Investing For Immigrants: A 2022 Guide
Investing is the way most of us will build wealth. In terms of personal finance, investing is just as important as budgeting and having an emergency fund. The good news is that 401(k)s are not only for U.S. citizens, which is true of other types of investments too. We’ll explain how immigrants in the U.S. can invest.
401(k) for immigrants
A 401(k) is an employer-sponsored, tax-advantaged investment account that helps employees save for retirement. Employees will be offered a selection of funds to choose from. These funds are “baskets” of assets that help diversify the investment. The money is taken from the employee’s paycheck and automatically invested.
The money becomes available for withdrawal after age 59 ½. Withdrawal prior to that age except in certain circumstances will result in a penalty. 401(k)s for Indian citizens and citizens from other countries are perfectly legal.
IRAs
IRAs are Individual Retirement Accounts, another type of tax-advantaged retirement account. There are two types of IRAs, Roth and Traditional:
Roth IRA: After-tax dollars are contributed to the investment account, and the money grows tax-free, and you can make tax and penalty-free withdrawals after age 59 ½.
Traditional IRA: Pre-tax dollars are contributed to the investment account, and the money grows tax-deferred. Withdrawals are taxed upon withdrawals after age 59 ½.
You can open a Traditional or Roth IRA with a Green Card, but it’s not required. You can also use H1B status to open an IRA account, but again, it’s not required. Traditional and Roth IRAs for non-U.S. citizens are legal. You get to choose what to invest in within the IRA; you can invest in a wide range of assets, including stocks, bonds, mutual funds, and index funds. Investments aren’t limited as they are for 401(k) accounts.
Brokerage accounts
If you have an ITIN, you can open a brokerage account through companies including Fidelity, Vanguard, and Charles Schwab. You can fund the account with money from your checking or savings account to buy assets, including stock, bonds, ETFs, and mutual funds.
Real estate
Immigrants of any status can also buy real estate in the U.S., including a home. Most people can’t buy real estate with cash; they need a mortgage. Getting a mortgage can be difficult for immigrants, but there is a solution.
ITIN mortgage loans are offered by some lenders, and they don’t require citizenship or a Social Security number. Buyers make a 10% to 20% downpayment and have a 30-year fixed-rate mortgage. Although ITIN mortgage loans typically have higher interest rates than do standard mortgages.
A U.S. personal finance education
There are so many aspects of American personal finance, from credit scores to credit cards. It’s a lot to learn! Upwardli is here to help you learn everything you need to know about a new financial system. We’ve created dozens of resources to educate you and can help you establish a credit history in your new home. If you are ready to learn, Upwardli is ready to help!
