Investing from abroad: brokers, currency risk and where to hold assets
When you move abroad, a lot of the stuff you took for granted back home doesn’t travel with you. That cool app your buddy uses to buy fractional shares of Tesla? Might block you the second you update your address to “Lisbon” or “Buenos Aires.”
And then there’s the fun part: your tax residence. Even if you’re happily sipping coffee in Medellín, Uncle Sam (if you’re American) still wants a peek at your investments. Other countries may too. Before you plow into ETFs and crypto wallets, you need to know who can legally tax you. Otherwise, surprise letters will show up later, and nothing kills a hammock vibe like a tax bill.
Brokers: Who Will Actually Take You?
Step one in investing abroad is finding someone to hold your assets who doesn’t slam the door in your face. Sounds obvious, but plenty of U.S. brokers, for example, shut accounts when you switch to a foreign address. Europeans run into the same if they move out of the EU.
So what’s the workaround?
- International brokers. Firms like Interactive Brokers are popular because they don’t really care where you log in from, as long as your paperwork checks out. They’re built for expats, globetrotters, and the “digital nomad with a Swiss ETF habit” crowd.
- Local brokers. Opening an account in your new country is an option, but tread carefully. Some only give you access to local markets, which can be shallow compared to the big global ones. You don’t want to be stuck buying just domestic bonds in Paraguay unless that’s your strategy.
- Hybrid approach. Many expats keep one account back home (if the broker allows it) and one abroad. This way, you’ve got a foot in both worlds.
The golden rule: don’t wait until your bank or broker freezes you out. Sort this early, while you still have a valid address back home if needed.
Currency Risk: The Quiet Wallet Killer
If you’ve never lived abroad before, it’s easy to forget that currency swings can make or break your returns. Imagine you make 10% investing in U.S. stocks. Feels good, right? But if your local currency jumps 15% against the dollar, you’ve technically lost buying power where you live. Ouch.
So what can you do?
- Match assets to your expenses. If you’re living in Europe and spending euros, holding at least some investments in euros makes sense. Same for pesos, baht, whatever. It’s not “sexy,” but it protects you from losing out when exchange rates move.
- Mix currencies. Diversifying isn’t just about stocks vs. bonds, it’s also about which money you hold. A mix of USD, EUR, maybe a dash of local currency if you trust the stability, is safer than betting all on one.
- Hedge if you’re fancy. Some ETFs and funds automatically hedge against currency movements. It costs a bit more, but it’s like buying insurance against wild swings.
Where Do You Actually Hold Assets?
This is the part that confuses people. Do you invest “back home”? Do you use your new country’s system? Or do you stash it all in some neutral place like Singapore or Switzerland?
There’s no one-size-fits-all, but here’s the breakdown:
- Back home. Familiar, stable, often has better investor protections. Downside: your home country might tax it, even if you live elsewhere.
- Abroad (your new country). Convenient for proof of funds (landlords, visas). But local brokers may be limited or not as transparent. Also, if the local currency isn’t stable, your investments are at risk twice: market + money swings.
- Third countries. Some people choose a “neutral” jurisdiction, Singapore, Hong Kong. Strong legal protections, global access, fewer hassles. Not always easy to set up, though.
The rule of thumb: spread it out. Don’t leave everything in one basket that could get smashed by a new law, a frozen account, or a currency collapse.
Taxes: The Buzzkill You Can’t Ignore
Okay, let’s rip the Band-Aid off. Taxes are the least fun part of this conversation, but skipping it is a rookie mistake.
- Americans have it toughest. The U.S. taxes citizens no matter where they live. You can use credits and exclusions to avoid double-taxation, but you still have to file. No sneaky hiding.
- Other passports get more breathing room. Many countries only tax you if you’re a resident. If you’ve officially left and planted your tax home elsewhere, you might dodge obligations back home. But watch out: some countries consider you “tax resident” just for owning property or keeping an address.
- Treaties matter. Tax treaties between countries decide who gets first dibs on taxing your dividends or gains. Without a treaty, you risk double taxation. With one, you usually get credits to avoid it.
Bottom line: before you invest a cent abroad, figure out your tax residence. This alone saves headaches later.
Practical Tips That Keep You Sane
- Keep everything digital. Paper bank statements mailed to your mom’s house don’t help when you’re 7,000 miles away. Make sure your brokers and banks offer full online access.
- Two-factor authentication. Sounds boring until you’re locked out of your account because they’re texting codes to your old U.S. phone number. Get this sorted early.
- Stay liquid. Keep some cash (or cash-like assets) in your local country for emergencies. Not everything should be tied up in a market halfway across the world.
Don’t chase fads. Living abroad already adds complexity. You don’t need to spice it up with every crypto coin someone pitches you at a hostel bar.
Anecdote Time
I knew a guy in Mexico who kept all his savings in U.S. dollars. Felt safe, until the peso strengthened 20% one year. Overnight, his rent and groceries felt way more expensive, even though his portfolio was “up.”
Another friend in Portugal thought opening a local brokerage would be easy. Six months later, she was still untangling tax forms because Portugal wanted a piece of every dividend. Moral of the story: where you hold it matters just as much as what you hold.
Wrapping It All Up
Investing abroad isn’t about being clever, it’s about being practical. Your roadmap looks something like this:
- Find a broker that actually lets expats in.
- Decide where you’re tax-resident, and what that means for you.
- Hold assets in more than one currency, so swings don’t wipe you out.
- Mix between back home, local, and possibly a neutral base.
- Keep digital access bulletproof and always have backups.
The $2,000 you earn remotely won’t last forever if you leave it under your mattress. Grow it, protect it, and spread it around smartly. Do that, and you’re not just an expat, you’re an expat with options, which is the best kind.
