Jump to content
jaybee747

How can a Filipino invest in US low cost mutual funds?

Recommended Posts

jaybee747

How can a Filipino invest in US low cost mutual funds? If anyone have a personal experience in this I will be glad to hear, thanks!

Share this post


Link to post
Share on other sites
Jawny

https://www.securitybank.com/personal/investments/unit-investment-trust-funds/

https://www.moneymax.ph/personal-finance/articles/investments-beginners-philippines-1000/

I used your sentence and this is the first two things google provided. Good luck. 

Whoops, I just realized you were inquiring about US mutual funds.  Google may help.  I have no experience just did a search.

Edited by Jawny

Share this post


Link to post
Share on other sites
Cgu

I assume you want to invest in USD (as US mutual funds are denominated in USD). Best is to use a US based online broker. I recommend IB (interactive brokers). Just open an account (and the requirements that go with it - normally everything can be done online), transfer money and choose your mutual fund  - vanguard funds in my opinion have the lowest costs  (however, ETF have lower costs, if you are after low cost). 

That's it. 

Share this post


Link to post
Share on other sites
Bama
2 hours ago, jaybee747 said:

How can a Filipino invest in US low cost mutual funds?

Which ever fund your Filipino friend might choose I would recommend being prepared to be in the market long term with it's many ups and downs. If he can't invest without pushing his finances (meaning he might have to withdraw early) then he probably should wait until he can. Just my opinion.

  • Like 4

Share this post


Link to post
Share on other sites
lamoe
3 hours ago, jaybee747 said:

How can a Filipino invest in US low cost mutual funds? If anyone have a personal experience in this I will be glad to hear, thanks!

 

Sometimes better to be generic rather than specific when using Google


 

Quote

 

https://pocketsense.com/can-foreign-investors-buy-mutual-funds-3468.html

Unlike many countries, the United States has very relaxed laws about foreign investment. Not only can foreigners own land and businesses, but they can buy securities both directly and through American brokerages. The only hurdles a foreign investor needs to overcome when buying American mutual funds is registering with the Internal Revenue Service (IRS). Of course, they can also avoid restrictions and registration by using brokerages in their home countries.

 

 

Share this post


Link to post
Share on other sites
Cgu
22 minutes ago, lamoe said:

is registering with the Internal Revenue Service (IRS)

This is done automatically when opening with a US broker like IB.

I thought Jay was asking for information how to go about, not investing advice or other general advice may can find through Google...

Share this post


Link to post
Share on other sites
jaybee747
6 hours ago, Cgu said:

I assume you want to invest in USD (as US mutual funds are denominated in USD). Best is to use a US based online broker. I recommend IB (interactive brokers). Just open an account (and the requirements that go with it - normally everything can be done online), transfer money and choose your mutual fund  - vanguard funds in my opinion have the lowest costs  (however, ETF have lower costs, if you are after low cost). 

That's it. 

Yes, USD dominated funds. But by opening a US based account, my understanding is that a Filipino will be subject to 30% income tax at the source. I was looking for a way to avoid this without compromising the rate of return.

Share this post


Link to post
Share on other sites
Cgu
3 hours ago, jaybee747 said:

Yes, USD dominated funds. But by opening a US based account, my understanding is that a Filipino will be subject to 30% income tax at the source. I was looking for a way to avoid this without compromising the rate of return.

Your question was not about taxes.  What you have to tax in the Philippines is up to you (whatever you declare). The US has a withholding tax on dividends (30%) for non-residential alien, but not capital gain. So, if you choose a mutual fund (or ETF for that matter), choose one that reinvest dividends, so no tax. Anyway, the dividend gain should be low. You will be asked by the broker to fill out a W8-BEN form, so that the withdrawal is lowered and you can claim it back (if you want to declare it in the Philippines - I would not).

But you have to be a non-residential alien.

Edited by Cgu

Share this post


Link to post
Share on other sites
Rocketman

I'm a U.S. citizen and my account  which I've had for 25 years was locked when they understood I lived outside of the U.S.  I could withdraw but could not invest or change my investments.   

Share this post


Link to post
Share on other sites
Jawny

I can’t vouch for the veracity of this information in the link.  However, it does appear to be a legitimate source of explanation why it’s hard for overseas citizens (and foreigners) to obtain and maintain securities in the USA. 

 

https://www.americansabroad.org/mutual-fund-restrictions/

Share this post


Link to post
Share on other sites
jaybee747
Spoiler

 

 

8 hours ago, Cgu said:

 So, if you choose a mutual fund (or ETF for that matter), choose one that reinvest dividends, so no tax. 

This is not correct, you pay tax regardless if you reinvest the dividends or not.

Share this post


Link to post
Share on other sites
Davaoeno

Gentlemen- please state your qualifications to give expert US tax advice so we know which of you to believe !  Lol

  • Like 1
  • Haha 1

Share this post


Link to post
Share on other sites
jaybee747
17 minutes ago, Davaoeno said:

Gentlemen- please state your qualifications to give expert US tax advice so we know which of you to believe !  Lol

You don't need to be an "expert", just look at your 1099div form and see that dividends are always taxed, regardless.

https://www.e-file.com/help/dividends.php

"Even though a taxpayer does not receive a cash distribution or have "control" over it, the IRS still considers reinvested dividends a form of income. This means that you are taxed on your reinvested dividends just as if the company wrote you a check for the dividend payment. "

 

Share this post


Link to post
Share on other sites
rfm010
17 hours ago, Rocketman said:

I'm a U.S. citizen and my account  which I've had for 25 years was locked when they understood I lived outside of the U.S.  I could withdraw but could not invest or change my investments.   

Interesting.  Could you give more info on the type of account?  Who was it with, what types of investment vehicles?  Mutual funds involved? 

When i opened my ameritrade account there seemed to be some hesitancy on their part.  So i opened a us bank account with a family member's address and used that for my ameritrade account.  All went smooth after that.  I didnt pursue the reasons for their hesitancy, didnt want to give them second thoughts.  

 

For the canadian contingent:  reinvested dividends are in fact taxable.  My qualifications for saying so:  i've been skirting us tax laws for pert near 50 years now.

  • Thanks 1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use, Privacy Policy and Guidelines. We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue..