Keeping Your Money in the U.S.

December 22nd, 2013 by The JetSetter Team | 2 Comments »

Slide1When you commit to living abroad, there are many unknowns. Aside from the basic changes in lifestyle you’ll have to contend with, there’s the issue of where to keep your money. The temptation is to transfer all money to a non-US financial institution due to lessened restrictions. But this isn’t always the best idea—improper tax advice and other dangers make these places potentially risky places to store your money.

There are a few reasons you might choose to store your money in a United States-based bank. First, investors risk losing a fair amount (up to 40%) to brokerage and mutual fund fees. In the Unites States, these fees are lower than in other places thanks to costs driven down by a competitive market.

Next, US citizens gain no additional tax advantage when their money is kept in accounts outside the US. Your money is taxed by the US no matter where you live—this applies to investment income, capital gains, and earned income. Additionally, upon retirement, you’ll need access to IRAs, 401ks and Roths, which can only be opened in the United States. Even foreign offices of US banks are not equipped to handle these types of investment accounts—which can lead to higher fees.

Other reasons to keep your money in the United States are record keeping and security. Investments in the US are categorized into pools by tax relevancy for accurate reporting, a practice not offered in every foreign financial institution. In terms of security, the US is also a pretty safe bet, as they’re covered by the FDIC and SIPC insurance, as well as regulated by the SEC or Federal Reserve. Your money is always protected this way—often, off-shore financial institutions are locally or governmentally regulated but may be limited and may not protect those who are not citizens of that country.

Because US tax and investment law is very complicated, the best advice regarding your investments comes from companies and institutions within the United States. Certified financial planners can be found, even if you’re living abroad. Thanks to the internet, you can keep your money within the United States and live anywhere you choose.

Jason Hartman knows that each individual is different, and recommends finding a solution to your investment needs that works for you. So long as you’re educating yourself on your investments, you’ll be making and saving money to live the life you always dreamed of! (http://www.flickr.com/photos/blatantworld/4148589161/)

 

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