Interactive Brokers or others for low-mid income American

[TokyoWart]

Does anyone have experience applying to Vanguard from Japan? How did it go?

Not well. Vanguard required a US address but after establishing the account it was possible to report "moving" to Japan and still maintain the account (including maintaining it with the Japanese address).

Although I started the accounts before moving to Japan, both Fidelity and Schwab allow me to continue holding accounts with them. They will not sell me any mutual funds but they allow all stock trading including ETF's.

TD Ameritrade allowed me to initiate an account with them while living in Japan without any trouble.

Once you have one of those accounts you can by the ETF equivalent of Vanguard's excellent index mutual funds by looking up symbols on the Vanguard website (VOO, VTI, VT, VWO, etc.)

I have never worked in the US, so I don’t have a 401k or IRA

You don't have to live in the US to be able to contribute to an IRA. You do have to have "earned income" and if you take the earned income exclusion when filing US taxes you may find that you don't have "earned income" from a US tax perspective.

[CapnRex]

Hmm would it be possible just to use my mom's address (who lives in the US) to sign up with Vanguard?

If not, maybe TD Ameritrade is the way to go, if you guys think it's better than I.B. Any insight on that VS I.B.? I.B. seems to get more mentions on this site at least.

It looks like you are using multiple brokers - why? Can you get better rates for certain trades?

[TokyoWart]

Hmm would it be possible just to use my mom's address (who lives in the US) to sign up with Vanguard?

It probably is possible but you would want to change to your Japan address as soon as possible or the state where your mom lives might expect you to pay state taxes related to the account. (You will still have reporting obligations to the US federal government regardless of where the account assigns your address and your foreign account asset reporting obligation for Japan will still apply if you're considered a tax resident here.)

If not, maybe TD Ameritrade is the way to go, if you guys think it's better than I.B. Any insight on that VS I.B.? I.B. seems to get more mentions on this site at least.

I find TD Ameritrade is fine but I have no experience with Interactive Brokers so I can't compare them.

It looks like you are using multiple brokers - why? Can you get better rates for certain trades?

I don't like having all of my assets in one financial institution but I wound up having four US brokerage accounts by chance because of temporary opportunities that came up for specific accounts over the 30-odd years I've been investing. Vanguard is the cheapest place to trade Vanguard mutual funds or ETF's. Schwab/Fidelity/TD Ameritrade are very similar in their trading commissions. If I had it all to do over again I would probably be equally happy right now with Vanguard plus either Schwab or Fidelity.

[coffeespoon]

Hi!

I am wondering if you were able to open an account with vanguard (using your mother's home address in the US). Updates, please.

[retiregem]

Yes, would like an update on anyone trying to open a Vanguard account from Japan using their parents' address.

[captainspoke]

I am wondering if you were able to open an account with vanguard using someone's address in the US...

To both of the above, and anyone else, I think that this would violate the terms of service that you agree to when you open the account. (=fraud)

This is not vanguard-specific, since many other banks and brokers have the same restrictions and stipulations about residency. It's their financial desire to comply with US rules and regulations--so that they can avoid being penalized by the government.

**

Separately, I'm not sure why vanguard still holds much appeal. While they once had a niche to themselves, other companies now offer ETFs that beat them on cost, i.e., competition has been a good thing. Also, from what I read, they certainly don't win any awards for customer service. If I were going to lie about my residence/address, I'd at least go for a decent broker like fidelity or schwab.

Also, at my urging one of our daughters living in the US recently opened a brokerage account, and they wanted a lot more than just a US address to satisfy their need to "know your customer" (KYC). I wouldn't be surprised if vanguard has similar controls.

I mean really, they have serious compliance requirements placed on them by the US government (and penalties for noncompliance), and some expat thinks that all they have to do to get around anti-terrorism and anti-money-laundering laws is give them a US address?

Good luck.

[SleighRide]

As several months have elapsed since your original post, by now you probably have already found a suitable solution. If not, I would encourage you to check out the following firm (ask for Peter), as they are doing a great job for us:

https://thunfinancial.com/

For U.S. citizens living abroad there are, as you probably are now aware, all sorts of tax-related issues to consider. During the past couple of years many large brokerage firms have, moreover, been shedding most if not all of their overseas based U.S. clients. My wife and I had been working previously with Morgan-Stanley until they unilaterally closed our accounts due to "compliance regulations beyond our control." I found Thun simply by searching the internet, and they have turned out to be just what we needed. They specialize in helping U.S. citizens who reside outside the U.S. Thun is an independent advisory service for clients of Charles Schwab. This is important because they do not get paid by Schwab to push any particular stock or fund.

Yes, there are fees involved, but they are worth it for the advice. I suspect that Thun would be able to assist even if you have limited funds.

Good luck!

Mark

[UpDown]

Thanks for sharing this information about Thun!

[StockBeard]

Separately, I'm not sure why vanguard still holds much appeal.

You already know this, but:
Vanguard has a different ownership structure from all other brokers, in that they are owned by their customers through their funds. This means the interest of their shareholders cannot be put above the interest of their customers, since the customers are the shareholders. AFAIK they are the only broker with such a structure and this is why they are so appealing. This ensures, among other things, that they operate at cost. Also gives me the feeling that they will mechanically act as a fiduciary.

(Note: Not a US citizen. I do not have a Vanguard account, but would definitely open one if I could because of that structure)

[jeronimoski]

Correct me if I'm wrong, but IB's balance needs to be over $10,000, not $100,000, right?