US Citizen, savings/investments if staying in Japan longterm

[retiregem]

Hello everyone,

I'm so glad I found this place and I'm hoping to learn a lot from reading everyone's experiences.

I have some savings in the US (Ally savings account) with greater than 20,000 USD.
I am also saving money every month for my daughter when she is older. (I set aside a certain amount per month and after about 6 months I send it to the US using transferwise with the idea that it could grow better than sitting in savings in a Japanese bank.)

From what I understand, interactive brokers is the only major company that will accept US expats. However, that maintenance fee seems costly. Am I wrong on this?

I have heard Vanguard is good for non-active investing but it's difficult for expats to register if they are already outside the US.
My idea was to use a VPN (US server) and register using my parents' address for now. Has anyone had experience getting a Vanguard account after they left the US?

Anyway, would appreciate any advice or wisdom! Thanks so much.

[expat2011]

Hey there. Just wanted to jump in and say I have always only used Vanguard for my investing and I've not had any problems. I'm not sure where reports of them not liking expats come in. (Anyone with a contradictory experience, please feel free to let us know.) My address on record with Vanguard is my Japanese address, and they send mail here when necessary. I did start my accounts with them while in the US, but as far as I know that doesn't matter. I am also pretty sure you don't even need to be a citizen, which I will explain in point 1 below. There are two things you should be aware of, though:

1. When Vanguard has a client with an overseas address, they will send that client an IRS form (I forget the number) around the start of the first year that client has an overseas address. The form is a form that the IRS requires, but they require that the account holder (you) fill it out and return it to the financial institution (Vanguard). No copy goes to the IRS. The form basically asks, "You're an overseas investor, so who are you?" You basically indicate you're a US citizen, input your SSN so they have a way to make sure you're doing your taxes, and you put your foreign address. I would make sure your address is also up-to-date with the IRS. (All of this indicates to me that not only is being a US expat not a problem, even being a foreign investor would not be a problem as long as you have an identifying number acceptable to the IRS. One such number is a SSN, but there's also like a foreign tax identifier or something. None of this matters for you, this is all just FYI.)

2. Vanguard tries to push you into a two-step authentication login. The second step requires they send you a one-time PIN. The problem is, they will ONLY send it via text, and they will not send it to a foreign phone number. (It seems weird to me that they will accept foreign addresses and phone numbers inside your account info, but will not text a required PIN to a foreign phone number, but whatever.) To fix this, you need to call Vanguard to explain the situation and ask them to disable the two-step authentication for your account. They'll explain the security risks and then do it for you. (This option is not advertised online and you cannot opt-out online, you must call.) I am not sure how the account opening experience would be affected by this, so you'll just have to wing it and see how it goes if you choose to go with Vanguard. You could always call them if necessary.

For what it's worth, my experiences with Vanguard are positive. I was a bit nervous at first, but I've never had a problem speaking to a live person within 3 minutes of calling them. This would also be a good time to figure out how you're going to place international calls. I just use Google Voice. It's cheap and it's already built into the chat feature of gmail. You should probably get a decent USB headset, though.

[retiregem]

Thank you for that in depth information, I really appreciate it.

I heard from my financial advisor that has some expat clients that upon registering, Vanguard wants your employer information and if it is outside of the US, you will have problems. Do you think that's not the case anymore?

[expat2011]

Sorry for my late reply. I don't recall what employer info, if any, I provided upon registration. I don't think they've asked for any updates since then, and I assume if they needed updates, they would have asked for it when they sent me the IRS form I mentioned above.

If you're concerned, you could always call them and ask. I've always been connected to a live person within five minutes, and their staff is very knowledgeable.

[captainspoke]

...
2. Vanguard tries to push you into a two-step authentication login. The second step requires they send you a one-time PIN. The problem is, they will ONLY send it via text, and they will not send it to a foreign phone number. (It seems weird to me that they will accept foreign addresses and phone numbers inside your account info, but will not text a required PIN to a foreign phone number, but whatever.) To fix this, you need to call Vanguard to explain the situation and ask them to disable the two-step authentication for your account. They'll explain the security risks and then do it for you. (This option is not advertised online and you cannot opt-out online, you must call.) I am not sure how the account opening experience would be affected by this, so you'll just have to wing it and see how it goes if you choose to go with Vanguard. You could always call them if necessary.
...

I think I missed this thread when it first came by...?

Question: You'd really want to use an account without 2FA?

And this: "I did start my accounts with them while in the US, but as far as I know that doesn't matter."

From what I've read, that is a crucial point, and it matters a lot.

[expat2011]

I am pretty sure a US citizen could open an account with Vanguard without living in the US, because the tax identification paperwork they request would cover what they need. They also allow foreign mailing addresses and didn't have a problem when I explained my situation on the phone.

Anyone interested in going with Vanguard could just call them up and ask what the policy is.

As for 2FA, if you'd like to enable it, the only option is to call Vanguard in order to receive the code to log into your account. So the option is there.

[yokaze]

For what it's worth, after several years living in Japan I opened a Vanguard account a year or so ago (I believe while visiting the US), but recently I was able to change my registered phone number to my Japanese phone. It texts me auth codes for the two-step authentication without issue - rather convenient.

(I still haven't done much with the account yet though as I'm trying to better comprehend the tax implications when investing as a US Citizen in Japan )

[retiregem]

Did they ask for your employer's address? That's what I have been told makes it difficult for those working in Japan.

[yokaze]

I vaguely remember they did, but I probably used our headquarter's address then. Technically I am employed and paid by our Japan subsidiary, but it's the same company where our HQ is in the US.

I guess that's ok? That's one of the reasons I haven't done much with it yet... but if others have created and since moved abroad and continue to use vanguard without issue, I suppose that should be alright? I should really just call Vanguard.

[retiregem]

Ah okay. I get paid by a Japanese organization, so there's no way I would be able to pass the initial screening for sign up then. You should be fine, though since you already have an account.