Interactive Brokers or others for low-mid income American

[griffitp12]

I certainly did not have 100 trades when I opened my IB account. They will ask you a lot of questions when opening the account, but this is more to tailor the site to your experience level.

Although IB is designed for frequent traders, you can also use it as a buy-once-a-year-and-hold account. That's actually close to my usage.

Note also that if your balance is less than $100,000, you will have to pay $10/month as maintenance fee, unless you occur charges through transactions (in which case your transactions fee are deduced from the maintenance fee, up to $10). That's one of the things they do to encourage trading.

This aside, I find the site particularly well done. It also lets you do a lot of things that other brokers don't like complex transactions I have no use for. If you are a US citizen, I can definitely recommend them (if you cannot have access to a Vanguard account).

Regarding the exchange fee, you will have to pay it of course, but if you invest with a long horizon that should be negligible.

I have similar questions. At some small level of investment per month, the 10 dollar fee outweighs any gains, right? For instance, if I can put aside a man per month (assuming a perfect exchange rate), I'm losing 9ish bucks per month saving with them, which definitely doesn't make economic sense right?

[N00bster]

I have similar questions. At some small level of investment per month, the 10 dollar fee outweighs any gains, right? For instance, if I can put aside a man per month (assuming a perfect exchange rate), I'm losing 9ish bucks per month saving with them, which definitely doesn't make economic sense right?

It might or not. You would still be investing, and eventually your balance's monthly growth will exceed that fee, but that's still a headwind I would probably look at other cheaper brokers if it was to invest only 1万 per month. Especially as a US citizen you have access to other US offers such as Vanguard, which the lot of us don't.

[RetireJapan]

Especially as a US citizen you have access to other US offers such as Vanguard, which the lot of us don't.

Non-resident Americans are going to have trouble opening a new account at many US brokers, unless they are willing to lie about their situation (commit fraud).

[griffitp12]

Especially as a US citizen you have access to other US offers such as Vanguard, which the lot of us don't.

Non-resident Americans are going to have trouble opening a new account at many US brokers, unless they are willing to lie about their situation (commit fraud).

Yes, this seems to be the crux. I can't open a Vanguard account but IB fees (which are 20 bucks/month, not 10) are a pretty substantial "headwind."
As far as I understand, as a US citizen I can't buy Japanese funds either without "excessively disavantageous" taxation, so I'm not sure what the solution is for people in this bucket (low-mid income US citizens currently living in Japan)

[Kanto]

Especially as a US citizen you have access to other US offers such as Vanguard, which the lot of us don't.

Non-resident Americans are going to have trouble opening a new account at many US brokers, unless they are willing to lie about their situation (commit fraud).

Yes, this seems to be the crux. I can't open a Vanguard account but IB fees (which are 20 bucks/month, not 10) are a pretty substantial "headwind."
As far as I understand, as a US citizen I can't buy Japanese funds either without "excessively disavantageous" taxation, so I'm not sure what the solution is for people in this bucket (low-mid income US citizens currently living in Japan)

Your options for passive investing are to stick with that that S&P 500 fund that I mentioned in your previous thread ( S&P500 index ETF SPY 1557) which trades as a Japan Depositary Receipt and avoids these tax issues.

(Spy = Vanguard VOO).

Outside of that Berkshire Hathaway (BRK.B), or similar companies are very ETF-like and would be fairly safe to hold long term until your ready to move to Internation Brokers.

[captainspoke]

Have I got this math right?

20/month for a year is, obviously, 240. On 10k, that's 0.024%

Fees for an index fund on the cheap side will add 0.03% to that--making it 0.054%

That seems acceptable to me.

[griffitp12]

Non-resident Americans are going to have trouble opening a new account at many US brokers, unless they are willing to lie about their situation (commit fraud).

Yes, this seems to be the crux. I can't open a Vanguard account but IB fees (which are 20 bucks/month, not 10) are a pretty substantial "headwind."
As far as I understand, as a US citizen I can't buy Japanese funds either without "excessively disavantageous" taxation, so I'm not sure what the solution is for people in this bucket (low-mid income US citizens currently living in Japan)

Your options for passive investing are to stick with that that S&P 500 fund that I mentioned in your previous thread ( S&P500 index ETF SPY 1557) which trades as a Japan Depositary Receipt and avoids these tax issues.

(Spy = Vanguard VOO).

Outside of that Berkshire Hathaway (BRK.B), or similar companies are very ETF-like and would be fairly safe to hold long term until your ready to move to Internation Brokers.

OK I see. From what I am reading, only SMBC Nikko (and perhaps Nomura and Daiwa) will allow me to to purchase that fund, ya? Anyone have any other info on that, or experience opening an account with one of those three as an American with N3 Japanese?

This seems like a silly amount of hoops to go through when I'm literally looking to give my money to someone haha.

[gogakuhei]

Have I got this math right?

20/month for a year is, obviously, 240. On 10k, that's 0.024%

So close!

240 / 10000 = 0.024, but you have to multiply by 100 to get percent, so 2.4%.

I listened in on a Thun Financial webinar recently, and one of the takeaways was (paraphrasing) that if you are going to invest on your own (not through an advisor) as an American outside of the US, IB is just about your only option. That 2.4% may just be the cost of doing business for most of us.

I hope someone can correct me if I am wrong here.

[captainspoke]

Have I got this math right?

20/month for a year is, obviously, 240. On 10k, that's 0.024%

So close!

240 / 10000 = 0.024, but you have to multiply by 100 to get percent, so 2.4%.
...

Oops! And thanks for the correction.

I guess I looked again at IB, and it seems the service fee is (now) $10/month. So (again, if my math is right!), on $10k it'd be 1.2%, and that percentage would decline with increasing investments--e.g., at $50k it would be a fifth of that, 0.24%.

(I hope I've gotten this correct...! )