How to start investing for an immigrant?
"For starting with zero knowledge you certainly did a great job on research as you hit on most of the important points with your question.  It seems like you have already saved up around six months of expenses in savings so it is a great time to look into investing. The hardest part of your question is actually one of the most important details.  Investing in a way that minimizes your taxes is generally more important, in the end, than what assets you actually invest in (as long as you invest even semi-reasonably).  The problem is that the interaction between your home country's tax system and the U.S. tax system can be complex.  It's probably (likely?) still worth maxing out your 401(k) (IRA, SEP, 529 accounts if you qualify) to avoid taxes, but like this question from an Indian investor it may be worth seeing an investment professional about this.  If you do, see a fee-based professional preferably one familiar with your country.   If tax-advantaged accounts are not a good deal for you or if you max them out, a discount broker is probably a good second option for someone willing to do a bit of research like you. With this money investing in broadly-diversified, low fee, index mutual funds or exchange traded funds is generally recommended.  Among other benefits, diversified funds make sure that if any particular company fails you don't feel too much pain.  The advantages of low fees are fairly obvious and one very good reason why so many people recommend Vanguard on this site.  A common mix for someone your age is mostly stocks (local and international) and some bonds.  Though with how you talk about risk you may prefer more bonds. Some people recommend spicing this up a bit with a small amount of real estate (REITs), sometimes even other assets.  The right portfolio of the above can change a lot given the person.  The above mentioned adviser and/or more research can help here. If, in the future, you start to believe you will go back to your home country soon that may throw much of this advice out the window and you should definitely reevaluate then.  Also, if you are interested in the math/stats behind the above advice ""A Random Walk Down Wall Street"" is a light read and a good place to start.  Investing makes for a very interesting and reasonably profitable math/stats problem." I am in a similar situation (sw developer, immigrant waiting for green card, no debt, healthy, not sure if I will stay here forever, only son of aging parents). I am contributing to my 401k to max my employer contribution (which is 3.5%, you should find that out from your HR).  I don't have any specific financial goal in my mind, so beside an emergency fund (I was recommended to have at least 6 months worth of salary in cash) I am stashing away 10% of my income which I invest with a notorious robot-adviser. The rate is 80% stocks, 20% bonds, as I don't plan to use those funds anytime soon. Should I go back to my country, I will bring with me (or transfer) the cash, and leave my investments here. The 401K will keep growing and so the investments, and perhaps I will be able to retire earlier than expected. It's quite vague I know, but in the situation we are, it's hard to make definite plans.
If you have money and may need to access it at any time, you should put it in a savings account.  It won't return much interest, but it will return some and it is easily accessible.   If you have all your emergency savings that you need (at least six months of income), buy index-based mutual funds.  These should invest in a broad range of securities including both stocks and bonds (three dollars in stocks for every dollar in bonds) so as to be robust in the face of market shifts.   You should not buy individual stocks unless you have enough money to buy a lot of them in different industries.  Thirty different stocks is a minimum for a diversified portfolio, and you really should be looking at more like a hundred.  There's also considerable research effort required to verify that the stocks are good buys.  For most people, this is too much work.  For most people, broad-based index funds are better purchases.  You don't have as much upside, but you also are much less likely to find yourself holding worthless paper.   If you do buy stocks, look for ones where you know something about them.  For example, if you've been to a restaurant chain with a recent IPO that really wowed you with their food and service, consider investing.  But do your research, so that you don't get caught buying after everyone else has already overbid the price.  The time to buy is right before everyone else notices how great they are, not after.   Some people benefit from joining investment clubs with others with similar incomes and goals.  That way you can share some of the research duties.  Also, you can get other opinions before buying, which can restrain risky impulse buys.   Just to reiterate, I would recommend sticking to mutual funds and saving accounts for most investors.  Only make the move into individual stocks if you're willing to be serious about it.  There's considerable work involved.  And don't forget diversification.  You want to have stocks that benefit regardless of what the overall economy does.  Some stocks should benefit from lower oil prices while others benefit from higher prices.  You want to have both types so as not to be caught flat-footed when prices move.   There are much more experienced people trying to guess market directions.  If your strategy relies on outperforming them, it has a high chance of failure.  Index-based mutual funds allow you to share the diversification burden with others.  Since the market almost always goes up in the long term, a fund that mimics the market is much safer than any individual security can be.  Maintaining a three to one balance in stocks to bonds also helps as they tend to move in opposite directions.  I.e. stocks tend to be good when bonds are weak and vice versa. What is the best option to start with? and  I am not sure about my goals right now but I do want to have a major retirement account without changing it for a long time That is a loaded question. Your goals should be set up first, else what is stopping you from playing the mega millions lottery to earn the retirement amount instantly. If you have the time and resources, you should try doing it yourself. It helps you learn and at a latter stage if you don't have the time to manage it yourself, you can find an adviser who does it for you. To find a good adviser or find a fund who/which can help you achieve your monetary goals you will need to understand the details, how it works and other stuff, behind it.  When you are thrown terms at your face by somebody, you should be able to join the dots and get a picture for yourself. Many a rich men have lost their money to unscrupulous people i.e. Bernie Madoff. So knowing helps a lot and then you can ask questions or find for yourself to calm yourself i.e. ditch the fund or adviser, when you see red flags. It also makes you not to be too greedy, when somebody paints you a picture of great returns, because then your well oiled mind would start questioning the rationale behind such investments. Have a look at Warren Buffet. He is an investor and you can follow how he does his investing. It is simple but very difficult to follow. Investing through my bank I would prefer to stay away from them, because their main service is banking and not allowing people to trade. I would first compare the services provided by a bank to TD Ameritrade, or any firm providing trading services. The thing is, as you mentioned in the question, you have to go through a specific process of calling him to change your portfolio, which shouldn't be a condition. What might happen is, if he is getting some benefits out of the arrangement(get it clarified in the first place if you intend to go through them), from the side of the fund, he might try to dissuade you from doing so to protect his stream of income. And what if he is on a holiday or you cannot get hold of him. Secondly from your question, it seems you aren't that investing literate. So it is very easy to get you confused by jargon and making you do what he gets the maximum benefit out of it, rather than which benefits you more.  I ain't saying he is doing so but that could be a possibility too, so you have consider that angle too. The pro is that setting up an account through them might be much easier than directly going to a provider. But the best point doing it yourself is, you will learn and there is nothing which tops that. You don't want somebody else managing your money, however knowledgeable they maybe i.e. Anthony Bolton. Secondly, should we pay off his student loans before investing? The subsidized loans won't be gaining any interest until he graduates so I was wondering if we should just pay off the unsubsidized loans and keep the subsidized ones for the next two years? From a purely financial standpoint, if the interest you gain on your savings is higher than the interest of the debt, then no. Otherwise, yes. If we were to keep 5,000 in savings and pay of the 3,000 of unsubsidized loans as I described above, that would leave us with about 15,000 dollars that is just lying around in my savings account. How should I invest this? Would you recommend high risk or low risk investments? I'm not from the US so take my answer with caution, but to me $15,000 seems a minimum safety net. Then again, it depends very much on any external help you can get in case of an emergency. I am not interested in watching stock exchange rates all day long. I just want to place it somewhere and let it grow Your intuition is spot on! To buy & hold is the sensible thing to do.  There is no need to constantly monitor the stock market. To invest successfully you only need some basic pointers. People make it look like it's more complicated than it actually is for individual investors. You might find useful some wisdom pearls I wish I had learned even earlier.  Stocks & Bonds are the best passive investment available. Stocks offer the best return, while bonds are reduce risk. The stock/bond allocation depends of your risk tolerance. Since you're as young as it gets, I would forget about bonds until later and go with a full stock portfolio. Banks are glorified money mausoleums; the interest you can get from them is rarely noticeable. Index investing is the best alternative. How so? Because 'you can't beat the market'. Nobody can; but people like to try and fail.  So instead of trying, some fund managers simply track a market index (always successfully) while others try to beat it (consistently failing). Actively managed mutual funds have higher costs for the extra work involved. Avoid them like the plague.  Look for a diversified index fund with low TER (Total Expense Ratio). These are the most important factors. Diversification will increase safety, while low costs guarantee that you get the most out of your money. Vanguard has truly good index funds, as well as Blackrock (iShares).  Since you can't simply buy equity by yourself, you need a broker to buy and sell. Luckily, there are many good online brokers in Europe. What we're looking for in a broker is safety (run background checks, ask other  wise individual investors that have taken time out of their schedules to read the small print) and that charges us with low fees. You probably can do this through the bank, but... well, it defeats its own purpose.  US citizens have their 401(k) accounts. Very neat stuff. Check your country's law to see if you can make use of something similar to reduce the tax cost of investing. Your government will want a slice of those juicy dividends. An alternative is to buy an index fund on which dividends are not distributed, but are automatically reinvested instead.  Some links for further reference:  Investment 101, and why index investment rocks: However the author is based in the US, so you might find the next link useful.  Investment for Europeans: Very useful to check specific information regarding European investing. Portfolio Ideas: You'll realise you don't actually need many equities, since the diversification is built-in the index funds.  I hope this helps! There's not much more, but it's all condensed in a handful of blogs. "There's several approaches to the stock market. The first thing you need to do is decide which you're going to take. The first is the case of the standard investor saving money for retirement (or some other long-term goal). He already has a job. He's not really interested in another job. He doesn't want to spend thousands of hours doing research. He should buy mutual funds or similar instruments to build diversified holdings all over the world. He's going to have is money invested for years at a time. He won't earn spectacular amazing awesome returns, but he'll earn solid returns. There will be a few years when he loses money, but he'll recover it just by waiting. The second is the case of the day trader. He attempts to understand ultra-short-term movements in stock prices due to news, rumors, and other things which stem from quirks of the market and the people who trade in it. He buys a stock, and when it's up a fraction of a percent half an hour later, sells it. This is very risky, requires a lot of attention and a good amount of money to work with, and you can lose a lot of money too. The modern day-trader also needs to compete with the ""high-frequency trading"" desks of Wall Street firms, with super-optimized computer networks located a block away from the exchange so that they can make orders faster than the guy two blocks away. I don't recommend this approach at all. The third case is the guy who wants to beat the market. He's got long-term aspirations and vision, but he does a lot more research into individual companies, figures out which are worth buying and which are not, and invests accordingly. (This is how Warren Buffett made it big.) You can make it work, but it's like starting a business: it's a ton of work, requires a good amount of money to get going, and you still risk losing lots of it.  The fourth case is the guy who mostly invests in broad market indexes like #1, but has a little money set aside for the stocks he's researched and likes enough to invest in like #3. He's not going to make money like Warren Buffett, but he may get a little bit of an edge on the rest of the market. If he doesn't, and ends up losing money there instead, the rest of his stocks are still chugging along. The last and stupidest way is to treat it all like magic, buying things without understanding them or a clear plan of what you're going to do with them. You risk losing all your money. (You also risk having it stagnate.) Good to see you want to avoid it. :)" This post has been wrote in 2014, so if you read this text be aware. At the time, and since France does tax a lot investment, I'd suggest you start a PEA and filling in using the lazy investment portfolio. That means buying European and/or French ETFs & index, and hold them as long as you can. You can fill your PEA (Plan d'Epargne en Action) up to 150.000€ for a period of at least 8 years as long as you fill it with European and French stocks. After the period of 8 years your profit is taxed at only mere 15%, instead of the 33% you see in a raw broker account. Since you are young, I think a 100% stocks is something you can hold on. If you can't sleep at night with 100% stocks, take some bonds up to 25%, even more. Anyway, the younger you start investing, the more ahead you may eventually go. "Congratulations. The first savings goal should be an emergency fund.  Think of this not as an investment, but as insurance against life's woes.  They happen and having this kind of money earmarked allows one to invest without needing to withdraw at an inopportune time.   This should go into a ""high interest"" savings account or money market account.  Figure three to six months of expenses. The next goal should be retirement savings.  In the US this is typically done through 401K or if your company does not offer one, either a ROTH IRA or Traditional IRA.  The goal should be about 15% of your income.  You should favor a 401k match over just about anything else, and then a ROTH over that.   The key to transforming from a broke college student into a person with a real job, and disposable income, is a budget.  Otherwise you might just end up as a broke person with a real job (not fun).  Part of your budget should include savings, spending, and giving.  All three areas are the key to building wealth.   Once you have all of those taking care of the real fun begins.  That is you have an emergency fund, you are putting 15% to retirement, you are spending some on yourself, and giving to a charity of your choice.  Then you can dream some with any money left over (after expenses of course).   Do you want to retire early?  Invest more for retirement.  Looking to buy a home or own a bunch of rental property?  Start educating yourself and invest for that.   Are you passionate about a certain charity?  Give more and save some money to take time off in order to volunteer for that charity. All that and more can be yours.  Budgeting is a key concept, and the younger you start the easier it gets.   While the financiers will disagree with me, you cannot really invest if you are borrowing money.  Keep debt to zero or just on a primary residence.  I can tell you from personal experience that I did not started building wealth until I made a firm commitment to being out of debt. Buy cars for cash and never pay credit card interest.  Pay off student loans as soon as possible. For some reason the idea of giving to charity invokes rancor.  A cursory study of millionaires will indicate some surprising facts:  most of them are self made, most of them behave differently than pop culture, and among other things most of them are generous givers.  Building wealth is about behavior.  Giving to charity is part of that behavior.  Its my own theory that giving does almost no good for the recipient, but a great amount of good for the giver.   This may seem difficult to believe, but I ask that you try it." "It's a good question, but it turns into a general 'how to invest' question.  You see, the cliche of ""invest the difference"" simply point to the ripoff the other two answers discuss. And it doesn't specify how to invest, only that this money should be put to work as long term investments.  The best answer is to find the asset allocation appropriate for your age and risk profile. It can be as simple as a low cost S&P ETF, or as complex at a dozen assets that include Stocks, both Domestic and Foreign, REITs, Commodities, etc. It's not as if the saved funds get segregated in a special account just for this purpose, although I suppose one can do this just as others have separate funds for retirement, emergency, vacation, college, etc." Pool their money into my own brokerage account and simply split the gains/losses proportional to the amount of money that we've each   contributed to the account. I'm wary of this approach due to the tax   implications and perhaps other legal issues so I'd appreciate   community insight here. You're right to be wary. You might run into gift tax issues, as well as income tax liability and appropriation of earnings. Not a good idea at all. Don't do this. Have them set up their own brokerage account and have them give me the   login credentials and I manage the investments for them. This is   obviously the best approach from a tracking and tax perspective, but   harder for me to manage; to be honest I'm already spending more time   than I want to managing my own investments, so option 1 really appeals   to me if the drawbacks aren't prohibitive. That would also require you to be a licensed financial adviser, at least to the best of my understanding. Otherwise there's a lot of issues with potential liability (if you make investments that lose money - you might be required to repay the losses). You should do this only with a proper legal and tax advice - from an attorney and/or CPA/EA licensed in your state. There are proper ways to do this (limited partnership or LLC, for example), but you have to cover your ass-ets with proper operating agreements in place that have to be reviewed by legal counsel of each of the members/partners, There is a fourth option - pay those taxes. Depending on the amounts, it might be the easiest way - if you make 34.49 in interest, and pay 6 $ in taxes on it, and be done, that might not be worth any other effort. If the expected taxable amount is significant, moving (most of it) to index funds or other simply switching existing investments to ‘reinvest’ instead of ‘pay out in cash’ would be the best approach. Again, some smaller amounts in savings or checkings accounts are probably not worth any effort. Transferring the money to the US doesn’t save you taxes, as any interest would still be taxable. You have a risk to lose on the conversion back and forth (and a potential to gain - the exchange rate could go either way!), so if you are sure you go back, it’s not a good idea to move the money. John Bogle never said only buy the S&P 500 or any single index Q:Do you think the average person could safely invest for retirement and   other goals without expert advice -- just by indexing? A: Yes, there is a rule of thumb I add to that. You should start out   heavily invested in equities. Hold some bond index funds as well as   stock index funds. By the time you get closer to retirement or into   your retirement, you should have a significant position in bond index   funds as well as stock index funds. As we get older, we have less time   to recoup. We have more money to protect and our nervousness increases   with age. We get a little bit worried about that nest egg when it's   large and we have little time to recoup it, so we pay too much   attention to the fluctuations in the market, which in the long run   mean nothing. How much to pay Q: What's the highest expense ratio that one should pay for a   domestic equity fund? A: I'd say three-quarters of 1 percent maybe.   Q: For an international fund?  A: I'd say three-quarters of 1 percent.   Q: For a bond fund? A: One-half of 1 percent. But I'd shave that a little bit. For   example, if you can buy a no-load bond fund or a no-load stock fund,   you can afford a little more expense ratio, because you're not paying   any commission. You've eliminated cost No. 2.... Certainly reading the recommended answers about initial investing is a great place to start and I highly recommend reading though that page for sure, but I also believe your situation is a little different than the one described as that person has already started their long-term career while you are still a couple years away.  Now, tax-advantaged accounts like IRAs are amazingly good places to start building up retirement funds, but they also lock up the money and have a number of rules about withdrawals. You have fifteen thousand which is a great starting pot of money but college is likely to be done soon and there will likely be a number of expenses with the transition to full-time employment.  Moving expenses, first month's rent, nursing exams, job search costs, maybe a car...  all of this can be quite a lot especially if you are in a larger city.  It sounds like your parents are very helpful though which is great. Make sure you have enough money for that transition and emergency expenses first and if there is a significant pool beyond that then start looking at investments.  If you determine now is the best time to start than then above question is has great advice, but even if not it is still well worth taking some time to understand investing through that question, my favorite introduction book on the subject and maybe even a college course.  So when you land that first solid nursing job and get situated you can start taking full advantage of the 401K and IRAs. There are some brokers in the US who would be happy to open an account for non-US residents, allowing you to trade stocks at NYSE and other US Exchanges. Some of them, along with some facts: DriveWealth Has support in Portuguese Website TD Ameritrade Has support in Portuguese Website Interactive Brokers Account opening is not that straightforward Website For now, park it in a mix of cash and short term bond funds like the Vanguard Short Term Investment Grade fund. The short term fund will help with the inflation issue. Make sure the cash positions are FDIC insured. Then either educate yourself about investing or start interviewing potential advisors. Look for referrals, and stay away from people peddling annuities or people who will not fully disclose how they get paid. Your goal should be to have a long-term plan within 6-12 months. The store wants their money back.   It's understandable that they are hesitant to accept another check from you. So if you don't have the cash to pay them back, take your good check somewhere else to cash it, and use that money to pay back the store that you gave the bad check to.