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You can’t survive on savings alone. Investing is the only way to build future financial wealth, with or without your job. It’s important that everyone, including immigrants, open a brokerage account in the US and take advantage of the many financial benefits investing in the United States has to offer.
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What is a Brokerage Account?
A brokerage account is an account you open with a financial firm. You may open a digital account (work with a robo-advisor) or an account with a human advisor, which is more feasible for most immigrants.
A brokerage account allows you to purchase investments, such as stocks, bonds, ETFs, and mutual funds. Investors may open a variety of accounts including taxable and tax-advantaged accounts (retirement accounts) depending on your goals. Your investment advisor should help you decide which works best for your income, current financial situation, and future goals.
When you open a brokerage account, your broker (computer or person) manages your investments, making trades upon your request, reallocating your portfolio if it deviates from your chosen allocation, and helping you determine the right steps given your financial goals.
Related Article | How To Start Investing As an Immigrant
How Do Taxable Brokerage Accounts Differ from IRAs and Roth IRAs?
Two terms you’ll hear talked about a lot when choosing a brokerage account are taxable and retirement accounts.
Taxable accounts (as the name suggests) are taxable. You don’t pay taxes when you invest or buy the assets, but when you sell them, you’ll pay taxes. This is because you earn income when you sell your investments and all income incurs taxes.
Your tax liability differs based on a variety of factors including your current tax bracket (which is based on your household income), and the type of capital gains you earn. If you buy and sell an asset within a year - the profits or capital gains are taxed as ordinary income or just like the income you earned from your job.
If you buy and hold, which is often recommended for the largest profits, you may take advantage of long-term capital gains, which are often taxed at a lower percentage.
IRAs and Roth IRAs are tax-advantaged accounts or retirement accounts. Unlike taxable accounts, they have tax breaks either when you contribute or when you retire. Here’s the difference:
IRA - You get a tax break the year you contribute. You may contribute up to $6,500 in 2020 and deduct the full amount from your taxable income. Your earnings grow tax-deferred, which means you pay taxes on the contributions and earnings when you withdraw them during retirement (after age 59 ½). If you’re in a lower tax bracket when you retire, you pay fewer taxes.
Roth IRA - You don’t get a tax break when you contribute, but your contributions and earnings grow tax-free. As long as you wait until you are at least 59 ½ years old before you withdraw the funds, you pay no taxes.
The experts at MYRA Wealth can help you determine which investment account is right for you based on your financial status, goals, and income.
Related Article | What Is The Difference Between A 401K And An IRA?
9 Reasons to Open a Brokerage Account in the United States
1. There are multiple ways to invest.
The US market has opportunities for everyone to invest how they want. Whether you are a conserative investor and just want to invest in risk-free bonds or you are an aggressive investor and want to invest in the stock market, commodities, or futures, there are plenty of opportunities.
2. Equities usually beat inflation.
There’s no guarantee, but historically equities beat inflation. This is crucial for long-term wealth and growth. If you don’t beat inflation, you lose purchasing power over the years, making it hard to keep up. Investing in equities helps with this issue.
3. Your earnings compound.
There’s no better way to grow your money than compounded earnings. Every dollar you invest today will be worth a lot more next year than the money you contribute tomorrow. Take advantage of compounded earnings as quickly as you can.
4. You can reduce your taxable income.
A large part of building wealth is minimizing your tax liabilities. Investing the right way means lowering your taxable income, paying less taxes, and keeping more money in your pocket.
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5. The US market is efficient.
Emerging markets have their time in the spotlight, but it’s often short-lived. US markets have the efficiency and stability to back them up, making it a worthwhile investment no matter your nationality.
6. Brokers can help you diversify your investments.
Having a knowledgeable broker, like MYRA Wealth on your side, helps you diversify your investments. MYRA specialists show you the many options at your disposal, explaining the risk in each, and helping you choose the investments that align with your goals, yet diversify your portfolio.
7. Many American companies pay dividends.
Working with a reputable broker, you’ll learn how to handle your dividends. Whether you reinvest them or cash them out - you’ll have options when you work with an investment specialist who has your best interests in mind.
8. Brokerages are insured by the SIPC.
Investing means taking risk, but not when you use a reputable broker like MYRA Wealth. SIPC insurance protects you should a company go under (it doesn’t cover natural losses from a declining market). SIPC insurance protects each account up to $500,000 should a company close or you become a victim of fraudulent activity.
9. Working with a cross-border expert is important.
The right US broker will have cross-border expertise so you minimize your tax liabilities and currency risk. The specialists at MYRA Wealth specialize in immigrant investing and are here for you every step of the way.
Open your Brokerage Account Today
The longer you wait to open a brokerage account, the more money you lose. Every day that you aren’t invested, is a day you lose money. Let the experts at MYRA help you reach your financial goals. Whether you’ve never invested before or you want to try new tactics, we’ve got you covered. We work closely with immigrants, helping them manage their personal finances, and most importantly their investments.
Let’s get you started on the path to financial freedom today. Let’s explore your options for a US brokerage account, and set you on the path to financial freedom.