Frustrated American Novice


#1

Hello folks, I stumbled upon this great site while reading some FIRE blogs and what a great resource!

I am an American citizen in his mid 30s living and working in Switzerland. Like most of the people here, I want to achieve FI as early as possible. Towards this extent, I have become quite good at saving money. I currently have a savings rate of just under 35% over my gross salary. There is still more work that can be done on this aspect but I am quite happy with what I have achieved.

The part where I have been absolutely terrible at is investing. So far, all my savings have been sitting in a swiss bank account earning near 0% interest rate. I do make pillar 3A investments but that is also in non-investment accounts. Part of the reason for this is (and also the cause of my frustration) has to do with the fact that I am an American citizen. This has made life lot more complicated when it comes to investment opportunities. For example, as a US citizen, I am not allowed to open a pillar 3A account that can invest in stocks. I also cannot open a trading account with Degiro, PostFinance, etc. Only place where I think it might be possible to do so is Interactive Brokers. That is not too bad as it seems to be the one recommended by you smart folks. I tried to open an account with them last year but got cold feet when I was going through their rather intimidating questionnaire.

But my goal for the new years is to read up more about it and finally go ahead and open an account with them. If you guys have any resources or tips to share (especially concerning my often unfortunate citizenship) please feel free.

Thanks and I hope to be an active member of this community in the new years.


#2

Sorry, bad joke. Some people find it a good alternative though. I mean it just as a joke.

We all are a bit afraid of IB, so I suppose you just have to accept it or maybe you can be the first to try some different solution and let us know.


#3

good job on saving!

I know this from multiple sides. since US kept sueing Swiss Banks and putting on harsh rules about tax evasion, noone wants to have US citisens as customers anymore. too bad :frowning:

I guess IB will be your first choice for investing. The questionaire should not be a problem. nobody here put in a realistic value in “how many transactions did you do so far” question^^
Or, if you as a US Citisen could set up an account with Vanguard directly, this would be your best bet?

Anyway, you clearly want to put your cash at work instead of idling around.

this is quite nasty as you fundas are locked in there. Try check out this thread on how to get you money out


#4

Thanks :slight_smile: – I went ahead and opened an account on IB. Lets see how this goes.

Should have done it 3 years ago already hah

ma0: It is not a bad suggestion but beggars cant be choosers. I still need another citizenship and we all know how stingy the Swiss are with the red book :slight_smile:


#5

@Novice, you could also check out reddit, specifically r/financialindependence. there’s quite often talk about managing taxes and investments by americans when abroad. you might get some interesting knowledge from over there.


#6

Hi @Novice. Another American here. How’d it go with IB? Personally, I’ve been using Fidelity and Etrade accounts that I had open in the US before moving here, but I’m only able to use brokerage accounts, not IRA or anything else. I do have a 3rd pillar account earning all of 1%, but now see that I should think about a few more to spread out withdrawals later. I think I may work towards maxing out 2nd pillar before that.


#7

Hey, I am waiting on IB to process my documents. They, of course, needed lot more documents than you normally need due to the entire American living abroad thing. I expect it to go through but lets see. At least I did not get rejected right after selecting nationality like with Degiro.

If this does not work then I will be forced to go your route and use my brothers state side address to open some accounts. Where are you getting 1% for 3rd pillar? Thats almost twice of what I am getting. Yes, it is a good idea to stagger it or else you will lose the tax benefit as well.


#8

Good luck on the document approval! Alas, that was a typo - I meant to type 0.1%, but I see it is actually 0.25% at my cantonal bank. :frowning: I need to look at VIAC and see how they treat Americans - perhaps as a startup they won’t have the American presence that seems to trigger problems for the bigger banks.


#9

Just got a mail fro IB that my documents are with the compliance and they expect to open the account shortly. Lets see.

Do let me know if you get something useful out of VIAC or any other useful nugget of information.

Added later: I just chatted with VIAC guys and they seem to indicate that it should not be a problem for US citizens to open an account with them. Quite excited by this news! Lets hope he is not mistaken.


#10

Unless you earn low enough to stay under IRS radar exemption limits, there’s no point in bothering with either pillar - you’ll just cough up all your swiss tax savings to IRS in the end and deprive local schools etc of that money, is that what you want?


#11

Hi @hedgehog! Its always an interesting topic. I agree that local schools etc all deserve funding, but by that argument none of us should try to limit our tax burden. As it stands, in my 5 tax years in Switzerland, I’ve never paid more than $1000 to the US, so even maximizing 3rd pillar alone is still a net gain for me (I think having just one salary and kids helps the equation). That said, my 2018 taxes will be a lot different so I may have to skip this year…


#12

Hi! Just wanted to say that Andrew Hallam is a great resource for investing while living abroad as an American. I bought Millionaire Teacher, but his newest book (2017) is more general, Millionaire Expat.
He has a website: Andrew Hallam’s site and is active on his Facebook page. Good luck!


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