Once you have an emergency fund and no high-interest debt, investing can help your money grow. Here are the basics for newcomers.
Pay off credit card debt. Its interest is usually higher than investments earn.
Keep an emergency fund in savings. See Saving money and building an emergency fund.
If your employer offers a 401(k) match (extra money when you contribute), contribute at least enough to get the full match. See Retirement savings: 401(k), IRA, and leaving the US.
A brokerage account lets you buy stocks, bonds and funds.
Most US brokers ask for a US address and an SSN or ITIN.
Some brokers do not open accounts for people on certain visas, or treat nonresident aliens differently (they may ask for Form W-8BEN instead of W-9). Ask before applying.
Use your legal name exactly as on your tax records.
Stock: a small part of one company.
Bond: a loan to a government or company.
Mutual fund and ETF: a basket of many stocks or bonds.
Index fund: a fund that follows a whole market, like the S&P 500. Low fees and wide spread are why many beginners start here.
Expense ratio: the yearly fee of a fund, as a percent. Lower is better.
Investments can lose value. They are not FDIC insured.
SIPC protects customers if a member brokerage firm fails, up to $500,000 including up to $250,000 in cash. It does not protect against market losses.
Check a broker or adviser at brokercheck.finra.org.
Buying and holding stocks or funds is generally treated as investing, not work. Running a business of active trading, or managing a company you invest in, may count as work. If you are on a visa that limits work and plan more than passive investing, ask an immigration lawyer.
Foreign funds: a tax trap
If you are a US tax resident (see Resident or nonresident for US tax? F-1, H-1B and more) and own mutual funds or ETFs from your home country, the US may treat them as a PFIC (passive foreign investment company). They are taxed harshly and need a yearly Form 8621. Talk to a tax professional before buying or keeping them.
Foreign accounts may also need reporting. See Reporting bank accounts at home: FBAR and Form 8938.
Investing money you will need in the next year or two.
Following "guaranteed return" offers in WhatsApp or Telegram groups. These are common investment scams.
Keeping home-country mutual funds without knowing about PFIC rules.