How can foreign investor (residing outside US) invest in US company stocks?
I am a small individual investor (less than 0K) and would like to invest in US stock market. My invest style is to buy-and-hold a good US's company stocks.
I checked couple discount brokers. All asked me for Social Security Number, which I do not have. So I wonder US allows the small investor like me invest in its market.
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As other people have said they should register with a broker in the country they reside in that can deal in US stocks, then fill out a W8-BEN form.
I have personally done this as I am from the Uk, it's not a very complicated process.
I would assume that most US brokers don't allow foreign customers due to the person having to pay tax where they reside and the US brokers don't want to have to keep approximately 200 different tax codes in track.
Instead of SSN, foreign person should get a ITIN from the IRS. Instead of W9 a foreigner should fill W8-BEN. Foreigner might also be required to file 1040NR/NR-EZ tax report, and depending on tax treaties also be liable for US taxes.
(Note: out of my depth here, but in case this helps...)
While not a direct answer to your question, I'll point out that in the inverse situation - a U.S. investor who wants to buy individual stocks of companies headquartered outside US - you would buy ADRs, which are $-denominated "wrapper" stocks. They can be listed with one or multiple brokerages.
One alternative I'd offer the person in my example would be, "Are you really sure you want to directly buy individual stocks?" One less targeted approach available in the US is to buy ETFs targeted for a given country (or region).
Maybe there's something similar there in Asia that would eliminate the (somewhat) higher fees associated with trading foreign stocks.
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