I am a U.S. citizen living and working in the UK and want to invest some of the income that I currently have sitting in savings. However, my U.S. based income is 0 (I take the Foreign Earned Income Exclusion on my U.S. taxes), so standard U.S. based retirement vehicles such as IRAs/Roths are out. I suppose the UK equivalent is a SIPP, but I’ve heard that these can’t be transferred to US pensions and that withdrawals are taxable in the U.S. I hope to live in the UK long term, but this will depend on the outcome of a future visa application, so right now I don’t know what the long-term future holds.
Ideally, a ‘set it and forget it’ approach such as an index fund or ETF seems attractive – I am very much in favour of anything where I can expect reasonable long-term growth, and where my investment is not completely locked up until age 67+. However, I’ve read that US-based ETFs are a bad idea for Americans living in the UK, and also that UK-based investments are a bad idea for UK-resident Americans as well. (The latter article claims that a core of U.S. registered mutual funds and ETFs have been granted UK “reporting fund” status and are ideal, though it neglects to mention what any of these ETFs are; I also wonder if that is a route for a more experienced investor than myself.)
What would be a reasonable investment strategy for someone in my situation, who wishes to invest for the long term, but would like to maintain more flexibility than a pension provides?