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I am a small individual investor (less than $100K) 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.

  • You are in Pittsburg, PA (USA), from your profile. What is your status? To answer, one would need to understand why you have no Social Security number. – JoeTaxpayer Jun 22 '12 at 20:40
  • I was asked this question from my friend. I do not know how to answer them. So I put the question here. They are in Asia and Not a US Citizen. – Richard Sayakanit Jun 22 '12 at 20:43
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    @1888 Your friend should look for a broker in his home country that can deal in U.S.-listed stocks. – Chris W. Rea Jun 22 '12 at 20:56
  • In Hong Kong, for example, banks (like HSBC) often offer stock trading including US stock trading. There's discount brokers too like boom.com. While many US brokers such as E*Trade will take an overseas application, payment can be an issue -- are you prepared to pay $50 in wire charges every time you need to deposit funds to buy stocks? A local broker who can connect you to US exchanges won't need to do that. – Paul Dec 4 '13 at 21:24
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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.

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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.

  • See 1888's updated comment. – JoeTaxpayer Jun 22 '12 at 21:05
  • Is your answer still applicable if the foreign investor resides outside US? – Jon S Jun 22 '12 at 22:48
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    @jdsweet can't see why not. But for an investor outside the US it would be much easier to find a local broker with US stock exchange access, rather than deal with the US (and their local) bureaucracy. – littleadv Jun 22 '12 at 22:51
  • A foreign (non-US) person needs an ITIN to trade US stocks? If they don't reside here, I don't believe they have any requirements to our IRS when stocks are involved. – JoeTaxpayer Jun 22 '12 at 23:19
  • @JoeTaxpayer I believe if they have an account with US broker they're subjects to withholding. If they trade through their local brokers they don't need ITIN. – littleadv Jun 22 '12 at 23:44
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(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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    ADR's of foreign companies in the US are much more common than ADR's of US stocks on foreign exchanges. The OP asks about investing in US companies. – littleadv Jun 22 '12 at 23:45

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protected by littleadv Dec 4 '13 at 7:51

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