What Options Do American Expats Have for Investing (Depending on How Much They Have to Invest)?

Living abroad as an American expat offers incredible rewards — new cultures, new opportunities, and a broadened worldview. But while life overseas can be enriching, managing your investments as a U.S. citizen abroad is rarely straightforward.

Between U.S. tax obligations, FATCA reporting rules, PFIC traps, and local financial regulations, even experienced investors can find themselves facing unexpected hurdles. Understanding what you can (and can’t) invest in — and how to stay compliant — is key to protecting your wealth.

Below, we explore how your investment options as an American expat may differ depending on the amount you have to invest.

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1. If You Have Up to $200,000 to Invest

At this level, simplicity, accessibility, and U.S. tax compliance are your main priorities. You’ll want to grow your capital efficiently without triggering complex reporting or punitive tax rules.

Stay U.S.-domiciled:
The cleanest approach is to stick with U.S.-registered ETFs or mutual funds. These avoid the IRS’s Passive Foreign Investment Company (PFIC) rules, which can create steep annual tax liabilities and require filing Form 8621 for each investment. By contrast, most foreign-domiciled funds and insurance-linked investments do fall into the PFIC category and should be avoided.

Choosing the right platform:
While some U.S. brokers restrict accounts for clients residing abroad, firms such as Charles Schwab International, Interactive Brokers, Saxo Bank, Ardan International, and Novia Global  often allow U.S. citizens living overseas to maintain investment accounts. These platforms let you hold U.S. stocks, bonds, and ETFs — keeping you compliant with both U.S. and local rules.

If you live in the European Union, note that EU regulations (such as PRIIPs) may limit your access to certain U.S. funds. Even so, it’s typically possible to buy low-cost U.S. ETFs via compliant platforms, while access to U.S. mutual funds may require maintaining a U.S. address.

Consider tax-advantaged retirement accounts:
If you earn eligible U.S. income, contributing to a Roth IRA or Traditional IRA may still be possible. These accounts offer tax-deferred or tax-free growth. However, if you claim the Foreign Earned Income Exclusion (FEIE), your excluded income does not count as earned income for IRA contribution purposes. If instead you claim the Foreign Tax Credit (FTC), you may still qualify.

Foreign pension plans:
If you work abroad, local pension contributions may be mandatory. Where a U.S. tax treaty exists with your country of residence, the plan may receive deferred treatment in the U.S., avoiding double taxation. Without a treaty, however, foreign pension plans can be treated as foreign trusts or PFICs, requiring forms 3520, 8938, and possibly 8621.

Real estate considerations:
Buying local property can diversify your portfolio and hedge inflation, but ensure you maintain sufficient liquid investments. Rental income is typically taxable in both jurisdictions, though U.S. expats can use the foreign tax credit to offset double taxation.

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2. If You Have $200,000 to $1 Million to Invest

Once your portfolio exceeds $200,000, strategic diversification and tax efficiency become central. You’ll need exposure across asset classes and currencies while avoiding compliance headaches.

Build a diversified U.S.-domiciled portfolio:
Continue to rely on U.S.-based ETFs for global diversification. You can construct a complete portfolio using U.S. ETFs that track domestic, international, and emerging markets, all without triggering PFIC rules. These investments are straightforward to report — you’ll receive Form 1099 each year, rather than multiple foreign statements.

Mind the reporting thresholds:
The Foreign Account Tax Compliance Act (FATCA) and FBAR rules apply to Americans with foreign financial accounts. If your combined foreign holdings exceed specific thresholds (often $200,000 for FATCA and $10,000 for FBAR), you’ll need to file Form 8938 and a FinCEN 114 (FBAR). Using U.S.-based accounts simplifies compliance and reduces audit risk.

Foreign pension plans and employer benefits:
At this level, international executives often accumulate employer pensions or stock options abroad. These can be advantageous locally but are frequently taxable under U.S. rules when vested. Treaties may defer taxation until distribution, but additional reporting often applies.

Real estate and currency management:
You may wish to diversify into real estate — either back in the U.S. for stable rental income or in your host country to balance currency exposure. If your living expenses are in euros or pounds, holding everything in U.S. dollars can create exchange rate risk. Some expats hold a portion of assets in local currency or use ETFs that provide non-dollar exposure.

Currency planning tip:
Match currencies to future goals. If you plan to buy property locally in the next few years, keeping those funds in the local currency — in low-risk investments or savings accounts — helps reduce volatility.

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3. If You Have Over $1 Million to Invest

With larger portfolios, priorities often shift toward asset protection, estate efficiency, and multi-currency diversification.

Core-satellite portfolio structure:
core holdings  are commonly maintained in low-cost, U.S.-domiciled ETFs for simplicity and compliance. This is frequently complemented by satellite investments which can include international real estate, alternative assets, or private equity (when appropriate for the investor’s circumstances). This approach may provide diversification without adding excessive reporting requirements.

Real estate for long-term stability:
Property investment — in the U.S. or abroad — can provide passive income and hedge inflation.

• U.S. property offers familiarity, depreciation deductions, and straightforward reporting.
• Non-U.S. property introduces local currency exposure and potential diversification benefits but often requires navigating foreign tax rules, title registration, and property management challenges.

Estate planning for global wealth:
At this level, estate planning becomes essential. The U.S. federal estate tax exemption stands at $13.6 million per person (2025), but many foreign jurisdictions impose far lower thresholds or separate inheritance taxes. Without a coordinated cross-border plan, heirs may face taxation in multiple countries.

Establishing a U.S. revocable living trust can help streamline the transfer of U.S. assets and avoid probate. However, check that it aligns with the inheritance laws of your country of residence — some nations (such as France, Spain, and Portugal) have forced heirship laws that can override U.S. estate planning documents.

Work with qualified professionals:
High-net-worth expats benefit from integrated advice. A U.S. expat wealth manager can coordinate with cross-border tax attorneys and estate professionals to check that your investments, reporting, and legacy plans are efficient and compliant in every jurisdiction.

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Final Thoughts

U.S. tax laws extend globally — meaning even the best investment strategy must fit within a compliant, U.S.-centric framework.

Whether you’re investing $20,000 or $20 million, your priorities remain the same:

• Avoid PFICs and foreign insurance-wrapped products.
• Stay compliant with FATCA and FBAR.
• Diversify globally using U.S.-registered vehicles.
• Align currencies with future spending needs.
• Integrate your investments with estate and tax planning.

U.S.-domiciled ETFs remain the cleanest, most flexible building blocks for global investors. But the details — access, local restrictions, and reporting — depend on your country of residence and personal circumstances.

A qualified U.S. expat financial adviser can help you design an investment plan that grows your wealth efficiently while keeping you compliant and confident, wherever you live.

Sources

https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-residents-abroad-filing-requirements