Investing as an American Abroad: The Complete Starter Guide

Moving abroad doesn’t pause your need to build wealth — but it does rewrite the rulebook. Americans overseas sit at the intersection of two tax systems and two regulatory regimes, and the standard advice from either side alone can hurt you. Here’s the whole picture in one place.

The three constraints that shape everything

1. The US taxes you on worldwide income, forever

Wherever you live, the IRS still cares about your dividends, interest and capital gains. Every investment decision abroad is also a US tax decision.

2. Foreign funds are PFICs

The single most expensive mistake in expat investing: buying non-US funds and triggering punitive US taxation. If you read only one other article, make it the PFIC trap.

3. US brokerages get nervous about foreign addresses

Some restrict or close expat accounts; a few genuinely welcome them. Your choice of brokerage is the foundation of the whole structure — details here.

The 2026 numbers worth pinning to the wall

Limits move every year, and abroad they interact. These are the ones that shape an expat’s investing decisions this year:

• IRA contributions: $7,500, plus $1,100 if you are 50 or over — traditional and Roth combined.
• 401(k) deferrals: $24,500, with a catch-up of $8,000 from age 50 and $11,250 for ages 60 to 63 — relevant only while a US employer is still running your plan.
• Roth phase-out: $153,000 to $168,000 of modified income for single filers, $242,000 to $252,000 filing jointly — and excluded foreign income is added back for this test.
• Foreign Earned Income Exclusion: $132,900 per person, with a housing amount limit of $39,870. Exclude everything and you may have no compensation left to contribute from.
• Filing: Americans abroad file by 15 June without asking, but interest on anything owed runs from 15 April regardless.

Notice how the last two collide with the first three. The exclusion that makes the US return painless is the same thing that can shut the IRA door. That trade-off, and whether the Foreign Tax Credit serves you better, is the first conversation to have with a cross-border tax professional.

The standard architecture that works

Most Americans abroad converge on the same sturdy setup:

• A US brokerage account at an expat-tolerant institution, holding US-domiciled ETFs for global diversification. This avoids PFICs entirely and keeps reporting simple.
• Retirement accounts (IRA/401k) left in place and growing — moving abroad rarely means cashing out; it usually means managing them from afar (what happens to your 401(k) and IRA).
• Local cash for local life — a European account for spending and emergencies (the two-country emergency fund), but not for investment products.
• A deliberate currency plan — because your assets are in dollars and your life is in euros (expat currency strategy).

The complications worth knowing by name

• PRIIPs: EU consumer rules can block EU residents from buying US ETFs on some platforms. Workarounds exist — explained here.
• Contribution rules: IRA and Roth contributions require US-taxable earned income — the Foreign Earned Income Exclusion can accidentally zero yours out (Roth IRA abroad).
• Your new country’s taxes: some countries tax investment gains differently (or more) than the US; treaties decide who bills first. This is where a cross-border professional pays for themselves.
• The UK version: Britain is replacing PRIIPs with its own regime, phasing in from April 2026 and fully in force by June 2027. It doesn’t open US ETFs to retail investors either, so London is no escape from the same squeeze.
• Estate quirks: beneficiary designations and wills interact awkwardly across borders (estate planning for expats).

The two reports that come with a foreign account

A US brokerage account is not a foreign account, which is one of the quieter arguments for the standard architecture. The European bank account is, and it brings two reports with it: the FBAR, which most expats owe from the first year a salary lands in a euro account, and Form 8938, which only larger balances reach. Neither is a tax; both are the paperwork that lets your filing and the bank’s FATCA report agree, and missing either is expensive out of all proportion to the effort. Organising your financial life as an expat carries the thresholds and dates; put a year-end reminder in the calendar the week you open the local account.

Where the cash and the bonds live

The architecture above is mostly about equities. The boring half of a portfolio needs a home too, and the rule is the same: US instruments in the US brokerage, local cash in the local bank, nothing pooled on the European side. Treasuries and US bond ETFs sit happily in the US account. Euro cash for living costs sits in a European bank, behind a deposit guarantee. A multi-currency fintech balance is not a deposit — e-money is safeguarded, not guaranteed — so keep it for transfers, not for savings (the guarantees, side by side). And if the bank’s “savings product” has a fund inside it, it’s back to constraint number two.

Your first year abroad, in order

Here’s how the pieces fall into sequence for a typical move, assuming you start a few months out:

• Before departure: get the brokerage’s expat policy in writing; if it’s the wrong answer, open the new account and transfer in kind while your address is still domestic. Switch off dividend reinvestment. Settle the FEIE-or-credit question with a professional before the first return. For the 401(k), see what to do with a 401(k) or IRA when you move abroad.
• First months in the country: open the local account, fund the euro side of the emergency fund, and buy nothing that holds other securities. Say no to the bank’s fund brochure; say it twice if necessary.
• Once income is flowing: resume automatic investing into US-domiciled ETFs in the US brokerage. Fund the IRA if the compensation test allows it; otherwise the taxable account does the compounding.
• Year-end: note the highest balance every foreign account reached, and sweep every statement for anything that might be a PFIC.
• Filing season: pay in April, file in June — the extension is for paperwork, not payment.

Do it in this order and the second year is mostly repetition. Do it in a different order and you spend the second year undoing the first.

What not to do

Don’t buy local funds because a local bank was friendly. Don’t cash out retirement accounts because moving felt like an ending. Don’t stop investing entirely out of confusion — the years out of the market cost more than the paperwork ever will. And don’t take portfolio advice from anyone who can’t say “PFIC” and “totalization agreement” in the same sentence.

Where to start

Map what you own and what breaks when you move — that’s the Expat Money Assessment. For the decisions that need regulated advice, we introduce vetted, fee-only fiduciaries who live and breathe expat portfolios: Trusted Advisor Matching.

This article is general information and education, not investment advice. Take regulated advice before acting.