How to invest in US stock market as a foreigner?
Question:
1. In Singapore, when I buy share, the shares will be in custody with CDP (Central Depository). Is there a similar system for US market? Or is my brokerage firm (e.g ameritrade) keep custody of my shares?
2. If my brokerage firm is my custodian for my shares, do I have to pay any regular custodian fees?
3. How do I receive my dividend? Will it be deposited into my brokerage account?
4. As a foreginer, do I get tax exempt for dividend and capital gain?
Answer:
I am a UK citizen with an account at TD Ameritrade in the US and investments in the US market. So, based on my experience:
1. The broker will keep custody of the shares.
2. There are no custodian fees.
3. Dividends will be deposited in your account.
4. When you open the account you will be asked to sign and return tax forms to keep the IRS happy. Thereafter the amount of the dividend you get to keep will depend on the current tax treaty between the US and Singapore government. You are likely to find you you are not fully tax exempt, an element of the dividend will be with held by Ameritrade.
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