My first experience buying US Stocks as a Non-US citizen

I came to US as a student 4 years ago to pursue my Master’s program. Coming from a Finance background, investing in stock markets always interested me. But these 4 years I was low on cash and frankly didn’t have enough bandwidth to enter into a “high risk-high return” trade.

Investing in stock market is not new to me. I have invested for several years in Indian stock markets – Stocks of specific companies, Mutual Funds and even got on Initial Public Offering (IPO) bandwagon. I made money sometimes, lost money a couple of times, so I very well knew that investing in stock market required a fair bit of risk appetite.

I generally feel the younger you are and lesser the responsibility the better you are to deal with uncertainties of stock markets. I mean personally I don’t want to be 65 years and going aggressively into equity investing.

I really wanted to get investing in US stock market but with the bull market of 2018-2019, I wasn’t really finding the window to step-in. So I was just saving up with my savings bank account offering a measly 0.1% interest per annum which did not even meet the annual inflation which is in the range of 2%+ per annum.

Along came the Corona Virus (COVID-19) and delivered 1-2 near knock-out punch to the whole world’s economy. The markets world over took a major beating. The most stable, value stock were down 20-30%. This gave me a window of opportunity to get into the action with the high risk money that I had set aside for this purpose. Initially I started small and stuck to blue chip stocks and ETFs (I will talk about them in another post). But essentially I worked out my finances and came up with my risk appetite (meaning even if i lost all of that investment in stocks, it wouldn’t jeopardize my normal life).

AS a personal investor, I used a broad framework to assess my financial situation:

• How much is my fixed cost as a % of my total take home salary? (These include housing rent/ mortgage payment, car loans, day care/ tuition fees etc. that have a fixed payout)
• My variable but necessary spends approximately as a % of take home? (E.g. Grocery, potential medical expenses, travel cost – Gas, parking, other transit costs etc.)
• Discretionary spends like restaurants, movies, vacation travels, shopping, subscriptions (Netflix, Hulu etc.). This is important as this is the first place for cost cutting in case things start going South.
• Based on above do I have enough savings to cover 9 to 12 months of expenses? (This includes fixed cost, necessary spends, purchase health insurance from marketplace incase unemployed and some extra cash to meet the out-of-pocket-max incase of some significant medical emergency)

I used a budgeting app to keep track of all my expenses over the past 12+ months to analyze each of the expense above.

With whatever surplus money I had, I didn’t go “all in” into the stock market. I kept buying on dips slowly and steadily. Currently my portfolio position is oscillating between Net Gain and Net Loss as the markets have been swinging wildly. I am super excited to see the Bulls and the Bears fight it out over next few weeks.

But with the virus spreading so rapidly I am also reminded of all the deaths, unemployment, hardships and the unprecedented challenging times that we are currently in. And that investment and profits will not be on everyone’s mind.

I wish you all a safe and healthy well-being!!