4) Investing & Asset Growth
Tax-aware investing principles
The IRS wants a piece of your investment profits. You need to be smart about when you pay them. Capital Gains Tax: If you buy a stock for $100 and sell it for $150, you owe tax on that $50 profit. Long-Term vs. Short-Term: If you hold an investment for more than 1 year, your tax rate is much lower (often 0% or 15%). If you sell in less than a year, you pay your normal high income tax rate. Dividends: Some stocks pay you 'rent' just for owning them. As a Non-Resident Alien, the U.S. usually takes 30% of this automatically, unless your country has a tax treaty.
The IRS wants a piece of your investment profits. You need to be smart about when you pay them.
- Capital Gains Tax: If you buy a stock for $100 and sell it for $150, you owe tax on that $50 profit.
- Long-Term vs. Short-Term: If you hold an investment for more than 1 year, your tax rate is much lower (often 0% or 15%). If you sell in less than a year, you pay your normal high income tax rate.
- Dividends: Some stocks pay you "rent" just for owning them (Dividends). As a Non-Resident Alien, the U.S. usually takes 30% of this automatically, unless your country has a tax treaty.
Free Resource: Tax-Efficient Investing Strategies
5) Retirement Planning
In the U.S., retirement planning is not just for people who are 60 years old. It is a tax strategy that you should start the very first month you get a paycheck. Because you may not stay in the U.S. forever, you need a plan that is portable meaning the money stays yours even if you move back to your home country.
Think of retirement accounts as special buckets. The government lets you put money in these buckets to grow much faster than a normal bank account because they give you massive tax breaks.
Resources
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