Investing Abroad as a US Expat: Tax-Efficient Strategies

US expats who want to invest for the long term face a difficult landscape: foreign mutual funds and ETFs are typically PFICs, direct foreign stock holdings are manageable but require careful tracking, and some foreign savings vehicles aren't recognized as tax-advantaged by the IRS. The most tax-efficient approach for most US expats is to invest in US-domiciled funds — US mutual funds and ETFs — even while living abroad, keeping the money in a US brokerage account. This avoids the PFIC rules entirely and gives you access to the wide variety of low-cost index funds available in the US market. US-domiciled funds are still available to expats through brokers like Schwab International, Fidelity, and Vanguard (though some have residency restrictions). For expats who want exposure to local real estate or private equity, working with a tax advisor who understands PFIC, CFC, and FBAR rules is essential before making any investment commitment.