The Brutal Truth About Investing as an Immigrant: 5 Lies Banks Will Tell You

🕑 16 min read  ·  ✅ Fact-checked  ·  📋 Sources: IRS, CFPB, SEC

Walk into almost any bank branch in the United States as a recent immigrant and you will hear the same script. Open a savings account. Maybe a checking account. Maybe a certificate of deposit if you have a little money set aside. What you will almost never hear is the question that actually matters: have you started investing yet?

There is a reason for that, and it has nothing to do with you. Banks make most of their profit from the gap between what they pay you on deposits and what they earn lending your money to someone else. Investing in stocks, bonds, and index funds bypasses that gap entirely. Your money goes to work for you, not for the bank’s quarterly earnings report. So when the teller smiles and says investing is “too complicated” or “too risky” or “not for people in your situation,” they are not lying out of malice. They are repeating a script that protects the institution’s revenue model.

This article will walk through the five most common lies immigrant families hear about investing, expose what each one actually costs in real dollars, and explain what the data from federal agencies — the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the IRS — actually says. By the end, you will have the truth, and the next move is yours.

Lie #1: “You need a Social Security Number to invest in the U.S.”

This is the lie that stops more immigrant families from building wealth than any other, and it is flatly false. The IRS issues something called an Individual Taxpayer Identification Number, or ITIN, specifically so that people who do not have an SSN can comply with U.S. tax law. According to the IRS, an ITIN can be used to open many financial accounts, including brokerage accounts, at firms that choose to accept it.

Major brokerages that currently accept ITIN holders include Charles Schwab, Fidelity Investments, Interactive Brokers, Webull, and Public.com. Each has its own documentation requirements, but the common path is straightforward: a valid ITIN, a U.S. address (in most cases), a passport or government-issued ID, and proof of income source. Some platforms also accept individuals on visas, foreign nationals, and even non-residents in certain conditions.

The reason banks rarely mention this is simple: investing accounts pay less in fees than checking accounts pay in float, and the bank has no incentive to redirect you. The federal agency that regulates investments, the Securities and Exchange Commission, publishes plain-language guides at Investor.gov that make clear there is no SSN requirement written into U.S. securities law. The requirement, when it exists, is set by individual brokerages and is increasingly being dropped to compete for new customers.

If a representative tells you that you “cannot invest” without an SSN, ask which broker they are referring to, then go check the application page of three other brokers. You will see for yourself that the door is open. Acting on the false belief that it is closed has cost immigrant families literal decades of compound growth.

Lie #2: “Your savings account is the safest place for your money.”

This one sounds reasonable until you do the arithmetic. The average national savings account interest rate in the United States has hovered between 0.40% and 0.50% APY for years, according to FDIC data published quarterly. Inflation, measured by the Consumer Price Index from the Bureau of Labor Statistics, has averaged roughly 3% per year over the long run, with much higher spikes in 2022 and 2023.

Run the numbers. If you keep $10,000 in a typical savings account earning 0.5% while inflation runs at 3%, you lose approximately 2.5% of purchasing power every year. That means your $10,000 will buy roughly $7,800 worth of goods after a decade — even though the bank statement shows your balance has slightly grown. This is not theory. It is mathematics, and it has happened to millions of families who believed their savings account was “safe.”

“Safe” should mean preserving the buying power of your money, not just the nominal dollar amount. By that more honest definition, a standard savings account is one of the least safe places to park long-term savings. The S&P 500 stock index has averaged roughly 10% annual nominal return over the past century, according to data tracked by S&P Global. After inflation, that is about 7% real return per year. Bonds and Treasury securities, while lower-yielding, also typically beat inflation over time.

Emergency funds should stay liquid — that part is true. Most financial planners recommend three to six months of expenses in a high-yield savings account, where current rates are closer to 4% to 5% APY. But every dollar beyond that emergency fund left to wither in a 0.5% account is paying a silent tax to the bank year after year. The lie is not that savings accounts exist; it is that they are sold as the destination rather than the starting line.

Lie #3: “Investing is too risky for people in your situation.”

Risk is real. The stock market has dropped 30% or more in a single year multiple times in the last century. Bonds have negative years. Real estate crashes happen. Anyone who tells you investing is risk-free is selling something. But there is a deeper question almost no one asks: what is the risk of not investing?

The Federal Reserve’s Survey of Consumer Finances tracks household net worth by demographic and the gap is sobering. Families with investment accounts accumulate vastly more wealth over a working lifetime than families with only savings accounts, even when starting incomes are comparable. The difference is not because investors are luckier. It is because compounding is the most powerful force in personal finance, and compounding only works on money that is invested in assets that grow faster than inflation.

Consider a 30-year-old immigrant earning $40,000 a year who manages to save $200 a month. If that money sits in a 0.5% savings account for 35 years, it grows to roughly $93,000 — barely tracking inflation. If that same $200 a month is invested in a low-cost index fund earning a long-term average of 7% real return, it grows to roughly $361,000 in real, inflation-adjusted dollars. That is the difference between retiring with little and retiring with options.

The myth that immigrants are somehow uniquely unsuited to invest is not just wrong, it is harmful. Many of the most successful long-term investors in the United States are immigrants and children of immigrants, precisely because their families understood the value of patient capital, of not consuming everything they earned. The risk is not in investing. The risk is in being told to wait until conditions are “right,” which means waiting forever.

Lie #4: “You need a financial advisor and a lot of money to start.”

Forty years ago, this was largely true. Brokerage accounts had minimums of $5,000 or more, trading commissions ate small portfolios alive, and a personal financial advisor was the only realistic way for an everyday person to access a diversified portfolio. None of that is true today.

Modern brokerage platforms have zero account minimums, zero commissions on stock and ETF trades, and offer fractional shares so that an investor with $10 can buy a piece of a $400 share. Charles Schwab, Fidelity, Interactive Brokers, Webull, M1 Finance, and Public all allow accounts to be opened with as little as the price of one fractional share. The cost of entry has effectively dropped to zero.

Beyond brokerage minimums, the rise of low-cost index funds and exchange-traded funds (ETFs) has eliminated the need for an expensive advisor for most everyday investors. Funds like Vanguard’s Total Stock Market ETF (VTI), the SPDR S&P 500 ETF (SPY), or Schwab’s U.S. Broad Market ETF (SCHB) give an investor exposure to thousands of American companies with a single purchase, at annual expense ratios below 0.05%. Compare that to the typical financial advisor who charges 1% of assets per year. On a $50,000 portfolio, that advisor’s fee alone is $500 every single year, often for advice that an automated robo-advisor or a simple three-fund portfolio could match.

Robo-advisors like Betterment, Wealthfront, and SoFi Invest, plus the automated portfolios offered by Schwab and Fidelity, provide diversified, professionally managed portfolios for fees of 0.25% or less per year — many with no minimum balance to start. For most immigrant families just beginning, a robo-advisor or a simple three-fund portfolio in a self-directed account is more than sufficient. The expensive advisor can wait until the portfolio justifies the cost, which is generally well above $250,000 of investable assets.

Lie #5: “You should send all extra money back home — that is the right thing to do.”

This is the hardest lie to talk about because it touches on identity, family, and obligation. Remittances are a fundamental part of immigrant life. They support parents, siblings, and communities that depend on the income earned in the United States. Nothing in this article suggests that supporting family is wrong. The honest question is one of balance, not of all-or-nothing.

The mathematics are stark. Imagine an immigrant family that sends $500 a month back home, year after year, for 20 years. That is $120,000 in cumulative remittances. Now imagine that same family decides to send $400 back home and invest $100 a month in a U.S. index fund earning a 7% real return over 20 years. The cumulative remittances still total $96,000 — meaningful support sent home. But the invested portion grows to roughly $52,000 in real, inflation-adjusted terms. Wealth that did not exist before.

That $52,000 can become a down payment on a home, an education fund for a child, or the start of generational wealth that supports the entire family for decades. It can also become a much larger remittance later — sending $5,000 in one year to help a parent through a medical emergency is more impactful than sending $250 a year for 20 years and having nothing left in reserve when the real need arrives.

The lie is the framing that sees the choice as either “support family” or “build wealth here.” The truth is that disciplined investing in the United States, paired with steady remittances, ultimately allows an immigrant to do more for everyone — including those at home — than either approach alone. The trade-off most immigrant families are sold is a false choice, and breaking out of it is one of the most powerful financial moves a household can make.

What the data actually shows about immigrant investors

Multiple academic and government studies confirm a consistent pattern. Immigrants who begin investing within their first five years in the United States, even in small amounts, end up with significantly higher household net worth by age 65 than immigrants who delay. The Federal Reserve’s Survey of Consumer Finances, the Census Bureau’s Survey of Income and Program Participation, and various university-led studies all point to the same conclusion: time in the market matters more than amount invested, and time only starts counting when the account is opened.

This is not a case where the rich get richer because they started rich. Many high-net-worth immigrant families today started with a few hundred dollars opened into a brokerage account decades ago. Compound growth did the heavy lifting. The lesson is not that investing makes you rich quickly — it does not — but that not investing makes wealth-building nearly impossible, no matter how hard you work.

The Securities and Exchange Commission’s investor education site, Investor.gov, offers free, government-sponsored resources in multiple languages explaining the basics. The Financial Industry Regulatory Authority, FINRA, runs BrokerCheck.org where any person can verify whether a brokerage or advisor is legitimate. These are tools every immigrant investor should bookmark before sending a single dollar anywhere.

How to start investing in the next seven days

The information above does not become wealth on its own. What follows is a simple seven-day plan that any immigrant with an ITIN and a U.S. address can complete this week to begin investing for the first time.

Day 1. Pick a broker. For most first-time immigrant investors, Charles Schwab, Fidelity, or Interactive Brokers is a strong starting choice. All three accept ITINs, all three offer zero-commission trades, and all three have well-rated mobile apps. Read the account opening page of each and pick one. Decision fatigue is real; analyze for one hour, then commit.

Day 2. Gather documents. ITIN letter from the IRS, government-issued ID (passport works for nearly all platforms), proof of U.S. address (a utility bill, lease, or bank statement), and employment information. Have these scanned and ready.

Day 3. Open the account. The online application typically takes 20 to 40 minutes. Most platforms approve same-day or within 48 hours. Use a personal email and a strong, unique password.

Day 4. Link a bank account. This requires your routing and account numbers. The brokerage will run two small test deposits ($0.01 to $0.99) and ask you to verify them. This step takes one or two business days.

Day 5. Make the first deposit. Start small — even $50 — to confirm the system works end to end. There is no shame in a small first deposit. The point is establishing the habit, not the amount.

Day 6. Make the first purchase. A single share or fractional share of a broad-market index ETF such as VTI, SPY, or SCHB is the simplest possible first move. This single purchase makes you, technically and legally, an investor in over 500 of the largest American companies.

Day 7. Set up automatic contributions. Even $25 a week, automated, transforms the entire equation. The Securities and Exchange Commission and Investor.gov both highlight dollar-cost averaging — investing the same amount on a regular schedule — as one of the most effective strategies for new investors.

The real cost of waiting: what 5, 10, and 20 years of delay actually look like

Numbers make this concrete in a way that arguments cannot. Suppose two immigrant families are identical in every way except one. Both arrive in the United States in their early thirties. Both eventually have $300 a month they could be investing. The only difference is when they actually start.

Family A starts immediately at age 32. They invest $300 a month in a broad-market index fund earning the long-term historical real return of about 7 percent per year. By age 65, the account holds approximately $456,000 in today’s purchasing power. The total amount they personally contributed across 33 years is $118,800. Compounding produced the other $337,000.

Family B intends to start but waits five years until everything feels “settled.” They begin at age 37, invest the same $300 a month for the next 28 years. By age 65, their balance is approximately $290,000. They missed not five years of contributions worth $18,000, but $166,000 of compounded wealth. That is the real cost of a five-year delay — close to ten times what the foregone contributions alone would suggest, because the earliest dollars do the heaviest lifting.

If the delay stretches to ten years, beginning at age 42, the balance at 65 drops to roughly $175,000. A twenty-year delay, starting at age 52, leaves the family with about $58,000 — barely more than what was contributed, because compounding had little time to work. This is not because the family invested less hard or less wisely. It is because time itself is the unreplaceable input. No future contribution rate, no clever fund pick, and no market timing can recover the lost decades.

The lesson is uncomfortable but unambiguous. The single highest-return financial move an immigrant household can make is to open an investment account this week, fund it with whatever amount is realistic, and let time do its work. Every other optimization — fund selection, allocation tweaks, tax strategy — is secondary to the basic act of starting.

What investing actually looks like during your first year

One reason new investors quit is that no one warned them what the first twelve months actually feel like. The reality is mundane in a way that surprises people. After the first deposit lands and the first ETF shares are purchased, almost nothing visible happens for weeks at a time. Markets go up a little, down a little, sideways. The account balance fluctuates by a few dollars in either direction on most days. There is no excitement, no payoff, no daily proof that the strategy is working.

This silence is the strategy working. Long-term investing is designed to be boring. The investors who eventually become wealthy are the ones who treat the brokerage account like a savings account they happen not to touch — depositing on schedule, never checking the balance more than once a month, never reacting to news headlines. The investors who never become wealthy are the ones who treat the brokerage account like a casino — checking constantly, buying when excited, selling when scared.

Expect one or two scary moments in the first year. A market correction of 8-12 percent is statistically likely within any twelve-month window. Headlines will use words like “crash,” “bloodbath,” and “rout.” Friends or coworkers will tell you they pulled their money out. The temptation to do the same is overwhelming. This is the moment when the discipline built before the storm pays off, or fails. The investor who keeps contributing through the correction usually finishes the year ahead. The investor who panics rarely returns to the market until prices have already recovered, locking in losses they could have ridden out.

Frequently asked questions

Can a person with an ITIN really open a brokerage account in 2026?

Yes. Charles Schwab, Fidelity, Interactive Brokers, Webull, Public.com, and several other major U.S. brokerages currently accept ITIN holders who are U.S. residents. Each has slightly different documentation requirements, and some may also require proof of a U.S. address. Always verify the most current requirements directly on the brokerage’s official application page before applying.

What is the difference between an SSN and ITIN for investing purposes?

For most account types — including individual taxable brokerage accounts — an ITIN allows the account holder to comply with IRS reporting requirements just as an SSN would. There are limitations for certain tax-advantaged accounts (some IRAs and employer-sponsored retirement plans may require an SSN), but the core ability to buy and sell stocks, bonds, ETFs, and mutual funds is available to ITIN holders at brokerages that accept them.

How much money is needed to start investing?

Functionally, the minimum is the price of a single fractional share, which can be as low as $1 at many modern brokerages. For automatic investing plans through robo-advisors, the minimum is often $0 to $10. The right amount is whatever can be invested consistently and not needed in the next several years. Even $25 a month, started young, compounds into meaningful sums over decades.

Is investing in the U.S. stock market taxed differently for ITIN holders?

U.S. tax residents (as defined by the IRS substantial presence test or green card test) — including many ITIN holders — generally pay U.S. taxes on investment income at the same rates as citizens. Non-resident aliens face different rules, often with flat 30% withholding on dividends unless reduced by a tax treaty between the U.S. and their home country. Consult IRS Publication 519 or a qualified tax professional for specifics relevant to your status.

What is the single most important step a first-time immigrant investor should take?

Open the account and make the first deposit, however small. Every other decision — which fund, what allocation, when to add more — can be refined later. The single biggest predictor of long-term investing success is simply having an account that exists and contributes regularly. The second is the discipline to ignore market noise and stay the course for decades.

Conclusion: the truth is that the door is open

Every lie covered in this article shares a common foundation: a false sense that the U.S. investment system is closed, complicated, or hostile to people who arrived from elsewhere. It is not. The door is open. The tools are inexpensive. The information is free, published by federal agencies and available in multiple languages.

What stops most immigrant families is not a lack of access. It is a lack of correct information, combined with well-intentioned voices repeating a script that protects institutions rather than households. Reading this article does not change a financial situation. Opening an account and making a first deposit does. The next move is yours, and there has never been a better moment in U.S. history for a determined immigrant to begin building real, durable wealth than right now.

This article is part of the ImmigrantFinance investing series. For step-by-step guides on opening specific brokerage accounts with an ITIN, see our individual broker reviews and the linked resources at SEC.gov, FINRA.org, and Investor.gov.

“My bank advisor told me whole life insurance was ‘the smart immigrant move’ because it builds cash value. I paid $350 a month for 14 months before another advisor showed me the real numbers. I cancelled immediately and put that money into VTI.”
— Mei L., China → San Francisco