Home » Frequently Asked Questions

F1 Student Stock Trading: Is It Legal?

Published on

Are you a stock market enthusiast pursuing your education in the United States as an F1 student and wondering can F1 students invest in stocks? 

Many of these students come from countries with strict financial regulations, making it difficult to access traditional investment opportunities. However, that doesn’t mean F1 students can’t invest in stocks. Well, yes, F1 students are allowed to invest in the stock market. 

In this blog, we will tell you how they can invest in stocks as an F1 student and the limitations you might face while doing so. So, let’s get started!

What is an F1 Student Visa?

The F1 student visa is a non-immigrant visa that allows international students to study in the United States. To qualify for an F1 visa, you must be enrolled in an academic or English language program at a US school or university.

In addition, the F1 visa allows you to stay in the US for your studies, plus an additional 60 days to prepare to leave the country. You can also apply for a work permit (known as an Employment Authorization Document or EAD) which will allow you to work on-campus for up to 20 hours per week.

Requirements

The F1 student visa allows international students to come to the United States for educational purposes. The visa is designed to ensure that international students can pursue their studies in the US without difficulty or disruption.

To be eligible for an F1 student visa, applicants must meet several requirements. 

Documents You’ll Need

Applying for an F1 visa can be complex, ensuring you have all the required documentation. The following is a list of the documents that you will need to submit with your visa application:

  • A valid passport
  • A non-immigrant visa application (Form DS-160)
  • A photo for your visa application
  • A SEVIS I-20 form from your school or university
  • Proof of financial support
  • Academic records, including transcripts and diplomas
  • Proof of English language proficiency
  • A letter of acceptance from your school or university

SEVIS fee

It is important to note that you must pay a SEVIS fee before your visa application can be processed. The SEVIS fee varies and must be paid before you schedule your visa interview.

Schedule an interview

If you are applying for an F1 visa from outside the United States, you must schedule an interview at a US embassy or consulate. During your interview, you will be asked about your plans to study in the US and your ties to your home country. You will also be required to provide proof of financial support and evidence of your English language proficiency.

It is important to remember that the F1 visa is a non-immigrant visa, which means it is not intended for those who want to live permanently in the United States. If you want to stay in the US after your studies are finished, you must apply for a different visa. The most common option is the H-1B visa, which allows skilled workers to work in the US for up to six years. However, several other visa options are available, so consult with an immigration lawyer to discuss your specific situation.

Can F1 Visa Holders Invest in the Stock Market?

There are a lot of misconceptions out there about what F1 visa holders can and cannot do. One common question is whether or not F1 visa holders can invest in the stock market account. The answer is yes; F1 visa holders can invest in the stock market. 

There are several reasons why investing in the stock market may be a good idea for F1 visa holders.

No Restrictions

First, it’s essential to understand that there are no restrictions on F1 visa holders when it comes to investing in the stock market. The only limitation is that F1 visa holders are not allowed to work in the United States. However, investing in the stock market is not considered “work” and is, therefore, perfectly legal for F1 visa holders.

A Smart Investment

Another reason why investing in the stock market may be a good idea for F1 visa holders is that it can be a smart investment. Historically, the stock market has been a great way to grow your money. In fact, the stock market has averaged an annual return of around 10% over the long run. That means that for every $1,000 you invest in the stock market, you can expect to make an average of $100 per year.

Of course, it’s essential to understand the risks involved with investing in the stock market. The value of your investments can go up and down, and there’s no guarantee that you will make money. However, if you are comfortable with taking on some risk, investing in the stock market can be a great way to grow your money over time.

Taxes

Another reason to consider investing in the stock market is that it can help you save on taxes. When you invest in the stock market, you may be eligible for several tax breaks. For example, if you hold your investments for more than one year, you will only be taxed on your gains at the long-term stock related capital gains tax rate, which is lower than the regular income tax rate.

This can be a significant benefit, especially if you have a high income. For example, let’s say you are in the 32% tax bracket and make a $10,000 profit on your investments. If you are taxed at the long-term capital gains rate of 15%, you will only owe $1,500 in taxes. However, if you are taxed at the regular income tax rate of 32%, you will owe $3,200 in taxes. That’s a difference of $1,700!

If you have losses in one year, you can carry them forward and use them to offset gains in future years. This can be a great way to reduce your taxes in the long run.

How to Invest as an F1 Student?

As an F1 student in the United States, you have a few options for investing your money. You can invest in traditional stocks and bonds or opt for more modern options like cryptocurrency or day trading.

Here are some of the best investment options for F1 students and tips on how to get started.

Bitcoin

Bitcoin is a digital currency that can be used to buy and sell goods and services. Any government does not regulate Bitcoin, and its value can fluctuate wildly. However, many believe Bitcoin has a bright future and can be a good investment for F1 students.

To buy Bitcoin, you must set up a Bitcoin wallet and then purchase Bitcoin through an online exchange. You can then hold onto your Bitcoin, trade it, or use it to buy goods and services.

can immigrants invest in stock market

Here’s how to get started in Bitcoin investing:

Understand the Risks

Investing in Bitcoin is risky and volatile. Before investing, understand the risks associated with cryptocurrency and how to manage them. Before diving in, research the asset class, its technology, and blockchain infrastructure.

Get Familiar with Exchange Platforms

Choose an exchange platform that is secure and reliable. Research different platforms to find one that matches your needs and preferences. Make sure to read reviews of the platform before you commit.

Set Up a Wallet

Once you have chosen an exchange platform, set up a wallet for holding your Bitcoin, this is where you will store your purchased coins, and it is important to have a secure wallet with reliable security features.

Do Your Research

Before investing, take time to do your research and understand the market. Consider factors such as supply and demand, price fluctuations, transaction fees, and more when analyzing the market and potential investments.

Make Your Investment

Once you have done your due diligence, you can invest in Bitcoin. Set up a budget and stick to it, as investing more than you can lead to severe losses. Additionally, keep an eye on the market for trends and news updates that can affect your investments.

Monitor Your Investment

After investing, make sure to monitor your investments regularly. Pay close attention to the market and stay up-to-date with the news that can affect the value of your portfolio.

What Do You Need To Invest In Bitcoin As An F1 Student?

To invest in Bitcoin, you will need to have the following:

  • Valid email address
  • Bank account with sufficient funds for your desired investments
  • Access to the internet

Robinhood

Robinhood is an online broker that offers commission-free trading for stocks, options, and cryptocurrency. Robinhood is a good investment option for F1 students because it is a simple and easy way to start investing.

Here’s how to start investing in Robinhood:

Open An Account

Opening an account is the first step to getting started with Robinhood investing. This can be done easily and quickly through the Robinhood app or website. Once you have opened your account, you need to fund it with cash before starting trading stocks.

Learn About Investing

Once your account is funded, the next step is to learn about investing and how it works. Robinhood offers a variety of resources on its website, including webinars and tutorials, to help you understand the basics of investing and trading. Additionally, they offer an active blog full of educational articles written by finance professionals that can provide helpful insights into stock selection and analysis.

Choose Your Stocks

After you understand the basics of investing, it’s time to start selecting stocks. With Robinhood, you can search for and buy stocks with ease. You can also use their charting tools to analyze the performance of individual stocks or entire sectors before purchasing.

Monitor Your Investments

Once you have made your purchase, keeping track of your investments is essential. Robinhood allows you to monitor your portfolio performance through their app or website.

What Do You Need To Invest In Robinhood With F1 Student Visa?

To invest in Robinhood with an F1 student visa, you will need the following:

  • Proof of identity
  • A valid form of payment
  • Proof that you are legally allowed to work in the United States while on your student visa

Day Trading

Day trading is investing, where you buy and sell securities on the same day. Day trading can be risky, but it can also be profitable if you know what you’re doing.

To start day trading, you must set up an account with a broker that offers day trading services. You will also need to deposit money into your account and then use that money to buy and sell securities.

Here’s how to start day trading:

can an international student start a business in the usa

Research The Markets

Before you start trading, it is crucial to understand the stock market. Research the various stocks and indices available for day trading and familiarize yourself with the fundamentals of each asset. Understand the different risk levels associated with each stock and how its movements are affected by macroeconomic factors such as news releases or changes in central bank policies.

Set Up Your Trading Platform

Day trading requires a reliable trading platform. This platform should be able to provide real-time prices, streaming quotes, and market news, as well as offer charting functionality. Ensure that the platform is secure and can handle any volume of trades you plan to make.

Choose Your Broker Or Exchange

Once you have chosen your trading platform, finding a broker or exchange that can provide access to the markets is essential. This decision should be based on cost, minimum deposit requirements, and customer service. It is also advisable to check reviews of different brokers before signing up with one.

Set Your Trading Rules

Before you start day trading, you must set out the rules you will follow. This includes setting up stop-loss orders and specifying the amount of capital you are willing to risk in each trade. Identifying your market strategy is essential – whether you will be a trend trader or a scalper. You should also have an exit plan for when the market moves against you.

Monitor The Market

Day trading requires constant monitoring of the markets. This means keeping up-to-date with news releases and events that could affect prices and tracking technical indicators such as trend lines and support and resistance levels. Monitor these factors regularly to identify good entry and exit points for your trades.

Practice With A Demo Account

Finally, practice trading with a demo account before investing in the market. This is an invaluable way to gain experience and familiarize yourself with day trading. Try different strategies and take time to understand how the markets react to various news events. Once you are confident, start trading with a small amount of capital. 

What Do You Need To Start Day Trading?

A few requirements must be met to start day trading for the F1 student visa. These include:

  • Valid passport
  • Student visa
  • Proof of enrolment in university or college
  • Sufficient financial resources to support your trading activity

Roth IRA

A Roth IRA is a type of retirement account that allows you to invest your money and grow it tax-free. Roth IRAs are a good investment option for F1 students because they offer a long-term way to save for retirement.

Here’s how to start investing in Roth IRA:

Open a Roth IRA Account

The first step is to open a Roth IRA account. You can do this through an online stock brokerage firms, such as Vanguard or TD Ameritrade, or a traditional bank, like Wells Fargo or Bank of America. Do your research beforehand and find the best option for you.

Choose an Investment Strategy

Once you’ve opened your Roth IRA account, it’s time to choose an investment strategy. You can select from asset classes such as stocks, bonds, mutual funds, and ETFs (exchange-traded funds). Consider your goals, risk tolerance, and timeline when deciding which option is best for you.

Fund the Roth IRA Account

Once you’ve chosen an investment strategy, it’s time to fund your Roth IRA account. The maximum annual contribution limit is currently $6,000 (or $7,000 if you are over 50). Remember that contributions must come from earned income (e.g., wages, salaries, and tips).

Monitor Your Investment Performance

Finally, it’s essential to monitor your investment performance regularly. This will allow you to make adjustments and ensure that you meet your goals. You should also review the fees associated with your accounts – such as trading commissions or management fees.

What Do You Need To Invest In Roth IRA? 

As an F1 student visa holder, you must provide proof of your legal status in the US. This includes:

  • Valid passport
  • Driver’s license or other valid photo ID
  • Any documents that prove your current immigration status (e.g., Form I-20)

401(k)

A 401(k) is a type of retirement account offered by many employers in the United States. 401(k)s are a good investment option for F1 students because they offer a way to save for retirement while getting a tax break.

To open a 401(k), you must sign up for an account through your employer. You will then need to make regular contributions to your account and let the money grow over time. Here’s how to start investing in 401(k):

Understand Eligibility

The first step to investing in a 401(k) as an F1 student visa holder is understanding the plan’s eligibility requirements. Make sure you understand if the plan requires certain minimum hours worked or other conditions that must be met before you can join.

Determine Contribution Limits

Once you have determined that you are eligible to participate, you can move on to understanding the plan’s contribution limits. This will help you determine how much of your salary should be invested and what financial goals you should set for yourself. Be sure to read through all the requirements associated with the plan to fully understand them.

Set A Budget

To make sure that you are investing the most effectively and efficiently possible, it is crucial to set a budget for your investments. For example, if you have enough money saved up from your salary, consider maxing out the 401(k) contribution limits each year. This will ensure that you make the most effective use of your money.

Choose Investment Options

Once you have established your budget, it is time to select the type of investments you want to make. Most 401(k) plans offer various investment options, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Consider the risk tolerance and investment goals when selecting the best options for your needs.

Monitor Your Investment Performance

It is crucial to monitor the performance of your investments to ensure that you are making progress toward your financial goals. Review any statements or reports related to your 401(k) plan regularly, and make adjustments as necessary. Doing this will help you stay on track to reach your financial goals and maximize the return on your investments.

Keep Track of Contributions

Finally, ensure that you are keeping track of all contributions made to the 401(k) plan to get a clear picture of how much money is being invested each year. This information can be helpful when filing taxes and will provide insight into the progress made toward your financial goals.

What Do You Need To Invest In 401(k)?

Before you start investing in a 401(k), make sure to have the following documents and information ready:

  • Valid identification, such as a driver’s license or passport
  • Social security number
  • Tax filing status
  • Salary information
  • Bank account details for contributions to be made electronically

The best investment option for F1 students will depend on their individual needs and goals. However, all the investment options listed above can be an excellent way to grow your money and secure your financial future.

Best Investing Apps for F1 Students

There are a lot of investment options available to F1 students. However, with so many choices, it can be difficult to know where to start. That’s why we’ve compiled a list of the best investing apps for F1 students. With these apps, you can get started with investing without having to worry about complicated financial jargon.

Webull

Webull is an investing app that allows you to trade stocks, options, and ETFs with no commission fees or monthly account service charges. It has a 4.8 out of 5-star rating on the App Store and Google Play store, making it one of the highest-rated stock investing apps currently available.

The Webull app provides users access to real-time stock quotes and market data and a powerful charting tool to help analyze the markets. It also provides commission-free trading on stocks, options, and ETFs with no withdrawal charges or hidden fees.

The process is straightforward for those looking to get started investing in Webull.

  • First, create an account and fund it, then search for the stock or ETF you’d like to invest in.
  • When you find the one you want, select “buy” and enter how many shares you want and your trading limit.
  • Once complete, submit your order and wait for it to be filled.

Stash

Stash is an easy-to-use investing app with a broad range of features. It offers a free and premium plan, so you can choose the one that best suits your needs. The free plan does not have any monthly fees or withdrawal charges, while the premium plan has slightly higher fees but provides access to additional tools and services.

Stash also provides educational materials to help you build your knowledge base. The app has a 4.7-star rating on the App Store and Google Play, with over half a million users taking advantage of Stash’s features.

To get started investing through Stash, follow the steps below:

  • Download the app from either Google Play or App Store.
  • Open an account and provide your personal information, such as name, date of birth, address, etc.
  • Fund your Stash account by linking to a bank account or using a debit card.
  • Choose investments for your portfolio based on your risk level and goals.
  • Set up auto-investing to invest money regularly.
  • Track your investments and view analytics to see how your portfolio is performing.

Acorns

Acorns is an investment app that has gained immense popularity in recent years. It is a relatively low-risk and convenient way to invest your money. The best part about Acorns is that there are no monthly fees or withdrawal charges, which makes it one of the most affordable options for beginner investors.

The app is easy to use and provides a variety of portfolio options to choose from. Users can set up automatic investments or make manual deposits whenever they wish. Additionally, Acorns has a 4.7/5 star rating from more than 45,000 reviews on the App Store, meaning it offers a high-quality investing experience for its users.

To get started, follow these steps:

  • Download the Acorns app and create your account.
  • Choose an investment portfolio that best suits your goals.
  • Deposit funds into your account either manually or through auto-investing.
  • Monitor your investments and make adjustments as needed.

Seeking Alpha

Seeking Alpha is a popular investment platform providing investors with access to financial news, analysis, and insights. It does not have any monthly fees or withdrawal charges. Seeking Alpha offers an easy-to-use mobile app that makes it simple for investors to stay connected to their portfolio no matter where they are. 

The app is also highly rated, with an average rating of 4.7 stars out of 5 on the App Store and 4.4 out of 5 on Google Play. For users interested in investing through Seeking Alpha, the following is a tutorial on how to get started.

  • Download the Seeking Alpha App
  • Create an account and provide your personal information, such as name, address, and email address
  • Choose the type of investment you’d like to make (stocks, funds, ETFs)
  • Set up your payment method (bank account, debit, or credit card)
  • Research the stocks and ETFs you’d like to add to your portfolio
  • Buy the stocks or funds you’d like to invest in
  • Manage your portfolio and track its performance

Fidelity

Fidelity is a popular online popular stock brokerage services firm and app that offers different kinds of investments for users. They offer various services, including mutual funds, ETFs, bonds, and stocks. 

The best part about using Fidelity is that there are no monthly fees or withdrawal charges when investing. Fidelity’s mobile app is highly rated among users, with a 4.9 rating on the App Store. The app is also easy to use and provides helpful investing tutorials for users unfamiliar with investing.

Here’s how to get started with Fidelity:

  • Download the app from the App Store or Google Play store.
  • Sign up for a free account and create a password.
  • Link your existing bank account to begin investing in stocks, ETFs, mutual funds, and bonds.
  • Research different investments that meet your needs and preferences.
  • Place orders and track your investments easily through the app.

M1 Finance

M1 Finance is a free investing platform that allows users to invest in stocks and ETFs without monthly fees or withdrawal charges. Thanks to its user-friendly design and robust features, it earned an impressive 4.9/5rating on the Apple App Store. The app is highly recommended for beginner investors who are just getting started with stock trading. 

Here’s how to get started with M1 Finance:

  • Download the M1 Finance app from the Apple App Store or Google Play Store.
  • Create an account and verify your identity using an approved government ID.
  • Once you’re set up, you can start investing in stocks and ETFs.
  • Browse the stocks and ETFs available on M1 Finance to choose the ones you want to invest in.
  • You can decide whether to buy individual stocks or create a portfolio of multiple stocks using M1 Finance’s pie feature.
  • Go to the “Transfer & Trade” tab and link your bank account to M1 Finance.
  • You can then select the stocks or ETFs you’d like to buy, enter the amount of money you want to invest, and click “Trade Now.” That’s it!

Betterment

Betterment is an online investment platform designed to help people make better investment decisions with their money. It has no monthly fees or withdrawal charges, and its low costs make it one of the most affordable options for those looking to invest their money wisely.

The Betterment app also comes with a simple-to-use interface, making investing easy even for those new to the process. It also has high user ratings, making it a popular choice among investors worldwide.

To invest in Betterment, follow these simple steps:

  • Create an account with Betterment and deposit your money.
  • Choose the type of investment that you want to make, such as stocks, bonds, or ETFs.
  • Set up a portfolio using the app’s recommended allocations or customize your investments depending on your needs and risk level.
  • Track your returns and adjust your investments as needed. You can also opt to use Betterment’s Smart Deposit feature, which automatically invests extra cash in your account into your portfolio of investments.
  • Finally, keep track of your investments, read up on financial trends, and adjust your portfolio if needed.

Firstrade

Firstrade is a popular online investment platform. It does not charge any monthly fees or withdrawal charges, making it extremely attractive to investors. The app is easy to use and offers many services, such as stock trades, mutual funds, ETFs, and options trading. It also provides access to research tools and an up-to-date financial news feed. Firstrade also has a 4-star rating on the App Store, indicating very high user satisfaction.

Here is how to invest using the Firstrade app:

  • Download and open the app.
  • Sign up for an account and complete the required KYC information.
  • Link your bank account or credit card to make deposits and withdrawals.
  • Select a stock, ETF, mutual fund, or options to invest in.
  • Enter the amount you would like to invest and click “Buy.”
  • Once your order is completed, the funds will be available immediately in your account. You can monitor and manage your investments anytime from the app’s dashboard.

TD Ameritrade

TD Ameritrade is a popular online brokerage that allows investors to buy and sell stocks, options, ETFs, mutual funds, and bonds without charging any monthly fees or withdrawal charges. 

It offers a secure platform for all types of traders, whether you are an experienced investor or just starting in the world of investing. TD Ameritrade also offers a mobile app that allows investors to access their accounts and place trades on the go. 

The app has a 4.7/5 rating on both Google Play and Apple App Store, with users praising its user-friendly design, helpful research tools, and an extensive list of trading options. Here’s how to start investing with TD Ameritrade:

  • You can open an account online, download the app, and register for a new one.
  • To start investing, you will need to fund your account. TD Ameritrade offers several options for transferring funds, such as bank transfers, wire transfers, and debit/credit cards.
  • Once you have funds in your account, you can start researching stocks, ETFs, mutual funds, and other investment options. TD Ameritrade provides research tools to help investors make informed investment decisions.
  • When you’re ready to buy or sell an investment, you can place a trade through the TD Ameritrade platform or app.
  • Once you’ve established a portfolio, you can use the TD Ameritrade app to track and manage your investments.

Charles Schwab

Charles Schwab is a great investment app for both new and seasoned investors. It has no monthly fees or withdrawal charges, making it an attractive option for those looking to invest without incurring additional costs. 

The Schwab mobile app, available on Android and iOS devices, is rated 4.7 out of 5 stars by users, indicating its ease of use and reliability. Here’s how you can quickly start investing with Charles Schwab:

  • Create an account online or with the app.
  • Fund your account with a deposit, wire transfer, or transfer from another financial institution.
  • Select investments—stocks, ETFs, mutual funds, and other options are available depending on your preferences and goals.
  • Monitor and adjust your portfolio as needed.

Investing Limitations for F1 Students

F1 students have certain restrictions and limitations when it comes to investing. These are designed to help protect the student from potentially costly mistakes in their student status.

Understanding these limits can be beneficial for helping F1 students make the most of their financial resources.

Passive Income Activity

Any income earned through passive activities, such as investments or other passive income sources, must be reported to the Internal Revenue Service (IRS). F1 students cannot invest in stocks, real estate, or other securities without obtaining permission from their school’s International Student and Scholar Services (ISSS). This includes any investment in mutual funds, bonds, or other investments.

Real Estate Involvement

F1 students are not allowed to sign contracts related to the ownership or rental of real estate after first obtaining written authorization from their school’s International Student and Scholar Services (ISSS).

Hedge Funds and Other Investments

F1 students cannot invest in hedge funds, private equity funds, or other investments without permission from their school’s ISSS. Any earnings from such investments must be reported to the IRS and claimed as income on the student’s taxes.

FAQs

Do I Need an SSN To Invest in Stocks?

If you want to invest in stocks, you will need either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). An SSN is a nine-digit number issued by the Social Security Administration (SSA), while an ITIN is a nine-digit number issued by the Internal Revenue Service (IRS). You need either of these numbers to open a stock brokerage account and buy stocks.

With an SSN or ITIN, the brokerage firm can track and report your taxable investment income accurately. The SSN or ITIN is used by the Internal Revenue Service (IRS) to identify taxpayers to ensure that they are paying the correct amount of taxes on their investments. 

Can I Trade Stocks on H1B?

Yes, it is possible to trade stocks on H1B. However, certain restrictions and laws govern the process of trading stocks while on an H1B visa. According to the United States Citizenship and Immigration Services (USCIS), individuals on an H1B visa can legally trade stocks in U.S.-based companies and U.S. exchanges while on an H1B visa, provided they do not violate any of the laws or regulations governing such activities. For example, individuals must comply with insider trading laws and report any profits or losses to the Internal Revenue Service (IRS). 

Can F1 Students Have Passive Income?

Yes, F1 students are allowed to have passive income. However, certain conditions must be met for the income to be considered passive. The main condition is that the student must not be actively engaged in any business activity in the United States. If the student is actively engaged in a business, then the income from that business would be considered active income and would not be allowed. For example, if you have a YouTube channel and are earning a quite handsome amount from it, it will be considered as a passive income source for you.

Can I Buy Stocks if I am Not a US Citizen?

Yes, you can buy stocks if you are not a US citizen. You will need to open a brokerage account with a broker that supports foreign investors. Some brokers may require you to have a U.S.-based bank account. You may also be subject to taxation on your profits. Check with your broker and financial advisor to determine what restrictions and requirements apply to you.

Conclusion

Thus, F-1 students can invest in stocks as long as they adhere to the regulations set forth by the United States government. These regulations state that F-1 students must have a valid Social Security Number and an individual taxpayer identification number.

F-1 students interested in investing in stocks should consult with a financial advisor to discuss the best way to achieve their investment goals while remaining compliant with U.S. immigration regulations.