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I am a US citizen, living in Canada. I've lived here now for 5 years, and am working towards citizenship. However, I don't know if I will be here indefinitely, or if I would retire here. Interestingly, I get paid in USD, which I currently benefit from because the exchange rate is good. I've learned how to do Norbert's Gambit to convert USD->CAD at a good price.

Because I get paid in USD, with my left-over money from expenses, I can just buy ETFs in USD for investments, and not convert to CAD first. When they get sold, I can also settle in USD as well. This seems like a good strategy because I dont pay currency conversion, although if I end up staying and retiring in Canada, I would need to convert it at some point...

Would it be better to convert all of that to CAD now, while the exchange rate is really good, or is it better to keep it in USD for the long run? I convert enough for my living expenses, but I'm wondering about the rest that I would otherwise invest in for retirement.
 

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Currency is currency - nobody really knows where it's going to go. If you are investing it's US ETFs usually have lower MERs so might as well keep it in USD.

if you do decide to live in Canada long term it may be a good idea to convert 50% to CAD as a hedge.
 

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Agree with none that you shouldn't try and second guess where the currency is going next.

If you are planning to be spending in Canada for the next little while (5 years? 10 years? for good?) then a portion of your investment should be in the Canadian stockmarket. For that portion CAD would be an efficient vehicle.

I wouldn't go to 50% CAD though. 20-35% should be more than enough home bias. Keep in mind that our stockmarket is ~3% of the world total and that it is very concentrated in certain industries.

You also need to make sure that you are on side with the US government as far as the taxes are concerned. There are certain investment vehicles you won't be able to use.
 

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If you are planning to be spending in Canada for the next little while (5 years? 10 years? for good?) then a portion of your investment should be in the Canadian stockmarket. For that portion CAD would be an efficient vehicle.
I do anticipate being in Canada for at least the next 5 years, possibly longer depending on how the citizenship process goes.

I wouldn't go to 50% CAD though. 20-35% should be more than enough home bias. Keep in mind that our stockmarket is ~3% of the world total and that it is very concentrated in certain industries.
You also need to make sure that you are on side with the US government as far as the taxes are concerned. There are certain investment vehicles you won't be able to use
Yeah, I'm clear on that, got a good cross-boarder tax accountant!

Agree with none that you shouldn't try and second guess where the currency is going next.
Ok, I can understand that argument, but right now I've got about $35k USD and the exchange rate is pretty good. Wouldn't it make sense to convert a good chunk of that *now* because the rate is so good? That way I'm not second-guessing where its going to go next, but getting a good rate while it is good.
 

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Ok, I can understand that argument, but right now I've got about $35k USD and the exchange rate is pretty good. Wouldn't it make sense to convert a good chunk of that *now* because the rate is so good? That way I'm not second-guessing where its going to go next, but getting a good rate while it is good.
The answer depends on what you want to do with the money:

- If you are going to need this in the next few months to buy a car or other routine expenses then sure - go ahead and convert. The sooner the better.
- If you designated this money for investment then define an appropriate allocation to various markets and stick to it. Only TSX investments should be in CAD; for the US and the rest of the world you are better of keeping it in USD.

Neither scenario involves trying to determine whether today's rate is "good" or "bad". We know where CAD/USD exchange rate has been in the past but that's irrelevant. Unless you are good at clarvoyance, you have no idea whether today's rate is better than tomorrow's.
 

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Ok, I can understand that argument, but right now I've got about $35k USD and the exchange rate is pretty good. Wouldn't it make sense to convert a good chunk of that *now* because the rate is so good? That way I'm not second-guessing where its going to go next, but getting a good rate while it is good.
Is it good? Why do you think that? I'm sure some people said the same thing when CAD was at $0.90. It doesn't seem so good now. What if the CAD$ foes to $0.66 (it has before) then the 0.74 it is right now seems pretty bad.

Whatever though really, converting some now isn't really a BAD decision. You can always convert it back (with a decent FOREX charge)
 

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Since the O/P is planning on some % of Canadian investments, it would likely make sense to use $US to buy cross-listed Canadian companies on the US exchanges. Then there is no FX at all.
 

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The OP had better check into US tax laws, such as FBAR and PFIC. For example you may find it easy to own Canadian stocks, cash, and GICs but probably not Canadian ETFs or mutual funds.

I also earn USD income but anticipate that I will be in Canada long term. Therefore I am accumulating CAD-denominated savings. In my opinion the current exchange rate (1.356) is a good rate to sell USD and buy CAD. I just recently converted about 1/3 of my annual income into CAD.
 

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Since the O/P is planning on some % of Canadian investments, it would likely make sense to use $US to buy cross-listed Canadian companies on the US exchanges. Then there is no FX at all.

this is a pretty good idea for someone who hasn't made up his mind yet whether he'll go north or south in retirement. Beaver tails or stars & stripes.

but it's not airtight. Most of the canadian interlisteds in US market will track their toronto trading prices. In other words, if USD rises, their US market prices will not necessarily rise & quite likely will fall, in order to stay pegged to the parent trading price in toronto.

ie a party holding strictly canadian interlisteds will only realize capital gains if the parent stock rises on the TSX. A rise in USD will not improve his fortunes.

it's true that there is a tiny handful of canadian stocks with big trading volume in US markets but anemic interest in toronto. Potash, teck, old rimm, old valeant. With these, there could be very slight traction on US prices from high US demand, above & beyond what the arbitrageurs can supply by arbing from toronto.

i've mentioned this phenom before. I've never seen or heard of any scholarly studies analyzing such a phenom although - also as i mentioned before - i totally believe that jas4beach could write the algorithm.

back to the OP with his will-you-won't-you janus-like position astride the border. If he holds too many canadian interlisteds, in the end he will wind up with a portfolio skewed to toronto prices. He will have insufficient or no representation among the thousands of authentic american stocks.

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The OP had better check into US tax laws, such as FBAR and PFIC. For example you may find it easy to own Canadian stocks, cash, and GICs but probably not Canadian ETFs or mutual funds.

I also earn USD income but anticipate that I will be in Canada long term. Therefore I am accumulating CAD-denominated savings. In my opinion the current exchange rate (1.356) is a good rate to sell USD and buy CAD. I just recently converted about 1/3 of my annual income into CAD.
I've got a good cross-boarder tax person who has schooled me on FBAR and PFIC. I'm only planning on getting US-domiciled ETFs (such as ishares ITOT, IXUS, IAGG, IUSB) for my index tracking retirement investments.
 

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Is it good? Why do you think that? I'm sure some people said the same thing when CAD was at $0.90. It doesn't seem so good now. What if the CAD$ foes to $0.66 (it has before) then the 0.74 it is right now seems pretty bad.
Well it is the lowest it has been for over a year. In January 2016, it did get to .68 (http://www.xe.com/currencycharts/?from=CAD&to=USD&view=2Y) which was the lowest it has ever been. If I try and wait to time the market for some future lower point, I may never get there and miss this opportunity that is here now. If it drops down to 0.68 again, I'll have more USD to convert at that point.
 
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