Moving to US with Canadian Savings - Exchange now and invest, or wait and see if

[PhIRED]

Hi All!

I’m posting this here because I think there may be a lot of people with cross-border US/Canada experience in this community.

My husband and I are US citizens who have been living in Canada for the past couple of years. I came here for a temporary position, and we’ve always known we’d move back to the US when my contract was up.

Sadly, the Canadian dollar tanked since we moved up here. It was around 0.89 when I moved here in late 2014, but plummeted soon after that, and has been hovering in the mid-low 0.70s for awhile. This means that the effective US equivalent of our salaries (and therefore current savings) have ended up being less than when we first moved here, though I guess that’s just the gamble of international exchange rates.

We’re about to move back to the States, and thanks to fairly frugal living, we have a lot of money saved in our Canadian checking account, which is doing a whole lot of nothing for us at the moment. We’re trying to decide if it makes sense to just bite the bullet and exchange it soon (via Norbert’s Gambit) so that we can invest it and make it work for us, or if it would be better to wait and see if the exchange rate improves (essentially an investment in itself, just with more risk) and exchange and invest it then.

We could invest it in Canada, but we’re hesitant to do that because it would be one more account to keep track of for accounting and tax purposes, and we’re not sure if the investing opportunities are as worthwhile here. 

I should note that we don’t anticipate needing to access this money for spending in the near future - we will be fine between what we have saved in USD and our salaries once we move.

Thanks so much for any advice!

[damyst]

The exchange rate chart for the last few years is indeed not fun to look at for those of us whose pay is denominated in CAD, but note that the current rate is actually fairly close to the long-term average. The last decade may not represent the "natural" balance between the two currencies, if there is such a thing.
Of course no one knows where the rates will go from here, but parking your money in cash "to wait and see if the exchange rate improves" would be a fairly risky speculative gamble. I wouldn't recommend it.
By the way, if your CAD savings were in cash the whole time, you missed out on healthy stock market gains that would have sweetened the deal quite a bit :-P

Both options you mentioned are reasonable - either exchanging everything to USD and taking it with you, or investing in CAD and waiting (an indefinite amount of time) for the next strong loonie cycle.
The former option appeals more to me, but it's a matter of taste.
If you choose the latter, make sure you're investing in Canadian assets, not U.S. assets in disguise.
For example, you could buy Vanguard's VCN, but not VUN or VXC. Otherwise you'd be getting the worst of both worlds.

[RetiredAt63]

I was listening to a bank financial analyst on the radio the other day - her take was that the exchange rate wold be worse 6 months from now due to various factors which she explained.  Of course her crystal ball is cloudy, but given recent trends I would bet the exchange rate is likely to be worse than better.