Long time reader, first time poster.
My husband and I are US citizens and Canadian permanent residents. We live and work in Canada and intend to do so indefinitely (i.e.: we plan to retire here, although life is long and uncertain). We are both mid-20's. Before moving to Canada, we saved about $50k USD from jobs in the US. We now also have about $30k CAD. Currently, the entire $80K (mixed currencies) is invested in index ETFs/funds denominated in the relevant currency.
My question: if we plan to stay in Canada long-term/forever, should we convert our USD to CAD? Keeping/rebalancing USD and CAD investment accounts is a major chore (once a year), and the wildly fluctuating exchange rate throws our asset balances off immensely even when the underlying index doesn't gain or lose. I feel like we are mainly investing in the exchange rate, rather than the underlying assets.
On the other hand, converting USD to CAD would have transaction costs (although there are ways to minimize this, like Norbert's Gambit). Diversification is good. We may move back to the US, and it would be silly to convert to CAD and then back to USD. I receive passive income (amazon e-book royalties) of about $2,000/year in USD (although maybe this could be switched to CAD - not sure.) In addition, both of our families live in the US and occasionally give us gifts in USD, which are put straight into our investment accounts.