Author Topic: moved from Canada to US, when to convert currency?  (Read 3948 times)

mathman

  • 5 O'Clock Shadow
  • *
  • Posts: 19
moved from Canada to US, when to convert currency?
« on: March 02, 2014, 07:25:20 PM »
We lived and worked in Canada for about three years and recently moved back to the US.  We were in Canada for temporary employment, with prospects for permanent positions in the US or Canada. We recently succeeded in finding permanent employment in the US.  Because of the temporary nature of our stay in Canada, we worked hard and saved hard, but did not bother making too many investments.  Now we have cash accounts that total to about $250k in CAD earning paltry interest.

Originally our plan was to simply convert to USD if/when we returned to the States and then invest in Vanguard index funds.  Unfortunately the CAD/USD ratio is not in our favor (or is that favour?). It is depressing to think about losing 10% of our hard-earned cash to a currency exchange.  Thankfully we have other accounts (and employment) in USD so there is no urgency, other than the urgency of losing out on investment earnings. Thanks for any thoughts and suggestions.

naners

  • Stubble
  • **
  • Posts: 172
  • Age: 38
Re: moved from Canada to US, when to convert currency?
« Reply #1 on: March 02, 2014, 07:39:59 PM »
I have no suggestions WRT exchange rate, but be sure to consider Norbert's Gambit to avoid the fees that banks charge to exchange currency:

http://www.finiki.org/wiki/Norbert's_Gambit

going2ER

  • Stubble
  • **
  • Posts: 200
Re: moved from Canada to US, when to convert currency?
« Reply #2 on: March 03, 2014, 08:15:27 AM »
Why don't you invest it with a Canadian firm? Have it earn interest and then when the Canadian dollar is back up do your exchange.

nereo

  • Senior Mustachian
  • ********
  • Posts: 10594
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: moved from Canada to US, when to convert currency?
« Reply #3 on: March 03, 2014, 09:26:54 AM »
First: trying to predict (read: "guess") where they exchange rates will be in the short term (weeks to months) is a fool's errand.  there are lots of very large investment firms that pay smart people big wages to predict 'currency floats', and if they are GOOD they are right maybe 55% of the time.   So - don't try.

now - you could invest all of that money in Canadian currency, and/or you could convert it to USD whenever it makes the most sense to you.

I understand your thinking though; I'm a US citizen living in Canada now, and most of my cash is in USD but almost all of my expenses (including my mortgage) are in CAD.  We constantly play the "what-if" game with transfering money, but in the end you just loose sleep and you don't wind up any wiser.

AlmstRtrd

  • Stubble
  • **
  • Posts: 183
Re: moved from Canada to US, when to convert currency?
« Reply #4 on: March 03, 2014, 10:58:42 AM »
Whenever I work in Canada, I always just change the Canadian dollars to US dollars and put the money to work here in the US. I have never had anywhere close to 250k because I only go up there for a couple of weeks at a time. But the idea is the same. It seems bad now because the two currencies were at almost one to one during the last three years. In the last few months the CN$ has taken a beating but it's nowhere near the crappy levels of the 20 or so previous years. Just my opinion but maybe think of it as selling close to the high as opposed to right at the high.

mathman

  • 5 O'Clock Shadow
  • *
  • Posts: 19
Re: moved from Canada to US, when to convert currency?
« Reply #5 on: March 05, 2014, 06:36:44 PM »
Thanks for the replies.

I had not heard of the Norbert Gambit, so that is helpful.

I also had not seriously considered leaving the sum in CAD and investing it there.  I am concerned a bit about how to maximize the productivity.  Vanguard Canada has slim pickings in terms of ETFs, and the fees are a bit higher than in the US.  Taking a look at TD's options, the expense ratios are - not surprisingly - terrible.  Just based on fees, it would make more sense to convert now and put it to work at Vanguard index funds.  Is there a respectable Canadian option that has low-cost index funds?

Thanks again.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1783
Re: moved from Canada to US, when to convert currency?
« Reply #6 on: March 10, 2014, 11:21:46 AM »
Is 0.10% MER too high? That's Vanguard Canada Equity (VCE). The American fund is VUN; currently the MER is 0.15%.  What is the equivalent in the U.S. for MER? Both are relatively new products, Vanguard is just coming into Canada.  I hope they shake things up and get us some lower fees.

You get portfolio diversification (All Canadian stocks with VCE), which isn't a bad thing. You have an excellent and easy opportunity to diversify.  I'm in Canada and doing the reverse thing, trying to get exposure to the U.S. while also being exposed to Canada.

I would gamble and leave it in Canada for a few years (10?) and play the currency hedge over the long term. If at some point the CDN$ goes back to parity then bring that money home.  If you need the money sooner then you have a problem.  If the American economy dips you'll look brilliant.  If the Canadian economy suffers you'll look foolish.

Captain and Mrs Slow

  • Bristles
  • ***
  • Posts: 414
  • Age: 59
  • Location: Munich Germany
Re: moved from Canada to US, when to convert currency?
« Reply #7 on: March 10, 2014, 11:55:38 AM »
As an alternative you can simply buy a bunch of high yielding stocks and REITS, most bank stocks and BCE pay 4% and many REITS are in the 8-9% range.

not sure how this would affect taxes though

mathman

  • 5 O'Clock Shadow
  • *
  • Posts: 19
Re: moved from Canada to US, when to convert currency?
« Reply #8 on: October 27, 2014, 08:36:34 PM »
Folks. Thought I'd give an update here.  Overall, not great news.

Given the exchange rate, I've been attempted to invest the funds following the advice of Prairie Practicality. However, it turns out that it seems to be a requirement that one reside in Canada in order to open an investment account.  Without being able to open an investment account, of course, I cannot invest the funds!  If you know of a place that would allow me to open an account I would appreciate the tip.

It seems I'm left with only two unpleasant options. 1) Leave money in pitiful CAD savings account. 2) Transfer (without benefit of even the Norbert gambit, since I don't have an investment account) to USD at the bank exchange rate.


taekvideo

  • Bristles
  • ***
  • Posts: 264
Re: moved from Canada to US, when to convert currency?
« Reply #9 on: October 28, 2014, 05:15:07 AM »
Folks. Thought I'd give an update here.  Overall, not great news.

Given the exchange rate, I've been attempted to invest the funds following the advice of Prairie Practicality. However, it turns out that it seems to be a requirement that one reside in Canada in order to open an investment account.  Without being able to open an investment account, of course, I cannot invest the funds!  If you know of a place that would allow me to open an account I would appreciate the tip.

It seems I'm left with only two unpleasant options. 1) Leave money in pitiful CAD savings account. 2) Transfer (without benefit of even the Norbert gambit, since I don't have an investment account) to USD at the bank exchange rate.

Transfer the money.
Letting it degrade from inflation instead of compounding investment returns in your favor is a LOT worse than any small one-time loss you MIGHT incur due to exchanging currencies at an inopportune time.

daverobev

  • Magnum Stache
  • ******
  • Posts: 3340
  • Location: UK
Re: moved from Canada to US, when to convert currency?
« Reply #10 on: October 28, 2014, 07:38:43 AM »
Folks. Thought I'd give an update here.  Overall, not great news.

Given the exchange rate, I've been attempted to invest the funds following the advice of Prairie Practicality. However, it turns out that it seems to be a requirement that one reside in Canada in order to open an investment account.  Without being able to open an investment account, of course, I cannot invest the funds!  If you know of a place that would allow me to open an account I would appreciate the tip.

It seems I'm left with only two unpleasant options. 1) Leave money in pitiful CAD savings account. 2) Transfer (without benefit of even the Norbert gambit, since I don't have an investment account) to USD at the bank exchange rate.

Interactive Brokers. Very very cheap currency conversions, AND you can invest in many markets.