Where to Park USD Cash

[DualFIRE]

Apologies if this has been covered before. I did a pretty thorough search here and didn't find anything.

I'm looking to increase the yield on the USD cash (~23K) that is part of my 1 year of expenses fund. Till now, I have moved it between a USD savings account at Tangerine with promo rates of 5-6% and USD savings at EQ Bank (3%). I want to avoid Tangerine since parent CIBC holds Elbit Systems (Israeli weapons), and I'm a dual citizen (US/Canada), so I'd like to close my EQ accounts to simplify my FBAR reporting.

It seems like a US-listed money market fund is a good option, but funds like VUSXX are not available through Questrade or Wealthsimple. The only one I can find is BIL (~5% yield), which I could hold in my Questrade margin account. My income is very low, so I don't think the relatively low yield would have a tax impact. 

Another option might be to buy MNU.U in my wife's taxable Wealthsimple account. (She is a Canadian citizen.) Since it's not US equities, I don't think there would be tax withholding. The main drawback is that since she has a "regular" income, we'd probably pay tax on the interest (or is it dividends?).

Any thoughts?

[Stashasaurus]

Hey DualFIRE. I don't know if this makes your choice any better, but Tangerine is owned by Scotiabank.
https://www.tangerine.ca/en/about-us/cdic#:~:text=Tangerine%20Bank%20is%20a%20wholly,CDIC%20in%20its%20own%20right.

[Heckler]

BMT124 BMO USD High Interest Savings, currently 4.40%

https://www.bmoinvestorline.com/selfDirected/pdfs/BMT_HISA_Terms_US_EN.pdf

Available in BMO Investorline, I believe exclusively, but you could search for it in your brokerage.

[Heckler]

https://www.bmoetfs.ca/etf-roadmap

Filter for Currency: USD for a few choices (TIPS, Treasuries, Ultra short bonds) I know nothing about, except where to find information about them.  You can likely buy them through a discount brokerage in Canada.

[Heckler]

if held non-registered, you'll be paying full Canadian income tax on the interest from all of them.  (assuming that MNU.U pays monthly Interest income)

https://canadiancouchpotato.com/2010/03/05/put-your-assets-in-their-place/


PS - scroll down Mr Thrifty for more USD options from other Canadian brokerages.  I suspect (but cannot confirm) that a Canadian held Interest paying fund does not have a US government 15% withholding tax applied.  At least I do know that BMT104 advertises 4.4% and pays 4.4%, so there's that...

https://mrthrifty.ca/investment-savings-accounts-maximize-interest-in-your-brokerage-account/

[Heckler]

https://www.finiki.org/wiki/High-interest_savings_account#Fund-based_investment_savings_accounts

one last link... :)

[DualFIRE]

Hey DualFIRE. I don't know if this makes your choice any better, but Tangerine is owned by Scotiabank.
https://www.tangerine.ca/en/about-us/cdic#:~:text=Tangerine%20Bank%20is%20a%20wholly,CDIC%20in%20its%20own%20right.

Yeah, sorry, I meant Scotiabank. I also realize that investing in a fund made up of US bonds is just as bad, since they funnel billions to Israel.

[DualFIRE]

Thank you for all those resources, @Heckler! Super helpful!

I will try to update on my experience here after I implement a strategy. 

[Heckler]

I want to avoid Tangerine since parent CIBC holds Elbit Systems (Israeli weapons)

an honourable choice, but I wish you luck in divesting in defense, especially towards a specific country.  Presumably, any US total market fund would hold at least customers of theirs, if not the subsidiaries directly.

https://en.wikipedia.org/wiki/Boeing_AH-64_Apache

The latest AH-64D-I integrates Israeli systems such as Elta communications suite, Elbit mission management system, Rafael Combat Net system and Elisra self-protection suite

https://en.wikipedia.org/wiki/Elbit_Systems

Elbit owns several companies in the United States through its American subsidiary, Elbit Systems of America (ESA).