Inherited 50k CAD to convert to USD???

[dudeswithcars]

Hi all, new post member here.

I am a Canadian citizen and US citizen who just received around 50k CAD from my grandmother who has passed. According to Mustachian ideas, I was think of converting some, if not all, of the this money to USD in order to invest in my Vanguard (VTI). But that would exchange the money to USD and I would "lose" money, right? Is it better to keep the money in CAD forever and maybe....invest it....somehow? What do you all think I should do with it?

As a young person I just need some help so I'm reaching out for some!

Also, I'm a little confused about exchanged rates. I know a friend who works in Columbia and exchanges his Pesos to USD due to the wild inflation rates. So, why wouldn't I want to do the same from CAD to USD? Convert to a more stable currency???

Thanks!

[Heckler]

https://www.google.com/search?q=cad+to+usd&oq=cad+to+usd&aqs=chrome..69i57j0i512l4j0i433i512j69i60l2.2159j1j4&sourceid=chrome&ie=UTF-8

Today, 50K CAD is worth 37,482 USD, and also worth 34,474 Euro, but only 11,441 Kuwaiti Dinar.  Why?  Oil.  Tomorrow, it'll be different, up or down.  Take a look at the Max view on the graph to see how much it can fluctuate.  Do CAD-USD and then CAD-Euro and you'll see CAD-Euro is a more stable exchange rate long term.  Take a look at Columbian Peso, and it shows what your friend is experiencing - a constant loss in value of the COP in the last 10 years.

https://www.investopedia.com/articles/investing/021315/how-why-oil-impacts-canadian-dollar-cad.asp

I convert C-U and buy VTI regardless of the current exchange rate.  But I also have plans to keep that USD income as USD travel spending later in life.  In a Canadian brokerage, you can buy VUN which is VTI in $CAD.  Guess what?  VUN fluctuates with the changing exchange rate as well.  https://www.vanguard.ca/en/investor/products/products-group/etfs/VUN

Exchanging currency costs you with each transaction (fees), but there are lower-cost ways to exchange it. 
   1. I have an internationally living friend who uses https://wise.com/ to reduce currency transaction fees and spend as they travel.
   2. Norberts Gambit https://canadiancouchpotato.com/2015/02/26/taxable-consequences-of-norberts-gambit/  But I link you to taxable consequences because I know international/US income tax rules are way above my head.

I would convert it to whatever currency you plan your future in. 

[Freedomin5]

I would convert it to whatever currency you plan your future in.

This. Convert to whatever currency you spend in. So if you’re living in the US and spending in USD, then convert to USD.

The only “loss” would be in exchange fees, but you would “lose” so much more in inflation and opportunity cost if you just kept it in CAD cash and didn’t invest it.

The only other “loss” I can think of is if CAD is currently weak compared to USD. But it looks like it’s currently 1 CAD = 0.75 USD. Not too bad. And again, if you try to time the currency market and wait until CAD is stronger, how much money are you “losing” but not having the money invested during that time?

Don’t overthink it. Keep it simple. If it were me, I’d just convert to USD, stick the money immediately into VTI, and move on.

[daverobev]

Just to point out, if it's $100 US for a global ETF and $133 CAD for a functionally identical ETF, and USDCAD is 1:1.33, the currency doesn't matter. Don't think you're buying stocks at 'better value' because you're buying in USD (or CAD). It's what you're buying *with* the money. Just in case you didn't realise that.

(Though as an American you always want to buy US domiciled stuff anyway).

[K-ice]

I have some USD VTI in my RRSP to use as a future snowbird fund. I add using Norbert's Gambit linked earlier.

If you want USD in your future it doesn't hurt to convert some now and potentially DCA some every year.

[dudeswithcars]

Thanks everyone so far with all your candid responses!

I'm thinking I should take half and convert it to USD or maybe all since most of my expenses are done through US. I use a chase card to rack up points/miles then pay off using my USD account. I just don't do enough business in Canada to justify keeping it there. I also do a lot of travel where the USD buys more of what I need overall.

My Father will probably scream at me for converting it but I just don't see why I should let it sit there when I can put it to work. I've been investing in VTI for 5 years now and it hasn't EVER let me down. It was the best thing I started doing in my young financial career with no guidance whatsoever. I bought so much VTI during Covid and just knew it would go up.

[OttawaNeal]

Just to point out, if it's $100 US for a global ETF and $133 CAD for a functionally identical ETF, and USDCAD is 1:1.33, the currency doesn't matter. Don't think you're buying stocks at 'better value' because you're buying in USD (or CAD). It's what you're buying *with* the money. Just in case you didn't realise that.

(Though as an American you always want to buy US domiciled stuff anyway).

It starts to matter more once the amount invested is "large."

MER for VTI is 0.03% whereas the MER for VUN is 0.16%.