Investing in Canada from South of the Border - Good Idea? Bad Idea?

[lauraredcloud]

I'm a dual Canadian and American citizen living in the U.S. I recently got interested in investing, so virtually all of my knowledge is pertinent to the U.S. I'm aware that the standard advice for Americans is to invest in a blend of American and international stocks/mutual funds, and for Canadians it's to invest in American, Canadian and international. Is there any reason why Americans shouldn't (or should) invest in Canada? If I wanted to invest in Canada, do you have any recommendations open to Americans? I use Vanguard but their Canadian ETF (VCE) seems to be open only to Canadians.

Thanks!

[Another Reader]

There's an ETF specializing in Canada - EWC.  Fidelity has a Canada mutual fund - FICDX.  The Canadian banks pay nice dividends, although they are at or near their 52 week highs right now.  The dividend yields are very good on BMO and BNS.  Not as good on RY or TD, but similar to US banks.

[daverobev]

Unless you are planning on moving to Canada sometime soon I wouldn't worry about investing in Canada specifically - globally speaking, Canada is small beans.

Go for something like VXUS as it has a few percent Canada, IMHO.

The reason to go for a local bias is at least currency related - you'll be buying things in currency X, and sometimes the stock market will fluctuate completely separately from the currency market.

Do you have a discount brokerage? If so you can probably buy ZCN.TO... not sure how 'foreign' buying works in the US. In my Canadian account I can buy on the TSX, NYSE, NASDAQ - but that could be because the Canadian market is small so the impetus to have the US markets available is large here...

If you have a SIN and some Canadian money you might want to open a Canadian brokerage account - eg with Questrade (buying ETFs is commission free, now). If you're eligible for an RRSP, that is sheltered from both US and Canadian tax... again, might really only make sense if you're planning on moving here.

If you're not I'd say don't worry about it!