Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-14-2016, 11:24 AM   #21
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,406
Quote:
Originally Posted by Ian S View Post
I'm thinking this may be the best approach. In an IRA, you don't get hit with the Canadian 15% withholding tax on dividends although in a taxable account, you get a tax credit to use against your US taxes. As I said previously, IMHO, the big 5 Canadian banks are one of the best ways to get Canadian exposure as easily and safely as possible. No special accounts required since they are all on the NYSE. When oil comes back, so will the loonie and so will the Canadian bank stocks. Meanwhile, a 4% dividend isn't too shabby. Each bank stock differs a little in for example its exposure to the oil patch and degree of expansion outside of Canada. They are heavily regulated which is why they came through the financial crisis pretty much unscathed.
This is a good idea.


Quote:
Originally Posted by kiki View Post
It looks like it's possible with TD Bank. I found this thread on their TD Helps website: https://www.td.com/to-our-customers/...1|vid=38385405

One of the team member responses:

I'm on the West Coast, so no TD branch in the US. I'd have to drive to Canada to open an account. If I go this route, I'll call beforehand to make sure it's possible and confirm what documentation I need. I'd hate to show up and be missing something.
Do you have an account at Schwab? If so, you could give your son an ATM card and he could withdraw from a US account without exchange or transaction fees. He wouldn't need a bank account there. Then all you would need is to find a way to pay the University costs.
__________________

__________________
MichaelB is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Converting USD to CAD
Old 04-14-2016, 12:03 PM   #22
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,250
Converting USD to CAD

Quote:
Originally Posted by kiki View Post
It looks like it's possible with TD Bank. I found this thread on their TD Helps website: https://www.td.com/to-our-customers/...1|vid=38385405



One of the team member responses:







I'm on the West Coast, so no TD branch in the US. I'd have to drive to Canada to open an account. If I go this route, I'll call beforehand to make sure it's possible and confirm what documentation I need. I'd hate to show up and be missing something.

BTW, you will have to make an appointment in advance for getting an account opened. (You don't want to just show up.). It's a Canada thing...


Sent from my iPhone using Early Retirement Forum
__________________

__________________
tmm99 is online now   Reply With Quote
Old 04-14-2016, 12:57 PM   #23
Recycles dryer sheets
 
Join Date: Aug 2014
Location: Phoenix
Posts: 473
When I opened my Canadian bank account a few years ago, I opted to go with Scotiabank as they were the only bank to offer me senior status at my age at the time. That meant pretty much no account fees. Also most any transaction even at the counter with a teller relies on chip and pin technology which was new for me. I found the bank people to be very friendly but IIRC, they weren't used to opening accounts for US residents. Of course, where I opened the account was nowhere near the border so that may have explained their inexperience. Still they got everything worked out fine. I have internet access to the account just like you would in the US. You may or may not get a 1099-int tax form but you must declare any interest no matter what as well as fill out the annual reporting form. IIRC, The latter is done in June not with your taxes in April.
__________________
Ian S is offline   Reply With Quote
Old 04-14-2016, 05:45 PM   #24
Thinks s/he gets paid by the post
 
Join Date: Apr 2011
Posts: 1,552
Quote:
Originally Posted by kiki View Post
I'm trying to figure out good way to lock in the current value of CAD vs USD.....

There are two options that I've been able to find. The first is to buy FXC (Guggenheim CurrencyShares Canadian Dollar Trust ETF). The downside to this approach is that I'm paying a 0.40 ER and I'm not earning anything on the cash. This would be great if I wanted to speculate in CAD, but that's not what I'm trying to do.
To me when you say you're trying to lock in current CAD value, you're exactly speculating that the CAD will appreciate.
__________________
gerntz is online now   Reply With Quote
Old 04-14-2016, 06:10 PM   #25
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,707
One other possibility depending on how much total you are looking at is Canadian Dollar Travelers Checks which come in $500 cad denominations. Assuming your son opens a bank account where he goes to school at a bank there should be no problem cashing them. You do have a bit more than 1% of up front fees.
__________________
meierlde is offline   Reply With Quote
Old 04-14-2016, 10:45 PM   #26
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 891
I like the idea of keeping things in the US. I'm leaning towards that, but I don't have a good understanding of how buying a Canadian bank stock is the equivalent of having a stash of Canadian dollars (or equivalents).

This is something I need to figure out. I need to spend some time modeling this to get a better understanding of how it works.

Quote:
Originally Posted by MichaelB View Post
Do you have an account at Schwab? If so, you could give your son an ATM card and he could withdraw from a US account without exchange or transaction fees. He wouldn't need a bank account there. Then all you would need is to find a way to pay the University costs.
Yes, I have a Schwab account and use it for all cash withdrawals, at home and internationally. You're bringing up the 2nd part of the equation: how can we get him money when he's in Canada. That's an easier problem to solve. Assuming the Schwab account is still around over the next 2-6 years, he could withdraw cash from an ATM. To make it a bit easier, he could open a student account (no fees) at a Canadian bank, withdraw cash using his Schwab card, and then deposit the money into his Canadian account. This way he'd have a local debit card, which might be better to use than a US debit card (he'd have a chip/pin card, etc) and he wouldn't have to carry cash all the time.

We could have him do this for his tuition too, but that'd be a tad extreme.

Quote:
Originally Posted by gerntz View Post
To me when you say you're trying to lock in current CAD value, you're exactly speculating that the CAD will appreciate.
Not really. I don't care if CAD goes up or down. What I want to do is lock in at current values. If it goes down, all the better. Then when I have to pay in a year it'll be cheaper. And if it goes up, I'll still lose out, since I won't have the full cost of tuition hedged in CAD.

Quote:
Originally Posted by meierlde View Post
One other possibility depending on how much total you are looking at is Canadian Dollar Travelers Checks which come in $500 cad denominations. Assuming your son opens a bank account where he goes to school at a bank there should be no problem cashing them. You do have a bit more than 1% of up front fees.
At this point you'd be better off opening a bank account in Canada. You'll still incur the fees, but you might be able to manage it better. Plus, you'll be able to earn interest on your cash.
__________________
tulak is online now   Reply With Quote
Old 04-14-2016, 11:15 PM   #27
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,707
Re #26 the only fees the travelers check route have are the money conversion fees and the issue fees. There are no ongoing fees and the checks remain good until used. (unless banks in Canada charge fees for cashing the checks). You wont earn interest. true but in todays market how much is that worth? (checking a 2 year cd in canada is about .55% pa.)
__________________
meierlde is offline   Reply With Quote
Old 04-14-2016, 11:22 PM   #28
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 891
Quote:
Originally Posted by meierlde View Post
Re #26 the only fees the travelers check route have are the money conversion fees and the issue fees. There are no ongoing fees and the checks remain good until used. (unless banks in Canada charge fees for cashing the checks). You wont earn interest. true but in todays market how much is that worth? (checking a 2 year cd in canada is about .55% pa.)
I haven't done a lot of research here, but it looks like you can get 1% without too many issues. The Scotiabank Savings Accelerator Account pays 1% with no monthly fees: Savings Account Interest Rates | Scotiabank. But getting the money there is a challenge.
__________________
tulak is online now   Reply With Quote
Old 04-15-2016, 07:29 AM   #29
Dryer sheet aficionado
 
Join Date: Jun 2013
Posts: 42
I have a TD (Canada Trust) account and live in the USA, with dual citizenship. I have an account there that is set up in US dollars and one in Canadian dollars. You can transfer between both easily, when the CDN dollar is high and vice versa. I set mine up in Canada, but there probably is no reason why you can't set one up, online, in the USA, with TD or any of the other major players.

In 1982, the exchange rate was ruffly -30 cents on the dollar. In 2012, it actually was +5 cents. Today it's -23 cents and probably "is" the average over the last 30 years.

I think your goal needs to be to try to keep a dollar a dollar. In my Canadian savings account, I'm making a little under 1%, but depending on the exchange rate the net effect could make that go away very quickly.
__________________
canuck5 is offline   Reply With Quote
Old 04-15-2016, 11:20 AM   #30
Recycles dryer sheets
 
Join Date: Aug 2014
Location: Phoenix
Posts: 473
Quote:
Originally Posted by kiki View Post
I like the idea of keeping things in the US. I'm leaning towards that, but I don't have a good understanding of how buying a Canadian bank stock is the equivalent of having a stash of Canadian dollars (or equivalents).
The Canadian banks are based in Canada and their Toronto stock exchange shares are priced in CAN$$. But for the convenience of US investors, they are also listed on the NYSE and priced in US$$ there. The price difference you'll see between the shares on the two exchanges is due essentially to the difference in the exchange rates. So, if shares of TD in Toronto stay constant on a particular day but the loonie appreciates against the US$, then the value of the shares on the NYSE will rise.

So the question is how risky are the Canadian bank stocks and what kind of fluctuations might occur. Well, they are stocks and so they will go up and down with the general market. But they are also tied to the Canadian economy (with some US and global exposure as well). That economy - and the loonie - are very dependent on oil prices. You are looking out 2 years or so until your son will be in the Canadian university. If you think oil will be higher then than today, you can count on the loonie being higher and the Canadian bank stocks doing very well. If oil stays the same or drops, then the loonie and the Canadian banks aren't apt to do that well. But there's almost no likelihood of those banks reducing their hefty dividend payouts so that's some protection against downward fluctuations especially if you reinvest dividends. Another option might be preferred shares of those banks but I don't think they are available on the US exchanges. Perhaps they could be bought on the Toronto exchange by your US broker. Their prices are less apt to fluctuate and they offer a good dividend payout.
__________________
Ian S is offline   Reply With Quote
Old 04-15-2016, 11:37 AM   #31
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,250
Quote:
Originally Posted by Ian S View Post
But there's almost no likelihood of those banks reducing their hefty dividend payouts so that's some protection against downward fluctuations especially if you reinvest dividends.
Great posts, Ian!

I just love those yields on Canadian bank stocks. They are so much better than the US counterparts. You also mentioned somewhere that the bank regulations in Canada are much more strict than in the US (which I've heard from other sources also), so that is definitely a plus. I have been setting up a small group Canadian dividend generating stocks now (so far I have 10 or so companies in the mix - banks, telecomm, energy and insurance), and I do have TD and RY in the mix so far, and I am planning to add CIBC.
__________________
tmm99 is online now   Reply With Quote
Old 04-15-2016, 08:16 PM   #32
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 891
Quote:
Originally Posted by canuck5 View Post
I have a TD (Canada Trust) account and live in the USA, with dual citizenship. I have an account there that is set up in US dollars and one in Canadian dollars. You can transfer between both easily, when the CDN dollar is high and vice versa. I set mine up in Canada, but there probably is no reason why you can't set one up, online, in the USA, with TD or any of the other major players..
Don't you pay a fee when converting from US to Canadian dollars?

Quote:
Originally Posted by tmm99 View Post
Great posts, Ian!

I just love those yields on Canadian bank stocks. They are so much better than the US counterparts. You also mentioned somewhere that the bank regulations in Canada are much more strict than in the US (which I've heard from other sources also), so that is definitely a plus. I have been setting up a small group Canadian dividend generating stocks now (so far I have 10 or so companies in the mix - banks, telecomm, energy and insurance), and I do have TD and RY in the mix so far, and I am planning to add CIBC.
+1

Ian, your posts have been great. I've started modeling this to get a better idea of what to expect, but so far I like what I see. I've modeled this back to 2007 and it's easy to see the effect of currency fluctuations. I'm still trying to better understand the normal stock volatility part and I still need to account for dividends. Overall though, excluding 2008, the volatility looks reasonable. I've been modeling CM (CIBC) and I'm leaning towards buying some and calling it good. I can also do this in a tax deferred account, so all the better.
__________________
tulak is online now   Reply With Quote
Old 04-15-2016, 08:46 PM   #33
Recycles dryer sheets
 
Join Date: Aug 2014
Location: Phoenix
Posts: 473
Quote:
Originally Posted by kiki View Post
Don't you pay a fee when converting from US to Canadian dollars?



+1

Ian, your posts have been great. I've started modeling this to get a better idea of what to expect, but so far I like what I see. I've modeled this back to 2007 and it's easy to see the effect of currency fluctuations. I'm still trying to better understand the normal stock volatility part and I still need to account for dividends. Overall though, excluding 2008, the volatility looks reasonable. I've been modeling CM (CIBC) and I'm leaning towards buying some and calling it good. I can also do this in a tax deferred account, so all the better.
I think there are always fees associated with converting currencies - everyone wants their cut I guess. One of the reasons I have a Canadian bank account is that I anticipate a significant future inheritance in CAN$$. I want a place to park the funds in the event the exchange rate is adverse at that future time. I'm also interested in minimizing currency transaction fees once I decide to bring the funds to the US so I'm looking into what the alternatives might be.

Thank you (and tmm99) for your kind words. I have owned BMO with dividend reinvestment since the early 1990's and have had splendid capital gains - starkly different from my investment in BofA LOL! Because I was born and grew up in Canada, I have always had a penchant for investing at least some funds there. I have added some RY recently. May add some others at some point as I'm increasingly interested in solid dividend stocks for the long run. If you keep them in a tax deferred account like an IRA, they don't even apply the Canadian withholding tax. Although, in a taxable account you can claim a tax credit for at least some if not all of what's withheld.
__________________
Ian S is offline   Reply With Quote
Old 04-16-2016, 07:54 AM   #34
Recycles dryer sheets
 
Join Date: Jan 2015
Location: Toronto
Posts: 179
TD has branches through the US Northeast. Harris Bank in the Midwest is connected to Bank of Montreal, so they may have something. Centura in the southeast used to be owned by Royal Bank, so they may have a Canadian $ account still. I don't know of any West coast connections.
__________________
Davis65 is offline   Reply With Quote
Old 04-16-2016, 10:34 AM   #35
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,119
RY just closed its deal for City National Bank in California. Believe City National is the largest bank in Los Angeles. They will eventually offer CDN dollar products there I would think. Agree with comments about the Canadian banking system. It's a very well run oligopoly which has resulted in excellent investment returns for many decades. Also, was a very rewarding place to work.
__________________
Danmar is offline   Reply With Quote
Old 04-16-2016, 10:38 AM   #36
gone traveling
 
Join Date: Apr 2016
Location: Tenerife
Posts: 67
I don't know if transferWise works in North America or not, but you get fantastic rates exchanging GBP to Euro here in Europe. Worth checking out.
__________________
languagefan is offline   Reply With Quote
Old 04-18-2016, 05:40 AM   #37
Dryer sheet aficionado
 
Join Date: Jun 2013
Posts: 42
Quote:
Originally Posted by kiki View Post
Don't you pay a fee when converting from US to Canadian dollars?



+1

Ian, your posts have been great. I've started modeling this to get a better idea of what to expect, but so far I like what I see. I've modeled this back to 2007 and it's easy to see the effect of currency fluctuations. I'm still trying to better understand the normal stock volatility part and I still need to account for dividends. Overall though, excluding 2008, the volatility looks reasonable. I've been modeling CM (CIBC) and I'm leaning towards buying some and calling it good. I can also do this in a tax deferred account, so all the better.
Yes, you do pay a % to exchange the funds, but you do earn a little interest. My thoughts were that since this was relatively short term "needed" money, it might be easier to only have to "watch" the exchange rate vs a multitude of other variables and keep a dollar worth a dollar. Just less risk and less to understand. The Canadian dollar has moved from $1.05 down to $.68 and inching back up again, over the last 5 years and it affects everything.
__________________
canuck5 is offline   Reply With Quote
Old 04-20-2016, 10:49 AM   #38
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 891
Slight change of plans, at least maybe. I was about to buy some CM on Monday, when Sunday night DS mentioned the idea of going in-state instead. He's still applying to Canada, but I think this went from choice #1 to #2. I still think I need to lock-in at least some Canadian dollars at the current rate, in case choice #1 doesn't pan out. Timing could have been better though, since everything has gone up this week.

For those that are interested, I created a new thread with more info: University Living Costs - is it worth it?

Thanks for all the advice here. Regardless of how we proceed, this thread has a lot of good info which I hope others find useful.
__________________
tulak is online now   Reply With Quote
Old 04-22-2016, 09:42 PM   #39
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 891
I bought some CM and BNS this last week. I'll probably buy a little bit more over the next few weeks on market dips.

At this point, I don't know if a Canadian education is in DS's future, but it's still a possibility so I need a little bit of insurance.

Thanks to everyone for the advice.
__________________

__________________
Eat, Drink and Be Merry.
tulak is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Sell USD stocks to convert to CAD right now? RioIndy Stock Picking and Market Strategy 7 02-18-2015 11:35 PM
Think twice before converting to a ROTH. Lakewood90712 FIRE and Money 43 03-21-2006 03:49 PM
Converting your coin jar into cash LRAO FIRE and Money 38 11-19-2005 08:42 PM
Converting to Roth -- College Financial Aid TromboneAl FIRE and Money 4 06-30-2005 04:26 PM
Mass Converting Photos to Digital BigMoneyJim Other topics 7 01-27-2005 03:02 PM

 

 
All times are GMT -6. The time now is 08:24 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.