There's a good chance my son is going to a Canadian University for his undergraduate degree in 2018 and I'm trying to figure out good way to lock in the current value of CAD vs USD. I figure that USD will most likely weaken or hold steady, so there's less downside for me to locking in a couple years of tuition right now.
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.
The other option I found is Everbank. They offer CAD denominated CDs and savings account. I've looked over their website and some concerns I have are their conversion fees (up to 1% both ways) and their exchange rate. Plus I see that they are offering 0% for CDs and deposit accounts. Not very attractive.
I've also thought about a short-term Canadian bond fund, but I haven't had any luck in finding anything with a short duration. And the bond funds that I have found have high ERs. I'd think even if I find a short-term bond fund the ER and yield would probably cancel each other out. At that point FXC is looking good again.
It would be ideal if I could open up a savings account at a Canadian bank and deposit a chunk of money there, but it doesn't look like I can do this as a US citizen?
At this point I think my best option is FXC. I might lose a bit on ER and trading costs (low volume so I expect to lose on spread costs), but I'm less than worried about +/-1% and more worried about 10-20%. I'd hate for CAD to hit par with USD right when the tuition bill is due.
Has anybody done this before? Any other ideas besides FXC?
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.
The other option I found is Everbank. They offer CAD denominated CDs and savings account. I've looked over their website and some concerns I have are their conversion fees (up to 1% both ways) and their exchange rate. Plus I see that they are offering 0% for CDs and deposit accounts. Not very attractive.
I've also thought about a short-term Canadian bond fund, but I haven't had any luck in finding anything with a short duration. And the bond funds that I have found have high ERs. I'd think even if I find a short-term bond fund the ER and yield would probably cancel each other out. At that point FXC is looking good again.
It would be ideal if I could open up a savings account at a Canadian bank and deposit a chunk of money there, but it doesn't look like I can do this as a US citizen?
At this point I think my best option is FXC. I might lose a bit on ER and trading costs (low volume so I expect to lose on spread costs), but I'm less than worried about +/-1% and more worried about 10-20%. I'd hate for CAD to hit par with USD right when the tuition bill is due.
Has anybody done this before? Any other ideas besides FXC?