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.
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.
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.
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.
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.
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.
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.
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.