I have some savings in a Canadian bank and I don't want to exchange it to USD yet due to the low exchange rate.
Which investment options (I know mutual funds and ETF are not good) will not cause a US tax preparation burden. Is there a way to invest the CAD in a US bank (everbank for example allow a CAD denominated account, but they don't have investment options)
I also have an RESP for my child. Is there some sort of election for deferred taxation that I can do for this similar to the RRSP one?
Thanks in advance
CAD Investment options for Canadian in the US
Moderator: Mark T Serbinski CA CPA
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- Posts: 16
- Joined: Sat Nov 18, 2017 6:39 pm
I was in the same situation as you, and I did not find any US broker that allow you to buy securities in a CAD denominated account.
I did however find a brokers that allow those two :
1) Allows to hold CAD deposits and paying some small interest rate based on BOC overnight (wire the funds in CAD from Canada)
2) Buy CAD denominated securities in your USD denominated account, after doing FX conversion
1) is not very interesting as the rate of interest is higher when using savings/GIC at a canadian bank directly
2) is not very interesting as they use a big spread for FX conversion (100-300 bps each way) and would eat most short-term returns
I suggest you either leave your money in GIC in Canada for fixed income, or wire your money in USD through KnightsBridgeFX (approx 70 bps for 10-100k trade size) and buy canadian equities denominated in USD. Most canadian banks trade on USD exchange, and there are some ETFs too. This basically fully hedge your FX exposure and gives you equity exposure.
I did however find a brokers that allow those two :
1) Allows to hold CAD deposits and paying some small interest rate based on BOC overnight (wire the funds in CAD from Canada)
2) Buy CAD denominated securities in your USD denominated account, after doing FX conversion
1) is not very interesting as the rate of interest is higher when using savings/GIC at a canadian bank directly
2) is not very interesting as they use a big spread for FX conversion (100-300 bps each way) and would eat most short-term returns
I suggest you either leave your money in GIC in Canada for fixed income, or wire your money in USD through KnightsBridgeFX (approx 70 bps for 10-100k trade size) and buy canadian equities denominated in USD. Most canadian banks trade on USD exchange, and there are some ETFs too. This basically fully hedge your FX exposure and gives you equity exposure.