Confused Canadian, Please Lend A Helping Hand?

[MyLittlePony]

Hello kind sirs,

I am a Canadian who has been living in the US for a decade now. I hold Canadian citizenship and am about to apply for US citizenship as well, if they accept me I will have dual US/Canadian citizenship. I have been doing a great deal of reading on investing, I have read The Bogleheads Guide to Investing, The Bogleheads Guide to Retirement Planning and also The Intelligent Investor although I must admit I skimmed through much and had a great deal of trouble understanding a lot of what was going on in that book compared to the first two.

I feel I have a relatively good understanding of investing in the U.S. but I am having a very hard time learning about Canadian investing. I have been going through the Finiki and also found the website bylo.org but still feel as if I have many gaps in my knowledge, there are so few resources for Canadian investors it seems. Amazon is a ghost town for investment reading about Canada.

Bylo.org has a list of reading and almost all of the books are about U.S. investing, the only Canadian specific books he recommends for beginners are The Wealthy Barber (1988) The Money Advisor (1998) and The Power of Index Funds (1999)

For Intermediates he recommends The New Investment Frontier (2001) The Ten Biggest Investment Mistakes Canadian Make (2000) and The Wealthy Boomer (1998)

All of these books are more than 10 years old and I am afraid that they are too outdated to be relevant. Has anyone read any of them or have any other Canadian investment reading that they could recommend to me?

I did some searching around these forums but was having a hard time finding info other than the e series funds at TD Waterhouse are the best Index funds for Canadians, and that the Canadian Couch Potato portfolios were good options.



I live and work in the U.S. at the moment but plan to eventually move back to Canada in about 5 years give or take a few. I am trying to figure out if it would be a bad idea to have all of my investments in the core 3 Vanguard funds recommended by Taylor Larimore. All of my currency would be in US dollars, when I move back to Canada wont I have to pay a hefty fee to convert this currency to Canadian money once I cash in my investments for retirement? (I plan to retired in 25 - 35 years) Also the Canadian dollar is worth more than the U.S. dollar right now, although it seems many on here say the Canadian dollar is more susceptible to fluctuations.

What is the most sound advice for Canadians, to have investments in both countries, or only one?





Any advice would be much appreciated by this confused Canuck.

Thank you Bogleheads, happy new years!

[DaveS]

Having worked on one of the books you mentioned I don't understand your confusion. Keep things simple and invest as in the Bogleheads guide and the average returns you will obtain will most likely beat any other strategy. Dave

[timmy]

Helpful? http://canadiancouchpotato.com/model-portfolios/

My sister in law is from Australia. (Now is the USA.) She has kept a hand in both countries. But gradually her USA assets are becoming the larger portion. She would probably to tell you not to force the matter one way or the other.

Good luck.

[lawman3966]

I think that the usual rules regarding passive investing may not apply to people planning to return to Canada permanently. This is because Canada has some very specific rules regarding the types of investments Canadians can hold.

To my knowledge, the mutual fund industries of the two countries are quite separate. The Canadian industry has done its best to ensure that the low-fee U.S. funds are not made available to Canadian investors. That said, investors moving from the U.S. to Canada may be able to keep U.S. funds after moving, that could not have been purchased by someone already in Canada. Therefore, I wouldn't necessarily assume that you will have to incur currency conversion costs upon moving back to Canada. However, you should work toward verifying this using the resources I mention below.

Resources: On the Wiki page, there is a link called financial webring which leads to a Finiki site on Canadian-U.S. investing issues. I have linked to it below.
http://www.finiki.org/wiki/Main_Page

Separately, there is a poster on the forum called Bylo Selhi. He has answered many questions on this topic, and appears highly knowledgeable in this area. If you have any questions after reading the information on the Finiki page, he is likely the best informed poster in this forum to answer any further questions on this topic.

It seems reasonable to me to bear in mind the Canadian rules you'll have live under in five years as you acquire U.S. funds now.

[Peculiar_Investor]

For Canadian investors, there is an equivalent forum, Financial Webring Forum (FWF) and as others have mentioned, our wiki, finiki, the Canadian financial Wiki. There are a number of FWF posters who also hang out on this forum, as well as a number of BH posters would contribute to FWF and finiki.

At a high level (conceptual) view, there isn't much difference between investing in the US and in Canada. At the implementation level, there are many differences, some small, some significant. As mentioned above, Canadian-US Investing Differences - finiki, the Canadian financial Wiki attempts to identify and address these differences.

All of my currency would be in US dollars, when I move back to Canada wont I have to pay a hefty fee to convert this currency to Canadian money once I cash in my investments for retirement? (I plan to retired in 25 - 35 years) Also the Canadian dollar is worth more than the U.S. dollar right now, although it seems many on here say the Canadian dollar is more susceptible to fluctuations.

When the time comes, you can avoid foreign exchange fees using Norbert's Gambit - finiki, the Canadian financial Wiki. IIn case the OP didn't know, Vanguard now has a Canadian presence, but at this point is only offering ETFs.

What is the most sound advice for Canadians, to have investments in both countries, or only one?

The Canadian market represents a small portion of the global market, around 4%, so common wisdom for Canadian investors is to have 25% of their equity allocation in the US market and 25% in global (non-US) markets. I would suggest that there is no reason one cannot continue to use the Boglehead's philosophy north of the border. Another consideration for most Canadians is where will retirement spending occur. If most of your spending will be in Canadian dollars, then it does make sense to consider reducing your non-Canadian investment income to avoid currency fluctuations. Many retired Canadians spend their winters in the southern US, so keep US dollar investments to fund their US dollar expenses.

[MyLittlePony]

Thank you for all of the great responses kind sirs!


I have been doing a great deal of research these past 24 hours and here are three different ways I have found to convert currency between USD to CAD without fee, in case any future Canadians run into this thread this could provide quite useful.

1. Norbert's Gambit (as mentioned) - http://www.finiki.org/wiki/Norbert%27s_Gambit

2. TD Ameritrad / Canadatrust has an option for those who hold an account with them in both countries where you can transfer up to $5000.00 a day without fees - http://www.tdcanadatrust.com/products-s ... /index.jsp

3. Also this website some Canadians have claimed success with, although I would assume the other two options would be safer bets. - http://www.xe.com/xetrade


I will continue to do research and report back with anything helpful that I find, O Canada.

[Peculiar_Investor]

There is also a somewhat parallel topic, viewtopic.php?f=1&t=107197 that might contain some useful information for the OP.