Transferring money from Canada - Wait for exchange rate to improve?

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msj16
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Transferring money from Canada - Wait for exchange rate to improve?

Post by msj16 »

Hello,

I received life insurance proceeds from a Canadian relative of a small sum (around 50,000) and am looking to bring the money into America. The problem is that the exchange rate converting Canadian to US dollars is bad at the moment. The proceeds can be held for me in Canada but will not gain any interest. Should I wait to bring it over, in the hopes that the exchange rate will improve? I only get about 76 US cents for one Canadian dollar currently.

Thanks for the advice,
msj16
neilpilot
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by neilpilot »

Looking for currency exchange rate improvement is another version of market timing. Not something we Bogleheads normally endorse.

However, exchange fees can vary significantly so pick your service wisely. There have been recent threads that reference options.
Gill
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by Gill »

No telling which way it may go. The exchange rate for The Canadian dollar has been much worse in the past. I’d covert it now and don’t look back.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Topic Author
msj16
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by msj16 »

Thank for the advice. With the recent "trade war" talk, it got significantly worse, but I guess there is no telling where it might go.
WhiteMaxima
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by WhiteMaxima »

The exchange rate can get worse. Before Canada part of NAFTA, 1 CAD=0.66 USD.
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dm200
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by dm200 »

At one point many years ago - I recall traveling in canada when the ration was 1:1 - and then there were times when it was better.
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MossySF
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by MossySF »

You can transfer the money now and then buy ETFs that hold all Canadian assets. That effectively gets you back into CAD after transfer.
Topic Author
msj16
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by msj16 »

Thanks everyone,

I appreciate that things might get worse, not better.

Mossy - I appreciate the idea if I wanted to wait - nice workaround.
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Pajamas
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by Pajamas »

MossySF wrote: Tue Jul 17, 2018 5:18 pm You can transfer the money now and then buy ETFs that hold all Canadian assets. That effectively gets you back into CAD after transfer.
Which sort of gets to the reality of the situation. Yes, the CAD was worth more compared to the USD in the past and may be again in the future but right now, the exchange rate is what it is. Both the exchange rate and returns from anything the money might be invested in (other than near cash with a fixed return) will vary in the future in ways unknown. It is bad luck that the current exchange rate is so low but money is fungible.
msj16 wrote: Tue Jul 17, 2018 1:04 pm Should I wait to bring it over, in the hopes that the exchange rate will improve?
If you hadn't inherited this money in this way, would you buy CAD with your USD to hold in the expectation that the exchange rate will benefit you over time? In other words, would you speculate in Canadian dollars if you had received U.S. dollars instead? If not, exchange the money now and do what you would normally do with such a windfall. It's worth what it's worth now.
nalor511
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by nalor511 »

Don't forget Norbert Gambit, to save you conversation fees
Topic Author
msj16
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by msj16 »

Thank Pajamas,

No, I would not buy Canadian if I had the choice. My only thought was wondering if, by waiting a few months, whether the exchange rate might recover slightly after the recent hit to it. Of course, that is absolutely market timing so I have to try to accept what I have.

As always, this is a great place to clarify things.
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whodidntante
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Re: Transferring money from Canada - Wait for exchange rate to improve?

Post by whodidntante »

My personal take is that it's 50 grand so either waiting or converting immediately isn't going to make a huge difference in your financial life. If you want to bring the money to the USA but maintain exposure to the loonie, you can accomplish that via a futures contract. The fact that it isn't worth that points to maybe it doesn't matter at all. https://www.cmegroup.com/trading/fx/e-m ... lobex.html

Sorry if this sounds callous; I do not mean it that way.
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