1. Take advantage of currency fluctuations
If you immediately convert your earnings to Canadian dollars, you may not be taking advantage of the best currency rate Opens in a new window.. If you can wait until the Canadian dollar is weaker, you can make extra money without having to work for it — and that’s what we call a life hack.
Currency fluctuates daily, and you can find the daily exchange rates through a simple Google search. It may also be a good idea to glance at the business section of a newspaper every day, which only takes about 30 seconds in the morning. If you spot a headline like “Canadian dollar hits 9-month low,” it might be a favourable day to convert some greenbacks. But in the meantime, why not let your USD accumulate in a savings account that earns interest?
2. Buy American stocks with lower fees
If you only invest in the TSX, your investment opportunities are limited. For true diversification and a shot at more growth, you may want to dive into the American markets through broad-market-based exchange-traded funds (ETF) or investments in specific American companies. The U.S. dominates sectors that aren’t available in Canada in the same way — such as tech and consumer goods.
Many brokerages give you the option to convert your Canadian funds to American dollars inside your account, but you’re probably going to pay a steep conversion fee. You could also buy Canadian ETFs that track the U.S. market, but these funds almost always have higher management fees than their U.S. counterparts.
So why not use the funds you’ve already earned in the U.S. to directly purchase stocks? This process lets you bypass additional fees.
Many brokerages will allow you to electronically link your USD savings account and transfer funds while keeping it in USD. You can hold dual currencies in both registered and non-registered accounts. With the U.S. funds, you can purchase whatever American stocks you want. You may want to consider doing this in a Registered Retirement Savings Plan (RRSP) or a non-registered account. Tax-Free Savings Accounts (TFSAs) aren’t the best place to hold U.S. stocks, as you may have to pay a withholding tax.
3. Shop until you drop in America
Even the proudest Canadians can admit that there are some shopping advantages to the States — hello, outlet shopping.
If you live in a city close to the border or fly down south in the winters, why not keep your funds in USD and withdraw them before you go? That way, you won’t have to consider currency exchange issues — and you can spend your hard-earned cash however you like.
