we are selling our home this summer and relocating to Europe. I am looking for a good way to invest the proceeds of the sale in Canada to wait for the CAD to recover some value against the EUR before moving the money to Europe. We won't need the money for 5-10 years. The money needs to be available fairly quickly to take advantage of a better exchange rate. Any ideas?
Have you considered the tax implications of relocating to Europe? If you become a Canadian non-resident for tax purposes, this will have some impact on your investing activities within Canada. For example, will you still be able to use a TFSA?
What is your time frame for doing the actual relocation and switching to becoming a Canadian non-resident?
Another factor to consider is that timing the currency market is just about impossible. You may not be better off by waiting. I suggest converting half to EUR immediately, and then maybe leaving the other half in CAD while you attempt to time the currencies.
The general answer for your original question is: short-term bonds. These are well suited for the 3-5 year time frame. However it still matters what your tax residency status will be. For example if you will still have a TFSA, I'd say the best thing to do would be to hold XSH (and maybe VSB) inside your TFSA. However these are not great for non-registered accounts because they have very large taxable distributions.
Looking back at the last 17 years the forex CAD/EUR peaked in 2000, 2001, 2006, 2007, 2010, 2012, 2015 above current levels. CETA might strengthen the CAD, if it ever happens.
Protection of capital is secondary as the money would be invested and exposed anyways here or in Europe.
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