# US Dollar storage



## scientist (Feb 14, 2015)

I am reading a lot about how people buy and "hold" USD especially in times when the loonie isn't so low compared to the greenback. OR when they want to invest in S&P500 but think the market is too inflated, so they want to hold USD instead. What are some of the best USD holding strategies? I quickly googled it and found scotiabank and TD accounts that will charge for transactions and/or fees, and give a bit of interest for savings. Does anyone "hold" USD in US bonds just for the sake of holding cash? What are some other options?


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## mf4361 (Apr 11, 2015)

If you want to buy into US currency with Canadian dollar cash, there is Horizon's DLR.TO

Btw, if CAD is low, shouldn't we spend more in CAD and less in USD, instead of buying USD and hold? E.g. if you live in Richmond, BC, you can drive to Bellingham, WA, do your weekly shopping and still cheaper than buying things in local stores. Now It's the opposite.


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## diharv (Apr 19, 2011)

I like to keep $ 4-5000.00 US in cash for when we make trips to the US. Try to make most purchases in cash vs credit to avoid currency conversion fees. We try to buy when the xchange rate is good , like at par when I bought the last time. US $ savings accounts pay nothing so not missing any interest there . Just keep the wad in a safe place !


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## scientist (Feb 14, 2015)

mf4361 said:


> If you want to buy into US currency with Canadian dollar cash, there is Horizon's DLR.TO
> 
> Btw, if CAD is low, shouldn't we spend more in CAD and less in USD, instead of buying USD and hold? E.g. if you live in Richmond, BC, you can drive to Bellingham, WA, do your weekly shopping and still cheaper than buying things in local stores. Now It's the opposite.


1. Thanks. Is there an advantage in using an ETF for holding USD vs a USD account at a canadian bank? Also, I see Annual Report Expense Ratio (net)	0.60% ---> Does this mean it's going to be eating 0.6% of my USD every year?

2. You're totally right. We want to buy more CAD products, equities, bonds etc. right now... I am just learning in case the CAD ever gets back to 1/1 with USD again I won't have to scramble to learn everything! Pretty much what diharv said. I just wanted to know what 'safe places' people are using besides mattress




diharv said:


> I like to keep $ 4-5000.00 US in cash for when we make trips to the US. Try to make most purchases in cash vs credit to avoid currency conversion fees. We try to buy when the xchange rate is good , like at par when I bought the last time. US $ savings accounts pay nothing so not missing any interest there . Just keep the wad in a safe place !


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## Eclectic12 (Oct 20, 2010)

The MER does mean a charge ... the question is what ways can the ETF make money. If it makes more than the MER, then the USD won't be reduced.

Another option is a MF that is a repackaging of a savings account. An example of a Canadian one is TDB8150. For those with a TD MF account or TDDI brokerage account, it is free to buy/sell, has a low minimum amount to buy and may not need to be held for long.


http://www.canadiancapitalist.com/high-interest-savings-accounts-at-discount-brokers/


Cheers


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## mf4361 (Apr 11, 2015)

Yes there is a 0.6% MER in holding DLR, meaning it charges 0.6% of your cash. But exchanging USD in cash with the bank usually means a 1.5-2% spread.


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## Eclectic12 (Oct 20, 2010)

^^^^

The OP seems more concerned about having a cheap place to park USD that will pay something. I believe that's why there is a concern about the MER. 

Where does the currency conversion to buy stock that has no MER - there's no issue as the MER will only be there for a short period. 


Cheers


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## gardner (Feb 13, 2014)

TDB8152 -- pays a relative pittance 0.15%
Tangerine pays between 0.45% and 2% depending on length of term for TD/GIC.

I generally use VTI though.


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## uptoolate (Oct 9, 2011)

Are you saying that you think the CAD is low? i thought it was kind of high... recency bias?


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## My Own Advisor (Sep 24, 2012)

I need to write about this on my site, but I'm doing a modified gambit if you will to get more USD.

1. Buy a CDN dividend paying stock, interlisted, that pays dividends in USD $$.
2. Gambit/move CDN dividend paying stock to U.S. side.
3. Own CDN stock now listed on US-side of account.
4. Earn USD $$ in dividends and use USD $$ to buy more USD assets.


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## humble_pie (Jun 7, 2009)

My Own Advisor said:


> I need to write about this on my site, but I'm doing a modified gambit if you will to get more USD.
> 
> 1. Buy a CDN dividend paying stock, interlisted, that pays dividends in USD $$.
> 2. Gambit/move CDN dividend paying stock to U.S. side.
> ...




the idea is appealing but progress would be very slow alas. Most of the 21 canadian companies that pay USD dividends are paying small potatoes.

potash is the highest dividend yield on the list of 21 USD dividend payors. But this immediately brings up another problem. Most of those 21 companies are resource stocks or else they are tied like potash to deep cycles, so their share prices are depressed right now.

is this a good time to buy cyclical stocks? aren't we getting into market timing issues here?

more profitable & more applicable against a broader spectrum of canadian investing would be a strategy that owns interlisted canadian dividend-paying stock but sells short USD options on this underlying.

any canadians stocks in this lot that pay dividends in USD would go into a USD account. The rest of the bunch - ie canadian companies paying dividends in CAD - would stay in CAD account.

but nearly always, the options would be sold on US options exchanges. The exceptions would be a few from the handful of senior stocks with interlisted options (thomson, banks, telcos, big energy) where the canadian option market may be more favourable for a retail investor.


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## My Own Advisor (Sep 24, 2012)

I actually don't mind low/depressed prices HP...you know this 

Correct though, I keep my CDN stocks that pay CDN $$ dividends in the CDN side of the account, although most of my RRSP is actually indexed.

I tend to keep CDN stocks in TFSA or non-registered. 

U.S. stocks in RRSP but I feel the my own gambit allows me to get more U.S. exposure, get paid more in USD $$ and avoid other fees.


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## cannew (Jun 19, 2011)

Why not just open a US saving account with one of the banks. Don't earn much interest but there are no exchange costs.


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## My Own Advisor (Sep 24, 2012)

Need to keep a min. amount usually for USD $$ savings account.


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## james4beach (Nov 15, 2012)

There's been a discussion about this in another thread:
http://canadianmoneyforum.com/showt...fe-since-Canada-does-not-offer-CDIC-insurance

If you're just parking a few thousand $, by all means, just plop it into an (uninsured) US$ deposit at one of the Canadian banks. I have a few thousand USD sitting in a TD US$ account. I believe a balance over 3k USD waives the account fees.

If you're dealing with large amounts, put it into US t-bills or those ETFs that I mentioned for the treasury bonds/bills. The ETFs I referenced (e.g. SHV) all have short maturity, short duration so they have minimal downside risk. e.g. in SHV's last five years its worst decline was -0.1% whereas a typical US bond fund would have declined -5% or more.

So the easiest answer is holding the cash in a US$ bank account at a Big Five bank. Alternatively, put them in t-bills (that's the safest) or a short term bond ETF (less safer than t-bills).

And in any case... forget about yield. The central bank has decreed Zero Interest Rate Policy, so you just have to accept that cash yields nothing. Canada is going that way too.


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