# Where can I park USD cash to be safe since Canada does not offer CDIC insurance??



## Johnny (Oct 30, 2014)

Hi,

I have a few hundred thousand in USD$ siting in a canadian bank. My plans were to exchange and invest in some real estate, but will now hold off a bit until we see where the market is heading. Since the cdic does not insure USD, where can I put my cash to be protected?

Thanks


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## james4beach (Nov 15, 2012)

Right, your USD deposit is uninsured. I posted some answers to this in this message
http://canadianmoneyforum.com/showt...e-return-on-my?p=436345&viewfull=1#post436345

US t-bills are the general answer, if you can get them directly. Less direct but much more convenient are the ETFs that contain t-bills and short term treasury bonds. For a short time horizon, you'll want SHV. For a longer horizon of a couple years, SHY or SCHO.

Be aware that prices can fluctuate on all of these things. They are still bond funds. US cash pays nil interest, so the most cash-like (SHV) also pays no interest.

Personally I hold SCHO. If I had very large amounts of money, I would diversify it between (1) SHV, (2) SCHO, (3) keep it in the Canadian bank uninsured. This diversifies it between several companies, and in a pinch you can always withdraw the uninsured amount in the Canadian bank or convert it to CAD to gain CDIC insurance


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## Johnny (Oct 30, 2014)

would opening a few money market accounts in the USA be a bad idea? This cash is currently in my canadian based corporation which I am the only shareholder, so how would it work if I wanted to open a money market account in a bank of the USA? If it were under my personal name, I guess that would be a big no no with CRA?


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## Guban (Jul 5, 2011)

I'm not sure about US brokerage insurance against default, and any other protective measures they have in place down south, but it seems that most of us can't open accounts in the US without a US address. Do you have an address that you can use? Is a corporation exempt from these requirements? I am assuming that you are not American.


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## fatcat (Nov 11, 2009)

open a us bank account and buy short term cd's (usa equivalent of gic's)
actually, i am not certain whether a non-citizen non-resident can buy cd's
but you would certainly get 250K FDIC protection per account
open with your partner and you have more options ?


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## Johnny (Oct 30, 2014)

can't you open a US based account with TD as a Canadian client? That is what I read on their site. Maybe RBC and other canadian banks with US branches offer the same


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## james4beach (Nov 15, 2012)

In the US, a non-citizen and non-resident can open and use bank accounts, including savings deposits.

I do this right now. In the tax definition, I'm a US non-resident yet I still actively use a US domiciled bank account. However you will find this difficult to do unless you have a US mailing address.

So it's fine to be a non-resident, but you'll still want a US mailing address. I do keep most of my US$ in a too-big-to-fail American bank, where it has FDIC insurance

Most countries are like this by the way. I also opened bank accounts in Australia (again, as a non-resident) and continue to use those as well. I needed an Australian address at the time.


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## cougar (Oct 15, 2014)

Exchange rates are pretty attractive at the moment-you could change it into Canadian earning a sizable markup right now and then put it in Canadian GIC's or bank accounts where it would be insured by CDIC up to 100,000 per account. That is what we are doing. We are finding the best rates at TD-changes every couple of minutes and Tangerine( set daily). With your large amounts you may find better rates should you cash a lot at one time. Then you could invest it in real estate if/when the real estate prices drop. Perhaps you meant you were waiting for the $ to go even lower rather than waiting for housing prices to go down. I think it may continue to go down further if the price of oil continues downward.


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## NorthernRaven (Aug 4, 2010)

james4beach said:


> In the US, a non-citizen and non-resident can open and use bank accounts, including savings deposits.
> 
> I do this right now. In the tax definition, I'm a US non-resident yet I still actively use a US domiciled bank account. However you will find this difficult to do unless you have a US mailing address.
> 
> ...


TD has its Crossborder program (not Borderless), which appears to allow Canadian residents to open a true US-domiciled account with their TD Bank subsidiary down there. I think RBC is similar, and perhaps the others. Presumably they have been making it easier lately to open with the US subs without a US address/presence/SIN, etc.

As far as deposit guarantees, many of the provincial credit union guarantees include US funds, and many don't have limits. Hubert in Manitoba has a 0.75% US account. But if the OP is worried about the solvency of one of the big 5 banks, they may not be satisfied with provincial CU guarantee systems!


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## james4beach (Nov 15, 2012)

With the CAD dropping so low, it's tempting to just convert some USD to CAD ("buy low", right?). You can then earn high interest far beyond rates you'll see in the US.

With my USD income, I hedge my bets and convert some of it to CAD while keeping some in USD


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## RBull (Jan 20, 2013)

NorthernRaven said:


> TD has its Crossborder program (not Borderless), which appears to allow Canadian residents to open a true US-domiciled account with their TD Bank subsidiary down there. *I think RBC is similar*, and perhaps the others. Presumably they have been making it easier lately to open with the US subs without a US address/presence/SIN, etc.
> 
> As far as deposit guarantees, many of the provincial credit union guarantees include US funds, and many don't have limits. Hubert in Manitoba has a 0.75% US account. But if the OP is worried about the solvency of one of the big 5 banks, they may not be satisfied with provincial CU guarantee systems!


Yes they do, and it is very simple to set up. RBC is a virtual bank in the US.


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## Johnny (Oct 30, 2014)

Will check them out. Not sure how it will work for my business opening the account or if they will only open personal.

As for usd exchange right now....yes it's gotten better for the usd vs cad, but not sure yet what to do with that. Do I wait it out and hope it rises more or exchange to cad. If so what percentage do I keep in USD? I reside in Canada and hope to invest this cash to make it grow for retirement and kids but not much of a re to be investing in real estate in Canada. Too many uncertainties and I think the same goes for stocks.


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## NorthernRaven (Aug 4, 2010)

RBull said:


> Yes they do, and it is very simple to set up. RBC is a virtual bank in the US.


Yeah, RBC sold off its US retail operations awhile back, I think. TD Bank (the US subsidiary) has 1300 branches along the US East Coast states. At a quick glance, it looks like the other big 3 don't have a similarly promoted US-domiciled account. BMO has its Harris subsidiary, but doesn't seem to hook up with them like this. I couldn't find a cross-border account at CIBC or Scotia, either, but that is less surprising since they don't have US retail branches.


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## NorthernRaven (Aug 4, 2010)

Johnny said:


> Will check them out. Not sure how it will work for my business opening the account or if they will only open personal.
> 
> As for usd exchange right now....yes it's gotten better for the usd vs cad, but not sure yet what to do with that. Do I wait it out and hope it rises more or exchange to cad. If so what percentage do I keep in USD? I reside in Canada and hope to invest this cash to make it grow for retirement and kids but not much of a re to be investing in real estate in Canada. Too many uncertainties and I think the same goes for stocks.


I misunderstood that you were considering investing in *US* real estate. If it is all going to come back to Canada anyway, there's probably less need to park most of it in $USD? Unless you have a future investment that will require a big slice of US dollars (US ETFs for instance, but Vanguard now offers a lot of Canadian option that used to require holding US ETFs), waiting on the exchange rate is an uncertain investment choice just like any other. You could park in $C with CDIC insurance for the short term.

There's a thread elsewhere on the forum of someone who was moving $500K the other way, and got an incredibly low forex spread (5 basis points, or 0.05%) on the exchange from Knightsbridge, and Canadian foreign exchange specialist. You should check it out if you are going to be converting that big a pile.


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## Johnny (Oct 30, 2014)

I honestly don't know what I will be investing in anymore. It all depends on how the world goes in the coming years. I would invest in US real estate and I would buy in Canada only if the numbers make sense (which it really hasn't in past couple years)

I just don't ant the cash to be sitting there making nothing like I did in most of 2014


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## lonewolf (Jun 12, 2012)

Johnny said:


> I just don't ant the cash to be sitting there making nothing like I did in most of 2014



Might not have increased the number of dollars, The value of those dollars has increased against other currencies & commodities. Johnny job well done


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## seh (Nov 10, 2014)

How about just leaving it in US cash in your brokerage account? It would be covered by CIPF (up to CAD 1 million).

Guess it depends on your confidence on the insurer's ability to pay, in the even of a large broker/bank going under.





Johnny said:


> Hi,
> 
> I have a few hundred thousand in USD$ siting in a canadian bank. My plans were to exchange and invest in some real estate, but will now hold off a bit until we see where the market is heading. Since the cdic does not insure USD, where can I put my cash to be protected?
> 
> Thanks


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## OhGreatGuru (May 24, 2009)

If a Canadian bank goes belly up and defaults on deposits, the least of your worries will be your USD account.


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## dime (Jun 20, 2013)

You could put it in a trading account and put some into some ETFs like:

VCSH is fairly low risk short term corp bonds at 1.6% yield. With a duration of 3 years you could see the value drop 3% if rates were to increase 1% (doubt they would. Maybe a quarter percent at most in a year.)

Check out BKLN it is very short term / floating so it should be safe if/ when rates rise.


https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=bkln

http://seekingalpha.com/article/294...diversify-a-fixed-income-strategy?source=feed

But if you wanted to take on a little more risk investing some to get a better return....

a high quality dividend yielding ETF like VYM. If you want some real estate and yield get some
VNQ and VNQI for a global REIT exposure.


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## IFITSTOBEITSUP2ME (Mar 6, 2015)

We opened up a Bank of America savings and chequing account in 2009 no problem, so yes you can open up a bank account as a Canadian and lots of our snow birding friends have done so using their Canadian addresses. They just deduct the minuscule amount of interest tax at source and have us signed a form to submit to Uncle Sam. Use our Canadian address for the accounts. We needed it to build a property down there which we are now in the process of selling due to how we are treated as non-homesteaders with almost triple property taxes compared to others in our neighbourhood. 

FWIW: There's more to owning property down in the USA than sourcing a great deal, make sure you know what's involved as foreign ownership, structure it correctly at the front end in case a joint spouse/owner passes away, and especially the impact of what you would have to pay upon selling at a later date. Believe me albeit our property is worth more than double what it cost us to buy the lot and build, we feel we'd never purchase down in the USA again as a foreign owner. Just saying do your due diligence, speak to lawyers and accountants aufait regarding Canadians owning USA property. Remember things vary state to state not just federally!!!

We are not very financially savvy folks ourselves, albeit we've built our retirement and livelihoods for many decades through real estate in Europe and North America. We do however feel it very wise to hold US currency being the most dominant for most world wide trading. As for now being a good time to convert back at a higher rate. It wasn't that many years ago the exchange rate was C$1.65 to US$1, so crystal ball aside will it continue to strengthen further?


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## james4beach (Nov 15, 2012)

TD only has bank branches along the east coast, and they're a totally distinct operation from TD Canada Trust. I'm a TDCT customer and asked them to help me set this up, and they referred me to the US operation and said to just contact a US-based TD. So it appears that establishing a US-domiciled account is not any easier with TD, versus any other US bank. The advantage of doing this though is the ease of moving money between banks in the two countries.

As others have said, you can definitely open a conventional US-based bank account if that's what you want to do.

It really comes down to your plans for the money:

- If you're definitely buying US real estate soon, keep it in an American bank

- If you're uncertain what you will be doing with the money, keep it in Canada. It's easy enough to store it in US t-bills or those ETFs (SHV, SHY, SCHO). Heck, keep some of it uninsured, you can convert it to CAD later to instantly gain CDIC insurance.


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