US Stocks and Canadian Currency - Stocktrades Canada

I have been wanting to jump into some US stocks but have been holding off as I had hoped the Candain dollar would improve thus adding to value to the conversion. Doesn’t appear this is going to happen anytime soon. I do see the Canadian dollar decreasing in value in the short term which suppose would be an additional yield to the US stock portfolio, but if the Canadian dollar increased significantly over the next couple years it would really eat into the US stock yields. I suppose one can just leave the cash as US currency until the Canadian dollar drops again etc.

How I wish I would have converted back when we were close to par but is what it is.

Any advice, or tips and tricks when funding US stocks, not sure if I want to go with the hedging options on ETF’S etc as the data seems to show long term the extra fees added to these funds negate the advantages of hedging?

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Asked on October 30, 2024 11:59 am

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My general guideline when it comes to hedging is the longer the time horizon, the less need to hedge. As you had mentioned, hedging fees tend to eat into returns over the long term while currency fluctuations tend to level themselves out.

I buy USD every single week. Half of my weekly contributions go towards USD and that helps me even out the volatility when it comes to currency fluctuations.

It is very difficult right now with the weakness of the dollar to buy USD. It is relatively easy for me to do it because I'm buying USD with the intentions of holding that USD for 20+ years. But again, the shorter your time horizon, the better it is to hedge. For example, if I planned to withdraw the money and convert back to CAD in the next 5 years, I'd consider hedging, because as you mentioned the currency fluctuations can really bite into returns.

Ultimately, it is up to the individual investor and their overall risk tolerance/timeline.

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Posted by Dan Kent

Answered on November 1, 2024 9:57 am

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Thanks Dan, comments are appreciated.

(bpl521@outlook.com at November 1, 2024 2:39 pm)

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