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Email this10:14 am
September 30, 2017
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US$ 1-5 yr GIC range from 4%-4.40%
and C$ only range from 3.5%-3.8%
12:23 pm
October 27, 2013
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Was there a point you wished to make about the difference?
The US Fed rate is 3.5-3.75% vs 2.25% for BoC. The US 5 year bond yield is about 4% vs 3.2% for GoC 5 year bond. It seems to me to be about the right spread.
2:33 pm
September 30, 2017
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Saving is an art. What else do you see here?
Yes. I have been noting the C$ U$ differences on several posts now.
(On 2nd thought) Yet among the banks/CUs on the GIC comparison chart, I don't know how many offer U$ GICs. Therefore, the flip side of my question ... What else is missing? Why?
4:08 pm
October 27, 2013
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hwyc said
Saving is an art. What else do you see here?
Nothing that has been known by everyone(?) for many months I suspect. Hence the reason I asked the question, i.e. is there something new you wished to inform the forum on to dedicate a thread to?
P.S. The discount brokerages have similar CAD-USD GIC yield spreads
7:41 pm
September 30, 2017
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It would seem the Tangerine US$ GIC is a dead end to me because I want to allocate these under TFSA.
5:16 am
September 29, 2017
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I just learned this week that foreign investment in a TFSA is NOT covered by Foreign tax treaties, unlike RRSP, so gains would be subject to Taxable income owing in the US in this case.
7:32 am
October 27, 2013
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smayer97 said
I just learned this week that foreign investment in a TFSA is NOT covered by Foreign tax treaties, unlike RRSP, so gains would be subject to Taxable income owing in the US in this case.
It is not quite like you suggest. A TFSA is not recognized as a retirement account by the IRS and thus is just another non-registered account for US tax purposes. A Canadian citizen residing in Canada has no US tax obligation beyond withholding taxes, just as in a non-registered accountt.
For ex-pats residing in the USA, any holdings in a TFSA would be subject to 1040 taxation which is why it has been typical advice for ex-pats NOT to keep investments in their TFSAs.
A dual citizen such as a US citizen residing in Canada filing a 1040NR would face a similar issue.
7:49 am
April 6, 2013
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TFSA accounts are covered under the US-Canada tax treaty. Just not as a retirement account, as AltaRed described.
US dividends to a TFSA are subject to a 15% withholding under the treaty instead of the non-treaty 30%.
8:14 am
September 29, 2017
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Sorry for the imprecise info. That is correct....subject to 15% withholding tax, which is NOT recoverable. So needs to be factored into investment choices in TFSA.
12:48 pm
November 3, 2022
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Turning back to the original focus of this thread, the USD GIC rates at Tangerine are a bit better than I was able to find at other FIs which offer electronic purchasing.
I've had mixed results with the GIC brokers, so have focused on direct purchasing since GIC rates are not (now) that much higher from brokers. And while the State Bank of India does offer higher rates, these come with hassles of in person visits to a branch which is far from my home, plus some minor fees for opening an associated chequing account.
So I'll be filling up to my CDIC limit with 1.5 and 2 year USD GICs at Tangerine next week. I don't want to invest the US cash in equities until after their market corrects, and this appears as good a place as any to keep those funds from losing purchasing power.
4:32 pm
September 11, 2013
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Don't forget to consider a change in exchange rates effect on your total yield, it's not just interest rates now that you're considering.
9:42 am
November 3, 2022
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Bill said
Don't forget to consider a change in exchange rates effect on your total yield, it's not just interest rates now that you're considering.
That's a good point, but my skills in exchange rate forecasting are not high. Trying to predict the USD value in 18 - 24 months is a tough call for me, given the world's current volatility. Since I have a portion of my assets already in USD, I work on investing them in that currency, and not moving (much) money between currencies.
