Would it be feasible to move my savings to Canada? Would this be a good way to avoid losses associated with another US banking crisis? (assumption is Canadian banks will weather a crisis better than US banks) Curious about the benefits/risks, even theoretically.
The simplest, most convenient way I know of to "move your savings to Canada" is to purchase an exchange-traded fund like
CurrencyShares Canadian Dollar Trust, or a similar instrument. (I identify this fund because I know it exists, not because I particularly recommend it.) Your money will be in Canadian currency earning Canadian interest rates. You will pay a small portion of that interest in fees.
Since US banks are already guaranteed by the FDIC up to $250,000 per account, I don't really think you avoid any risks associated with the failure of an individual bank, but you might fare better if the US currency is subject to inflation or unfavorable foreign-exchange movements - not that such a thing would be a direct risk of a bank failure, but it could happen as a result of actions taken by the Federal Reserve under the auspices of aiding the economy if the economy worsens in the wake of a financial crisis - or, for that matter, if it worsens as a result of something else, including legislative, regulatory, or executive policies.
Read the prospectus to understand additional risks with this investment. One of them is foreign-exchange risk. If the US economy and currency strengthen relative to the Canadian economy and its currency, you may lose substantial amounts of purchasing power. Additionally, one of the possible results of a financial crisis is a "flight to safety"; the global financial markets still seem to think the US dollar is pretty safe, and they may bid it up as they have done in the past, resulting in losses to your position (at least in the short term).
I do not personally recommend moving all your savings to Canada, especially if it deprives you of income from more profitable investments over the long term, but moving some of your savings to Canada at least isn't a stupid idea, and it may turn out to be somewhat profitable. Having some Canadian currency is also a good idea if you plan to spend the money that you are saving on Canadian goods in the intermediate future.
Yes, you can put assets in Canadian banks.
Will it protect your wealth to a greater extent than the FDIC protection provided by the US Government? Probably not.
If you do business or spend significant time in Canada, then having at least some money in Canada makes sense. Otherwise, you're trying to protect yourself against some outlying risk of a US banking collapse, while subjecting yourself to a very real currency exchange risk.
It is absolutely feasible to move your savings into Canada. There are a few ways you can do it. However it is unlikely you will benefit or avoid risk by doing so.
You could directly hold your savings in the CAD.
Investing in Canadian bonds achieves a similar goal as holding your money in the CAD. By doing so you will be getting re-payed with CAD.
Investing in Canadian companies
Some Canadian companies also trade on US markets. In addition some brokerage firms allow you to trade on Canadian markets.
The problem with any of the options is the assumption that Canadian banks will fare better then US banks. The entire globe is very dependent on each other, especially the more developed nations. If large US banks were to fail it would create a domino effect which would spiral into a global credit crunch. It wouldn't matter if your invested in Canadian companies or US companies they would all suffer as would the global economy. So it would probably be more valid to refer to your question - enter link description here
If you are referring to weather the Canadian bonds would be a safer investment over US Treasuries it would all depend on the scenario at hand. Investors would probably flock to both treasuries.
protected by littleadv Dec 4 '13 at 7:52
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