We have a student loan in the US, which is at low percentage rate. We live in Canada, and the CAD <-> USD conversion rate is getting worse.

We have several stock and fund positions held in USD. For example, we have some S&P index fund shares.

Should we liquidate these to pay off the student loan? Or should we continue to send cash from our income down to the US and getting a poor conversion rate to pay the loan monthly?

Is this a simple calculation of checking the % return on the fund against the conversion rate issue?

My thought is that keeping the fund compounds in the stronger USD, and since the student loan interest is low, we shouldn't worry about the conversion rate and keep the fund.

1 Answer 1


You shouldn't liquidate a strong investment purely because it's denominated in the same currency.

You don't want to look at the worsening CAD-USD conversion, but the fees charged by the broker. The worsening rate just means that your USD investments are a slightly bigger proportion of your overall assets. And if you expect the CAD-USD to continue the trend, then selling out USD means you are selling an appreciating investment. You should use the assets that you expect to give you the least return in the future, such as uninvested cash (if any).

You're really looking at two questions: (1) should we pay off the loan now or make regular payments, and (2) if paying it off, should we liquidate the US index fund to do it?

The analysis for whether to pay it off is how you expect the costs to rise in the future (conversion rate, loan interest) versus the opportunity cost of paying it off (the ROI you could've gotten with the money if you didn't pay your loan, plus the flexibility and convenience of having the assets in the interim). If you decide to pay off now, then deciding which assets to use should turn more on their expected future performance than the conversion rate.

If USD is going to continue rising relative to CAD, then don't sell USD investments.

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