|
26 Apr 2012
|
Contributing Member
HUBB regular
|
|
Join Date: Aug 2009
Location: Various in Ontario, Canada (no fixed address)
Posts: 38
|
|
Canadian citizen/resident: does US funds account makes sense for long trip?
As a Canadian citizen, does it make sense for me to have an US funds account? What do other people do?
The context is a longer trip (a year?) through South America, parts of Africa.
I guess it is always a gamble, but since I have some funds for the trip saved, does it make sense to "convert" some of it to US dollars when the exchange rate is good to hedge against the possibility of the Canadian dollar tanking? Of course it could go the other way.
Based on a previously trip (3 months) in Central and South America, I used ATMs frequently enough to make me question whether there is "more bang for the buck" to have my "source" currency as Canadian dollars vesrus US dollars.
Any pointers would be welcome.
Cheers.
Adam
|
26 Apr 2012
|
Registered Users
Veteran HUBBer
|
|
Join Date: Nov 2006
Location: Canada
Posts: 738
|
|
A detailed discussion of F/X strategy is probably beyond the scope of this site but in short it's 50/50 whether you should stick to CAD or convert to USD.
F/X speculating is a pretty tough racket, for every group that thinks a currency is going to go up, another one thinks it's going to go down. It's too complex for almost any one individual to figure out and is best left to institutions with super computers and economists on staff.
F/X hedging on the other hand is pretty common practice for businesses who realize that it is nearly impossible to predict exchange rate fluctuations and therefore hedge their positions to mitigate risk.
The key thing to keep in mind is that they typically hedge by converting to the currency that they need to pay their bills to eliminate exchange rate risk.
In your case, you are considering converting to USD which will then have to be converted to the local currency in the countries you visit so you will still have exchange rate risk, you have just changed the risk from holding CAD to holding USD.
You also have to add on top of that the additional transaction costs of that extra step (converting CAD to USD), for ease of calculation say 2%. In addition, you have the opportunity cost of the loss of interest on your current savings as you can get ~2% at a few credit unions while the interest on USD investments is quite low. So if you plan on travelling in a year, the USD/CAD exchange rate has to strengthen by ~4% before it would be more beneficial to hold USD instead of CAD.
In the long term, one very general way of determining what relative exhange rates should be is using purchasing power parity and depending on who you ask you'll get an estimate of a USD/CAD exchange rate of $0.82-$0.92. If this happens, when this happens, and how long it will take to happen is anybody's guess.
The call is of course up to you. IMHO, short term, probably not worth the bother. If it was long term, then it would probably be a reasonable bet to hold some USD.
|
1 May 2012
|
Contributing Member
HUBB regular
|
|
Join Date: Aug 2009
Location: Various in Ontario, Canada (no fixed address)
Posts: 38
|
|
Thanks for your input MountainMan. This is food for thought and gives me some context for further research.
Cheers.
Adam
|
Currently Active Users Viewing This Thread: 1 (0 Registered Users and/or Members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
Next HU Events
ALL Dates subject to change.
2024:
- California: April 18-21
- Virginia: April 25-28
- Germany Summer: May 9-12
- Québec: May 17-19
- Bulgaria Mini: July 5-7
- CanWest: July 11-14
- Switzerland: August 15-18
- Ecuador: August 23-25
- Romania: August 30-Sept 1
- Austria: September 12-15
- France: September 20-22
- Germany Autumn: Oct 31-Nov 3
2025 Confirmed Events:
- Virginia: April 24-27 2025
- Queensland is back! May 2-4 2025
- Germany Summer: May 29-June 1 2025
- CanWest: July 10-13 2025
- Switzerland: Date TBC
- Ecuador: Date TBC
- Romania: Date TBC
- Austria: Sept. 11-15
- California: September 18-21
- France: September 19-21 2025
- Germany Autumn: Oct 30-Nov 2 2025
Add yourself to the Updates List for each event!
Questions about an event? Ask here
See all event details
Check the RAW segments; Grant, your HU host is on every month!
Episodes below to listen to while you, err, pretend to do something or other...
2020 Edition of Chris Scott's Adventure Motorcycling Handbook.
"Ultimate global guide for red-blooded bikers planning overseas exploration. Covers choice & preparation of best bike, shipping overseas, baggage design, riding techniques, travel health, visas, documentation, safety and useful addresses." Recommended. (Grant)
Ripcord Rescue Travel Insurance™ combines into a single integrated program the best evacuation and rescue with the premier travel insurance coverages designed for adventurers.
Led by special operations veterans, Stanford Medicine affiliated physicians, paramedics and other travel experts, Ripcord is perfect for adventure seekers, climbers, skiers, sports enthusiasts, hunters, international travelers, humanitarian efforts, expeditions and more.
Ripcord travel protection is now available for ALL nationalities, and travel is covered on motorcycles of all sizes!
What others say about HU...
"This site is the BIBLE for international bike travelers." Greg, Australia
"Thank you! The web site, The travels, The insight, The inspiration, Everything, just thanks." Colin, UK
"My friend and I are planning a trip from Singapore to England... We found (the HU) site invaluable as an aid to planning and have based a lot of our purchases (bikes, riding gear, etc.) on what we have learned from this site." Phil, Australia
"I for one always had an adventurous spirit, but you and Susan lit the fire for my trip and I'll be forever grateful for what you two do to inspire others to just do it." Brent, USA
"Your website is a mecca of valuable information and the (video) series is informative, entertaining, and inspiring!" Jennifer, Canada
"Your worldwide organisation and events are the Go To places to for all serious touring and aspiring touring bikers." Trevor, South Africa
"This is the answer to all my questions." Haydn, Australia
"Keep going the excellent work you are doing for Horizons Unlimited - I love it!" Thomas, Germany
Lots more comments here!
Diaries of a compulsive traveller
by Graham Field
Book, eBook, Audiobook
"A compelling, honest, inspiring and entertaining writing style with a built-in feel-good factor" Get them NOW from the authors' website and Amazon.com, Amazon.ca, Amazon.co.uk.
Back Road Map Books and Backroad GPS Maps for all of Canada - a must have!
New to Horizons Unlimited?
New to motorcycle travelling? New to the HU site? Confused? Too many options? It's really very simple - just 4 easy steps!
Horizons Unlimited was founded in 1997 by Grant and Susan Johnson following their journey around the world on a BMW R80G/S.
Read more about Grant & Susan's story
Membership - help keep us going!
Horizons Unlimited is not a big multi-national company, just two people who love motorcycle travel and have grown what started as a hobby in 1997 into a full time job (usually 8-10 hours per day and 7 days a week) and a labour of love. To keep it going and a roof over our heads, we run events all over the world with the help of volunteers; we sell inspirational and informative DVDs; we have a few selected advertisers; and we make a small amount from memberships.
You don't have to be a Member to come to an HU meeting, access the website, or ask questions on the HUBB. What you get for your membership contribution is our sincere gratitude, good karma and knowing that you're helping to keep the motorcycle travel dream alive. Contributing Members and Gold Members do get additional features on the HUBB. Here's a list of all the Member benefits on the HUBB.
|
|
|