mikewu69

Can someone use US dollars  to make US dollar invesments in Canada and registered as RRSPs ?

Due to the high canadian dollar, it might not be a good time to exchange $US to $CAN.

Richard

Post by chenhui
However, you are talking about the risk of investment. It's another big issue to discuss.

The question here is: Can we hold US dollar asset in RRSP account?

Let me know if I misunderstood the whole issue.


If you really want to

Let's make it clear here, actually, what I am trying to say is not the investment risk in related with foreign exchange risk, Instead, I would like to know which exchange rate you used to calculate the client's RRSP contribution.
like your example, the client put USD10000 as initial investment and the exchange rate now let's make it simple is USD1=CAD1.1 , assume it will change to USD1=CAD1, if you use USD1=CAD1.1, the client's contribution is CAD11000, if you use USD1=CAD1, the client's contribution is CAD10000. THE TAX RETURN IS DIFFERENT.

WHAT I AM TRYING TO SAY IS IT IS IMPOSSIBLE FOR YOU TO FIND A FAIR SOLUTION FOR BOTH CLIENT AND GOVERNMENT, LET'S MAKE A EXTREM ASSUMPTION, IF USD1=CAD0.5 30 YEARS LATER WHEN THE CLIENT RETIRED, DO YOU THINK THE CLIENT MAY GET HIGH TAX RETURN NOW AND PAY LESS TAX LATER IN THEIR RETIREMENT?

PLEASE USE COMMON SENSE!!!! IT IS NOT INVESTMENT RISK, IT IS UNREASONABLE SOLUTION TO INVEST IN USD IN CAD RRSP.

Richard

Post by chenhui
Sample:

Mr. James has US$10000 and he has enough RRSP room.

He can buy US$10000 IG US Money Market Fund in his RRSP account today.

He will get the tax refund next year depending on his marginal tax rate in 2006.

I am just curious, Let me ask you a simple question, "have you ever thought about foreign exchange risk for your example?"

Let's say today's rate USD1=CAD1.1, six months later USD1=CAD1, Mr. James has CAD11000 fpr his RRSP contribution room, which rate are you going to use for his RRSP contribution today?

unless I.G. is doing hedging between u.s. and canadian, but I don't think so. technically, it is impossible. who is going to take the risk, you?

Richard

The answer is so creative!!!

Richard

Again, unfortuntely you can not invest in Mutual funds or stock for your RRSP in U.S.dollar. Impossible!

By the way, I believe that it is reasonable for Canadian dollar continue to appreciate against U.S. dollar, Nov. Last year, I told one of my client he can see 0.9 within one year. That's what happened now. No confidence at all for U.S.dollar.

mikewu69

I mean the investment in US dollar-denominated securities, or mutual funds. Because I have penty of US dollars, but  not enough CA dollars. I do not want to do an exchange.

In 2006, I can buy $18,000 RRSP. CA dollars too expensive. Last week, RBC bank predicts CA dollars would go down to $US 0.81 end of 2007, but BN bank says it would go up to $US .97.

Richard

To answer your question, I am afraid nobody can do that, because of the taxation system, that 's impossible to invest in U.S.dollars in your RRSP.