Should you invest in foreign ETFs?

Nov 12 11:11 2018 Print This Article

Q: My partner and I have saved 1,000 British pounds and 7,000 euros: we were planning to move to Europe, but our plans changed and we’ve decided to stay in Canada. We would like to invest this cash in ETFs on the London Stock Exchange and the Frankfurt Stock Exchange, so we do not want to convert it to Canadian or US dollars. Unfortunately, our brokerage (Questrade) does not offer investment accounts in other currencies. What are our options for investing this money in Canada?

– Ann

A: It’s possible for Canadian residents to invest in ETFs on overseas stock exchanges, Ann, but before we look at your options, let’s consider whether it makes sense for you to do so.

If you’re simply looking to avoid the normally high cost of currency exchange, I don’t blame you. Banks tend to offer terrible rates on currency conversion. But there are businesses that exchange currencies at much more reasonable rates, so you may be able to reduce this cost considerably if you do some research. Converting your currencies is likely to be the best solution because as we’ll see, the cost of investing your money on overseas exchanges is likely to be much higher.

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Money Sense

MoneySense is a Canadian personal finance and lifestyle magazine published by Rogers Publishing Limited, a division of Rogers Communications.Written for Canadians who want to take financial control of their lives, MoneySense is Canada's best-selling investment and lifestyle magazine, helping readers make smart, informed decisions about how to get the most from their money. The magazine has received many awards, including multiple National Magazine Awards and CFA Society Toronto Awards.

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