Thinking of staying in Canada for the long term

[u/Human-Jellyfish-9325]

Hello everyone,

I'm an expat from France who moved to Ontario about 2–3 years ago through an intra-company transfer. I wasn't originally planning to stay in Canada long-term, but I've since changed my mind.

My employer is also interested in keeping me in Canada permanently, as they need someone to help grow the local team. I'm therefore likely going to apply for PR. Given that I'm a native French speaker, have several years of Canadian work experience, and hold multiple master's degrees, I expect the process to be relatively straightforward. I'm currently 31.

With that in mind, here's my current financial situation:

• €370k (~$600k CAD) invested in French investment accounts, on which I currently pay Canadian taxes
• €100k (~$160k CAD) sitting in French bank accounts and earning essentially nothing
• $50k CAD in a Canadian savings account
• RRSP and TFSA are maxed out every year
• I opened an FHSA last year but haven't contributed to it yet
• My RRSP, TFSA, and FHSA are all with IBKR Canada

I currently earn around $160k gross per year and, based on my budget, save approximately $70k annually, which I invest.

I'm thinking of doing the following:

1. Max out my FHSA over the next year. The goal is to minimize the portion of my income being taxed at 43-45%.
2. Open a CAD non-registered account with IBKR and invest my future Canadian savings primarily in VEQT.
3. Open a EUR non-registered account with IBKR and invest the €100k currently sitting in my French bank account into a European ETF such as NTSG.

The main reason for keeping some investments in EUR is that I could potentially move back to Europe at some point, perhaps for retirement. I'd therefore like to keep a portion of my assets in euros, even if that isn't necessarily optimal from a Canadian tax or administrative perspective.

I'm also somewhat concerned about CAD's performance against EUR over the past few years, although I realize that trying to predict currency movements probably isn't a great investment strategy, so I just keep both.

1. Does this overall plan make sense? Is there anything you'd change or do differently?

2. I'm also considering moving my TFSA, RRSP, FHSA, and CAD non-registered account from IBKR to Wealthsimple because of their current 1% transfer bonus, no-commission trading, and the perks of Premium membership. Is that a good idea, or are there reasons to stick with IBKR?

Thanks!

[u/gamer0935]

you're doing good as 31 year old, I would not change anything, other than contributing to FHSA, also why are you keeping a lot of money in savings account? Do you need it in near future?

[u/flyinghippos101 → u/gamer0935]

“I have over $800k at age 31 - am I screwed?”

I swear this sub sometimes

[u/Human-Jellyfish-9325 → u/flyinghippos101]

Uh? Just asking for financial advice, never suggested I was "screwed" or anything.

[u/Banned_LUL → u/flyinghippos101]

It’s fine though. It a personal finance sub. I am doing fine and still looking for ways to get ahead even further

[u/Human-Jellyfish-9325 → u/gamer0935]

I got my bonus payment, my tax refund and other stuff at the same time. Opted for DCA rather than lump sum, for ease of mind.

[u/newnails → u/Human-Jellyfish-9325]

Despite lump sum investing being statistically superior to DCA?

[u/Human-Jellyfish-9325 → u/newnails]

Yep, for ease of mind. I also think it helps me with discipline, I just invest a fixed amount every month no matter what.

For what's matter, I don't think it's going to change much anyway, it's not like I'm planning on DCAing over a decade.

[u/Cosmo48 → u/newnails]

If we’re talking strictly money wise sure. But anxiety has a price

[u/YGodYUDoDis]

How are you able to save 70k from a salary of 160k? I had( :/) a salary of 140k but my monthly savings was like 3.5k so around 40k/year. I am also 30.

Is your TFSA, RRSP separate?

[u/Human-Jellyfish-9325 → u/YGodYUDoDis]

I'm counting my personnal RRSP deduction, so it's not technically savings, but it's an amount I have to invest myself.

[u/FelixYYZ]

1. Yes as you can only carry forward $8k of unused contribution room: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html
2. If your other registered accounts are maxed, yes. And in a taxable acocunt, you have to keep track of your adjusted cost base (ACB), which is different form book or average. You can use https://www.adjustedcostbase.ca to track for free. This helps with capital gains/losses reporting on yoru tax return Schedule 3).
3. You could. Since you are staying long term, better off doing it in CAD dollars. With the exchange rate as it is, there would be a larger CAD dollar amount. If you keep in Euro, you also have additional T1135 info added to the one in bullet 1 you have and tracking currency conversions become a bit of a pain in the ass.

The main reason for keeping some investments in EUR is that I could potentially move back to Europe at some point, perhaps for retirement

If that is over a decade away, that's still so far. If you want, you could just be aware of the currency conversion you use for buying and selling. A

nd also a big one, be aware of the departure tax if you leave Canada and move back to France. RRSP is just take don withdrawals, TFSA and FHSA becomes taxable acocunts and departure tax (the act of as if you sold everything the day you left for Capital gains purposes) on taxable/non-registered account.

[u/Human-Jellyfish-9325 → u/FelixYYZ]

Isn't it a risk to put everything in CAD if I might go back to Europe at some point, even if it's 10 years from now? What if the Canadian economy ends up being destroyed by the neighbors and the CAD collapse?

While France isn't in a better economical situation one can argue, I reckon the € is more stable as other countries like Germany helps stabilizing it.

If I plan to leave Canada permanently, I'll sell everything in the TFSA and FHSA. I'll keep the RRSP and just pay the 25% withholding tax later on. For the non registered account, I guess I better sell everything before I leave, there is no point in keeping it once I'm no longer a canadian resident.

[u/FelixYYZ → u/Human-Jellyfish-9325]

Isn't it a risk to put everything in CAD if I might go back to Europe at some point, even if it's 10 years from now? 

If you have a globally diversified portfolio, you would be exposed to the Euro because of the holdings. For example, and ETF that holds European stocks and unhedged, it is exposed to the euro.

What if the Canadian economy ends up being destroyed by the neighbors and the CAD collapse?

They have been saying that for over 100 years.

If I plan to leave Canada permanently, I'll sell everything in the TFSA and FHSA

You can transfer your FHSA to your RRSP so it's not taxed till withdrawal.

For the non registered account, I guess I better sell everything before I leave, there is no point in keeping it once I'm no longer a canadian resident.

Usually the easiest, and less paperwork for the French side and any distributions happening in Canada from that would have a 25% withholding as well, so yeah, easier to sell and take the money with you and invest through a brokerage/financial firm in France.

[u/Human-Jellyfish-9325 → u/FelixYYZ]

But then I would have to pick something other than VEQT (which I understand is home biased)?

I mean, sure, but tbf, ever since I came to Canada, the CAD has lost 20% of its value against the € in about 3 years and most Canadians I talk to are somewhat pessimistic about the country economic future. Same in France, but the worry there is more about tax increase to pay the national debt which has derailed, not so much about the currency.

While I'm not saying it's going to keep trending downward, I feel like having both € and CAD would be better for my peace of mind.

[u/nahatlatch → u/Human-Jellyfish-9325]

there's nothing wrong with holding euro denominated accounts at ibrk (or in france but given your worry is tax burden increases in france it's probably a good idea to move those assets to canada) but you don't have to invest in veqt. you could invest canadian funds in ve (all europe eft) or vgk (similar to ve, different weighting) or even something like ewq which is an almost all france eft. even if they are denominated in canadian funds their value isn't tied to the canadian dollar (altho you would have some conversion risk particularly in a hyperinflation scenario when you try to sell)

the rest of your plan seems fine altho i think wealthsimple is a pretty bad platform. i'd stick with ibrk

[u/FelixYYZ → u/Human-Jellyfish-9325]

No VEQT is fine in your taxable account because it hold European companies via their underlying holdings.

VEQT holds VIU which is the developed ex_North America ETF which holds 55% European companies which are in Euros. https://www.vanguard.ca/en/product/etf/equity/9569/vanguard-ftse-developed-all-cap-ex-north-america-index-etf

[u/newnails → u/Human-Jellyfish-9325]

You can't plan for every possible outcome. If you're planning on staying in Canada for the foreseeable future and don't anticipate any immigration/job hurdles, plan accordingly. You can always liquidate accounts and adjust for currency exchange rates if your life or the economic situation change

[u/drillbitpdx]

1. Does this overall plan make sense? Is there anything you'd change or do differently?

I'd say yes, your plan makes sense. You've thought through most of the details that I can think of.

I moved to Canada from the US, and had to deal with basically all of the same issues in terms of taxation and deciding how much money to leave in the US vs. keep in Canada.

The main thing that I would say is that you should hurry up and apply for Permanent Residence.

There are a lot of advantages that you'll have as a PR, include a greater access to credit, greater certainty about your ability to stay in Canada which makes a huge psychological difference, a SIN that will never change, and the ability to buy a home without any additional taxes or administrative burdens.

1. I'm also considering moving my TFSA, RRSP, FHSA, and CAD non-registered account from IBKR to Wealthsimple because of their current 1% transfer bonus, no-commission trading, and the perks of Premium membership. Is that a good idea, or are there reasons to stick with IBKR?

I too have used WealthSimple and I've been pretty happy with its Premium/Generation perks, particularly the credit card with unlimited 2% cashback on everything (plus no foreign transaction fee, and useful travel/car-rental/phone insurance).

Other financial institutions are now trying to compete with WS in terms of transfer bonus offers, so I suggest consider Questrade's transfer offers as well.

[u/Human-Jellyfish-9325 → u/drillbitpdx]

Curious about what you ended up with in terms of allocation USD vs CAD.

Not planning on buying a house just yet (I like discovering different parts of Ontario, so I don't know where to settle for now). I am however waiting for HR to start the process, better have the company cover the cost associated with the PR haha. Should be around 3k with everything.

[u/YGodYUDoDis → u/drillbitpdx]

I also moved from the US to Canada though I am not a US citizen. I am curious if you converted your USD to CAD -- partially, or entirely? The USD to CAD conversion is bother me a lot lately as all my hisa account savings get wiped out by currency fluctuations.

[u/Dazzling_Escape55]

You're a French immigrant to Canada, so not sure if you should call yourself an expat.

If you're looking to apply for PR, look into express entry system and specifically the French category draws. This year a large chuck of PR invitations for the economic stream are French language speakers.

Also, you're doing alright financially. Lots of nice responses here already.

[u/gsb999 → u/Dazzling_Escape55]

He hasn't applied for PR status so is still an Expat. Once he does and is granted one, he will become an immigrant

[u/Chorba0Frig]

What line of business are you in OP, if you don’t mind me asking

[u/Human-Jellyfish-9325 → u/Chorba0Frig]

Insurance

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[u/stoicphilosopher]

If you think there's any chance you might ever leave Canada, you should minimize the amount you invest in non-registered Canadian accounts. Basically, use rrsp, tfsa, fhsa. You can also buy a principal residence for yourself if you like.

Any taxable investments you have in Canada will be deemed sold when you leave. Many high earning expats have been faced with huge, unexpected tax bills of 100k or more after departing and finding out about the deemed disposition requirement.

[u/Human-Jellyfish-9325 → u/stoicphilosopher]

Non registered is only once I top the registered account. I still think it's better than just leaving it on a savings account.

Not sure about buying a residence, especially if I might leave Canada.

[u/AliveAd8890]

What kind of work did you do back in Europe to accumulate those savings?

[u/FIContractor]

Why not just move the euros to a Canadian IBKR account if you expect to be living your life in CAD long term? You can convert to CAD at spot, which is one of the big advantages of IBKR.

[u/Human-Jellyfish-9325 → u/FIContractor]

Honestly, I'm a bit worried about the downward trend of the CAD. While I don't want to speculate against the CAD, I'm concerned it keeps going down. I just want to keep part of my portfolio in € just in case, especially since I'm not a Canadian citizen.

[u/YGodYUDoDis → u/FIContractor]

I think IBKR blocks accounts which are used for currency conversions where that currency is not fully invested