Category: Foreign Exchange

dollar cut in half

Kicking USD out of my retirement portfolio

RobH1 Comment

After much consideration, I’ve decided that holding USD-denominated assets during retirement is no longer a good idea. I have been struggling with this question for a while now.

There are a few reasons why I’ve reached this conclusion:

  • I no longer spend USD. I have two credit cards1 that allow me to avoid foreign exchange fees.
  • Complexity. The USD in my RRIF accounts needs to be converted periodically since withdrawals are in CAD. The USD in my non-registered account might eventually lead me to have to file a T1135, and I hate new tax wrinkles. And of course the USD funds add to the universe of funds I have to manage in all the accounts. Fewer is better!
  • Choice. Without USD in my portfolio, the universe of DIY brokers opens up2 and the number of accounts I have to have is also reduced34.

The fluctuating CAD/USD FX rate might be another reason, but that hasn’t really bothered me. In the long term, it’s reasonably stable.

So how to go about doing it, and what impacts will this have? Let’s take a look.

General considerations

So of course, the only real way to convert USD into CAD at Questrade is to use Norbert’s Gambit. Performing the Gambit is a multi-day activity:

  • Day 1: Sell the USD asset and buy DLR.U with the proceeds; make journaling request to convert DLR.U into DLR
  • Day 2: Wait for settlement of trades made on day 1
  • Day 3: Wait for journaling to complete
  • Day 4: Wait for journaling to complete
  • Day 5: Sell DLR and buy CAD-listed assets to replace what I sold on day 1

Each time I do this exercise, it makes me a little leery since

  • I have to pay $9.95 plus GST to journal the shares on Questrade (not a huge deal, but as you have read elsewhere on the blog, I am a cheapskate)
  • I’m out of the market for 3 days. I really hate being out of the market since big moves can happen over short periods of time. Of course, this cuts both ways; I could miss a big rally or a big meltdown as a result5.
  • I’m making a bet on favourable FX rates. FX rates don’t typically swing much in short periods of time, but since over 50% of my retirement portfolio is in USD I’m not willing to try to find the “right” time to make such a trade.

As a result, I’ve made the decision to

  • Sell off 1/6th of my USD portfolio every month for the next six months (or thereabouts). This will allow me to smooth out any FX speed bumps and limits how much of my portfolio is idle at any one time.
  • Take advantage of a free month of Questrade Plus6 and do a few journaling requests during this month and save a few bucks

While doing all of this, I’m trying to be mindful of my asset allocation targets which are (newly set as a result of my analysis at Are my portfolio’s asset allocation targets “correct”?)

  • 5% Cash
  • 15% Bonds
  • 23% Canadian Equity
  • 37% US Equity
  • 20% International Equity

I’ll try to start moving my portfolio to these new targets as I make this shift, but given the targets are brand new, I’m in no particular time constraints; I’m expecting the portfolio to slowly move from the old targets to the new ones, finally landing at some point later in 2026.

Kicking USD out of my RRIF accounts

Of the 5 RRIF accounts I have in the household (three for me, two for my spouse), only two of them have USD in it, and the USD portion is 100% invested in either AOA (an 80/20 all-in-one global equity fund) or ICSH (an ultra short-term bond fund that stands in for cash)

AOA can be replaced with XGRO but it’s not an exact replacement. AOA has almost no Canadian Equity content and a higher US Equity content than XGRO. This means that a one-to-one switch will cause my Canadian Equity content to increase and my US content to decrease. I’m expecting this will eventually cause me to need to replace some of my AOA with a pure play US Equity asset. I’ve chosen VFV since it mirrors the S&P 500, an index that won’t be adding the mega-IPOs any time soon 🙂

ICSH can be replaced with ZMMK since they are similar in nature, but I’m not going to do that. Why? Because I hold ZMMK in my non-registered account as a VPW cash cushion, I do make trades in ZMMK from time to time. I don’t want to end up in a situation where I’m selling ZMMK in my non registered account and buying it in my RRIF, since this could deprive me of possible (small) capital losses — CRA does not look kindly on trying to “artificially” generate capital losses in this way.

So after mulling it over a bit, I’ve decided to replace ICSH in my RRIF accounts with ZST. It’s a short term bond fund which is a bit riskier than ZMMK7, but I’m counting on it being cash-like for my purposes. Neither has been around all that long, but it appears they are pretty close on the performance front with a slight edge for ZST.

So when all is said and done, my RRIFs should have three holdings: XGRO (mostly), VFV (some), ZST (about 2.5% of overall portfolio),

Kicking USD out of my non-registered accounts

Here there are two holdings

  • ICSH in my VPW cash cushion account
  • SCHF, an international equity fund I’ve held for years and years

The ICSH replacement is easy — move it to ZMMK. I’ll do that all at once. It will mean a loss of over a percentage point in gains at the moment, but this is the price of simplicity, I guess.

The SCHF sale is a bit like selling 6 months of RRIF payments all at once, which will attract a capital gain. I’m ok with that, but I’d prefer to avoid more capital gains for the rest of the year (I didn’t budget for that when I tried to work out my likely tax bill for 2026). Since selling SCHF is actually helpful in getting my new asset allocation targets right, I don’t need to replace it with another International Equity fund. My calculations tell me that I’ll probably need to replace it with a Canadian Equity fund. Here I’ve chosen to use VCN since it uses a different index provider8 and would be considered different from my other non-registered Canadian equity funds, namely XIC and HXT9. Buying VCN and selling it in subsequent months to fund my retirement salary should result in minimal capital gains for the remainder of the year.

So when all is said and done, the VPW cash cushion account should be 100% ZMMK and the other non registered account will be 100% CAD-listed ETFs, mostly tied up in Canadian Equity.

You’ll be able to see my progress in my next instalment of What’s in my retirement portfolio (May 2026) which I should have ready at the end of this month!

  1. Rogers Mastercard and Wealthsimple Visa, as detailed in What are the best credit cards? ↩︎
  2. e.g. Wealthsimple does not currently (June 2026) support USD RRIF accounts. ↩︎
  3. e.g. QTrade USD accounts are always separated from CAD accounts. So instead of 4 RRIF accounts, I could have 8 at QTrade. Painful. ↩︎
  4. I guess that’s actually a “reduce complexity” argument. Don’t tell anybody. ↩︎
  5. https://www.bogleheads.org/forum/viewtopic.php?t=370885 shows me that my fears are unfounded. It’s practically a normal distribution. ↩︎
  6. A subscription service offered by Questrade to give you free journaling. And other things I don’t really care about. ↩︎
  7. Average duration is longer, which makes its price more sensitive to changes in the overall interest rate environment. ↩︎
  8. FTSE Canada all cap rather than S&P/TSX for the others ↩︎
  9. And therefore avoids CRA’s superficial loss rules ↩︎

dollar cut in half

Another quarter, another gambit

RobHLeave a comment

Every quarter, I convert some of my USD to CAD using Norbert’s Gambit. A good chunk of my retirement holdings are in USD, but since I spend in CAD, I need a cheap way to convert. I’ve been tracking my actual costs using Questrade’s platform for the past year. You can read about that over here.

Anyway, over the past year, the conversion has been effective. I have never paid the usual FX rates charged by Questrade (1.5% over the spot rate). My most recent conversion was the most expensive one to date, and that was a rate 0.7% over the going rate on the day I started the process. On three other occasions, I actually made out better than the spot rate, but that was because the foreign exchange rate moved in my favour in between the purchase and the sale.

My need for US cash has evaporated now that I have a no-FX fee credit card. (You can read about what cards I’m using over here.) So this makes me wonder if it’s time to get rid of the majority of my US holdings. Note this doesn’t mean that I will stop investing in US equities — that would be unwise — it just means I will stop holding assets denominated in US dollars.

The are downsides to holding USD-denominated assets, of course:

  • It adds complexity to the portfolio. AOA is the US equivalent of XGRO; both are 80/20 asset allocation ETFs. But because AOA is a US ETF, it holds a paltry amount of Canadian Equity, and I have to make up that difference elsewhere by holding pure Canadian Equity ETFs like HXT or XIC.
  • If you hold too much USD (or any foreign property) in non-registered accounts, you’ll be obliged to file a T1135 with CRA1.
  • It may limit the universe of online brokers you can deal with. Wealthsimple, for example, does not currently support USD RRIF accounts.
  • Foreign exchange can work for or against you. It’s another variable that can impact your returns. I’m not convinced this is a downside, but it does make tracking things like ACB in a non-registered account a little more tedious.

    One big hesitation I have about converting all my USD holdings would be the time I’d have to be out of the market while the Gambit runs its course. As you can see in from my tracking, each conversion means I’m not invested in AOA for 3-4 trading days. I just hate that idea. I also hate the idea of converting at a time when the CAD<->USD exchange rate is perhaps not optimal. (A low Canadian dollar would be a good thing for me in this case.)

    One place I sort of like having the USD assets is in my cash cushion, especially since US interest rates are quite a bit higher than Canadian rates. (I track current rates over at HISA and short-term bond table (Canada & US)).

    So perhaps I just need to craft a plan where I make more aggressive conversions over a fixed time frame. x% every month, with a deadline. This helps mitigate the “time out of market” and “exchange rate” issues. Crafting the plan with fixed milestones also takes emotion out of the equation; if I set a series of future transactions, then all I have to do is press the button mechanically.

    More to come on that.

    1. If your cost base exceeds $100,000 CAD ↩︎

    What are the best credit cards?

    RobH1 Comment

    The best credit cards for me are not necessarily the best cards for you. I don’t find I’ve changed my spending habits much in retirement, but being retired has meant I can spend a bit more time trying to optimize my credit card holdings to maximize benefits to me. One thing that I value above all else is cold, hard, cash. I don’t like “points” cards because understanding what kind of ROI I’m getting is nearly impossible, and always subject to the whims of a points to dollar conversion rate that can be changed at any time. I’m now holding three different credit cards, all of whom pay cash back, and all of them have their place in my spending universe.

    Primary Card: Rogers Red World Elite Mastercard

    Read about it here. As a Rogers customer1, this card is really the best possible card for my needs:

    • No fees
    • 2% cash back on everything, paid as a reward credit that you then immediately apply to subsequent card purchases; this reward credit is multiplied by 1.5 if you apply it to a subsequent card purchase for a Rogers service.
    • 3% cash back on USD purchases, which erases the 1.5% FX fee charged, and then some
    • Travel insurance, purchase insurance, etc etc
    • Free supplementary cards

    The problem with this card is that its credit limit is a bit low; I even asked for an increase and was denied2.

    The other problem with this card is that it’s not tied to my normal banking, so I have to pay it manually3. And it only offers a login for the primary card holder, which isn’t ideal.

    Secondary Card: CIBC Costco Mastercard

    Read about that one here. This one is actually a conversion from another CIBC card I had. Converting a card from one kind to another means you don’t lose your credit limit, which was the main appeal here. I am a Costco member, so this is a good second choice for my needs:

    • no fees
    • 1% cash back on everything except 2% back on gas and Costco.ca, and 3% back on Costco gas4 and restaurants5
    • Cashback paid annually in the form of a Costco gift certificate
    • Travel insurance, purchase insurance etc etc
    • Free supplementary cards

    The travel card: Wealthsimple Visa

    I’ve been on the waitlist (like many people) for quite a few months for this card now. I finally got my card when I called their support line to query about why a transaction on their prepaid Mastercard6 failed to complete. (Turns out there’s a daily limit on that card that can’t be modified). Anyway, the helpful agent offered to put in a good word for me and a few days later, I was able to successfully apply for the card and immediately download it to my phone7.

    The Wealthsimple Visa’s features are a lot like the others:

    • no fee (if you have enough assets with Wealthsimple)
    • 2% cash back on everything, paid into your account every month
    • travel insurance, purchase insurance, etc etc
    • and…most importantly for me, NO foreign exchange fees for any currency

    With no foreign exchange fees, Wealthsimple’s Visa becomes the go-to card anytime I’m travelling to a non-US destination. It also becomes my primary card in the event that I cut ties with Rogers, since the only thing the Rogers card does better than the Wealthsimple card is paying for Rogers services.

    The Wealthsimple card had a better credit limit than the Rogers card right out of the gate (I guess it helps that I had hard assets with them) but inexplicably does not have the concept of a secondary card, so my spouse is currently locked out of that benefit.

    The card that got cut: the CIBC Aventura USD Gold Visa

    This was a card I had for a few years when US travel was a more frequent (desirable?) option. It’s not a bad card, especially if you frequently transact in USD, but with two other cards that offered “good enough” coverage on USD purchases, I felt it was no longer needed. And (I forgot this) when I canceled my almost-never-used CIBC USD checking8 account, I lost the “no-fee” aspect of this card. At a cost of zero I might have been convinced to hang on to it “just in case”, but with a $35 annual fee (USD) it was no longer required. An hour long wait on hold with CIBC telephone banking was all it took9.

    What card is used when?

    • For foreign currency transactions, Wealthsimple Visa card is best. Rogers card also a good option if USD.
    • For Costco gas and restaurants, Costco card is best.
    • Anything else, Rogers
    1. Internet, television, home phone, if you’re curious. 2 year contract which I’ll probably break at the earliest opportunity 😉 ↩︎
    2. Admittedly, this hurt my feelings a bit. ↩︎
    3. I could set up a PAD, but I trust Rogers about as much as they trust me, it seems. ↩︎
    4. There’s no advantage to actually shopping at a Costco store with this card, which seems weird. My weekly Costco grocery run is paid for with my Rogers Mastercard, since I get 2x the cash back <shrug>. What’s more, the Costco I usually frequent doesn’t have a gas station, and I’m not really willing to make a special trip to go get it — my CAA/Shell combination is about as good. ↩︎
    5. These 2% and 3% rewards have annual caps, but I got bored trying to memorize them ↩︎
    6. Part of Wealthsimple’s chequing account, a good product, in my view ↩︎
    7. Great timing too, since I was in a foreign country at the time. ↩︎
    8. I use American spelling here because (a) that’s how CIBC spells it and (b) it really is a US-domiciled account ↩︎
    9. Writing that sentence has confirmed for me how low my standards for customer service have become. ↩︎

    News: Wealthsimple Norbert’s Gambit in Beta

    RobHLeave a comment

    Norbert’s Gambit is a way to save money on USD/CAD conversions. (Want to learn more? I’ve written about it here). Most brokers take extra margin points on these conversions, hidden in the relatively crappy exchange rate you actually get. Since a lot of my retirement holdings are in USD, and since I am a cheapskate, I’ve used Norbert’s Gambit at three different brokerages (BMO Investorline, QTrade and Questrade1) over the years.

    And now, Wealthsimple has joined the fray. It’s not open to the general public quite yet, but I did get a notification that I can now perform the Gambit on this platform. This brings Wealthsimple agonizingly close to being a contender for my retirement savings business. They only lack (puzzlingly) USD support in RRIF accounts. Otherwise, they check the other boxes in my “need to have” list for any broker:

    • $0 trading commissions
    • Support for USD accounts in non-registered, RRIF, and spousal RRIF2
    • Norbert’s Gambit3

    Wealthsimple’s implementation of the Gambit seems to mirror that of Questrade insofar as they charge a $9.95 plus tax fee for journaling shares, a necessary step of performing the Gambit. There are a few oddball wrinkles documented on their website, none of them show-stoppers in my view:

    • Not available on the Wealthsimple app
    • You can only journal DLR/DLR.U. Other cross-listed shares aren’t supported4.
    • The journaling fee is always charged in Canadian dollars, and by the language used on the website, it sounds like you are blocked from doing the journaling unless you have the cash in your account at the time of the request5

    Normally I’d give the feature a whirl to see if it’s comparable to the Questrade/QTrade experience, but I only hold CAD assets at Wealthsimple at the moment. It’s not really a complicated thing to do, the only way Wealthsimple could make the experience better is to do the journaling faster. I’ve documented the timelines involved with doing the Gambit at Questrade here.

    1. Other brokers also support it, but I just have no personal experience with it. ↩︎
    2. Wealthsimple doesn’t support this per their website ↩︎
    3. People (especially on Reddit) frequently cite Interactive Brokers as the best game in town to do currency conversions. I did at one time have an IB account, and I can confirm that their currency conversion rates across the board are a pittance, and in most cases will be cheaper (and faster) than even Norbert’s Gambit. HOWEVER, if you want to actually get hold of the cash you’re converting, then you can expect VERY long delays before you are allowed to withdraw the funds. ↩︎
    4. Most people use DLR/DLR.U to do the Gambit but it isn’t obligatory. At BMO Investorline, if you didn’t want to place a phone call, you had to use some other share combination (I usually chose a Canadian bank stock like RY). Not sure this is still true. ↩︎
    5. Questrade lets you carry a negative balance, but of course they will charge interest on that. ↩︎

    Top Five Money Engineer posts of 2025

    RobHLeave a comment

    The Money Engineer launched in January 2025 and according to the WordPress stats, I made 144 posts last year. What were the most viewed posts of 2025?

    5th-ranked post of 2025: ZGRO versus ZGRO.T

    ZGRO versus ZGRO.T: what’s the difference?

    I got wind of ZGRO.T through Reddit, specifically r/CanadianInvestor. ZGRO and ZGRO.T are both all-in-one asset allocation ETFs from BMO, but with vastly different yield characteristics. I was confused, but in the end, decided that ZGRO.T was probably not a bad pick for use in a RRIF account as it might save you the hassle of selling shares. Their TOTAL returns (assuming all dividends are invested) are effectively identical.

    4th-ranked post of 2025: Spousal RRIF Attribution Rules

    Caution! Spousal RRSP/RRIF Attribution Rules

    I think I was first warned about this nuance of spousal RRSPs/RRIFs by my DIY neighbour (thanks, Steve) and is the main reason I’m only drawing RRIF minimum for the next two years1. I think most of the visits to this article were search-driven. Either that, or people came to admire what might be my favourite article thumbnail2 I’ve posted thus far.

    3rd-ranked post of 2025: Norbert’s Gambit with Questrade

    Questrade Example: Exchanging USD/CAD with Norbert’s Gambit

    As someone who holds more USD-denominated assets than might be wise, I do very much appreciate the existence of a cheapskate way of converting between USD and CAD assets. I think I first learned about this trick via The Loonie Doctor’s blog. The #3 blog entry explains how it works if Questrade is your broker. I would also recommend https://moneyengineer.ca/2025/08/21/tracking-norberts-gambit-costs-with-questrade/ for a very clear picture of what it actually costs (in time and fees) to execute the Gambit: in three of four instances, the time delay of executing the gambit has worked in my favor as the FX rate has drifted a bit to my advantage.

    2nd-ranked post of 2025: TD versus iShares all-in-ones

    TD versus iShares: XEQT/XGRO/XBAL versus TEQT/TGRO/TBAL

    I’m a fan of all-in-ones (and am a little sad https://moneyengineer.ca/2025/01/21/why-you-can-fire-your-advisor-asset-allocation-etfs/ didn’t crack the top five last year). I am genuinely puzzled why people seem to get so wound up about which family of all-in-ones to choose3. I examined TD’s only because their cost to own is a bit cheaper than iShares (who I use primarily), and I’m a cheapskate. (I studied the cost of owning an all-in-one here.) Anyway, in the end, the biggest difference is visible in TGRO versus XGRO because TGRO, unlike any other GRO ETF, uses 10% bond allocation and not 20%. This gooses its return a bit, at the cost of additional volatility. Otherwise, it’s a case of tomato/tomahto. Pick one, or pick them all, it doesn’t matter much.

    Top ranked post of 2025: Mini-Review of Optiml.ca

    Mini-Review: Optiml.ca

    This was, as the title implied, a quick review of a made-in-Canada tool to help craft a retirement plan. And again, my DIY neighbour gave me a heads-up about it4. It got a lot of interest, probably because the kind folks at Optiml linked to my review from their website ;-). I was impressed by the completeness of the tool during my test drive, and it seems like a good and fairly priced way for a DIYer to do some validation of their retirement plan. Having validation of my plan was one of the ways I knew I could retire.

    Looking forward to seeing what the 2026 list might look like! Got a topic or question? Send it along to comments@moneyengineer.ca, or comment below!

    1. RRIF minimum withdrawals are never subject to spousal attribution ↩︎
    2. Courtesy Pexels free photos, built into WordPress’ editor. ↩︎
    3. iShares, TD, BMO, Vanguard, Global X…. ↩︎
    4. Thinking he should write his own blog, maybe. ↩︎