Do You Have An Interest In High Foreign Cash Yields?

Investing in U.S. bonds is like trying to catch rain water in the Sahara. You’re thirsty for some kind of cash yield, but with ten year government bonds paying less than 1.5 percent, you may be tempted to hunt for an alternative.

Whether you’re an American seeking higher interest rates in Canada, a Canadian or Singaporean drooling over Australian cash yields, you might reconsider taking the foreign plunge. You can read my thoughts on the issue in my latest AssetBuilder article:

Do You Have An Interest in Higher Foreign Cash Yields?

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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1 Response

  1. andysterdam says:

    Very timely post, Andrew. I'm a Canadian holding VTI and VEA in Questrade, as per your book's recommendation, but my mistake was buying BMO shares in US$ on the NSYE, with all the rist that the currency conversion entails. As soon as the latest dividend is credited to my account on Aug. 28 I'm planning to sell my 121 shares and buy bonds.

    Ok, so here's my dilemma. In light of your article I'm thinking that if I hold a Canadian bond with my VTI and VEA holdings in the same account, I could lose big when it comes time to rebalance. How do you deal with that in your own portfolio, which as I recall holds XSB, VTI and VEA? Wouldn't it be better for me to buy BND or BSV instead? And since we're on topic, would you go for BSV or BND? I know you prefer short-term bonds, but BSV is paying about half what BND pays in dividends. Keep in mind that this is just the account for US$. The bulk of my investments is held in TD e-series in the four indexes we're all familiar with now.

    Thanks for any insight into this! 🙂

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