Why you need a U.S.-dollar registered retirement account

Diversify without taking a currency-conversion hit.

Gail Bebee 21 February, 2014 | 7:00PM
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Owning U.S. stocks, bonds or other U.S. securities is a good way to diversify within your registered retirement holdings, especially if you can do so in a U.S.-dollar account.

Without this type of account, the investments and any dividends received in U.S. dollars are automatically converted into Canadian dollars. Account holders lose money on such transactions due to the buy-sell spread that brokers build into their currency-exchange operations.

A registered retirement account -- such as an RRSP, a registered retirement income fund (RRIF) or a locked-in retirement account (LIRA) -- is also ideal for holding U.S. dividend-paying stocks. There's no withholding tax, and any income earned is tax-deferred until it's withdrawn from the account.

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About Author

Gail Bebee

Gail Bebee  Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at gbebee@gailbebee.com; her website is www.gailbebee.com.

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