Now that Joe Biden has been elected president, there’s going to be a lot of unhappy people who want to leave this country. The capital gains tax rate might go up. The step up basis might go away. And the top marginal income tax rate might go up too! Therefore, may I present the best life hack for Americans: taking advantage of Canada!
I’m always looking for arbitrage opportunities to help readers make more money and live better lives. Taking advantage of Canada may seriously be the best American life hack of them all.
My favorite money-making arbitrage opportunity for the next couple of decades is investing in non-coastal city real estate due to lower valuations and higher net rental yields. Technology is accelerating the flow of capital and people towards attractive real estate opportunities.
However, taking advantage of Canada could be an even greater multi-decade arbitrage opportunity, especially if you have children. Despite the frigid weather for four months a year, Canadians have a lot going for them.
Their GDP per capita is a respectable $45,000. Few people go through medical bankruptcies because healthcare is heavily subsidized. Meanwhile, the average annual tuition for Canadian universities is only about $6,571 for the 2021/2022 academic year. Even compared to public university tuition in America, $6,571 a year is cheap.
Let me share how one Canadian friend is taking advantage of America and how we, in turn, can take advantage of Canada.
How Canadians Take Advantage Of America
A 25-year-old friend in my SF softball league is from Vancouver, Canada. He went to the University of British Columbia, a top five university where annual tuition is only $5,399 in the computer science department.
When he graduated, he decided not to find a job in Canada, but come down to San Francisco where the computer engineering jobs pay much more. He works for an online real estate company.
“Sam, I make twice as much in San Francisco as I would if I got a similar job in Vancouver,” my softball friend told me.
“But don’t you want to give back to your country? I thought brain drain is a big thing in Canada?” I responded.
“Yes, but let me make my money first. After five years in San Francisco making double the money, I’ll then move to Seattle with my girlfriend where my firm is headquartered. Seattle pay is similar to San Francisco pay, despite the cost of living being 30% cheaper. Further, Vancouver is only a 3.1- hour drive away.“
“Sounds like a good plan!” I responded.
“Once I’m in my 30s and ready to start a family, then I’ll move back to Canada and live a less hectic lifestyle. With a stronger government safety net, I feel more comfortable raising a family back home,” he explained.
Although I feel a little bad for Canada for not getting the benefit of his productivity after providing him with 22 years of education, I can’t fault his logic.
If Canadians wish to participate legally in our labor market and also buy and sell U.S. stocks and property, why not take advantage of the opportunity? After all, America is the greatest country in the world.
How Americans Can Take Advantage Of Canada
Following my softball friend’s logic, Americans should take advantage of Canada’s government safety net and immigrate to Canada after we’ve amassed our fortunes as well. This is the best life hack to make life easier.
One of the biggest problems we face in America is the runaway cost of healthcare. Medical-related expenses are our nation’s #1 cause for bankruptcy. It would, therefore, seem logical that those who decide to retire early and are ineligible for Medicare should migrate to Canada and get their healthcare paid for.
For example, my family of four will pay about $28,000 a year for healthcare premiums plus co-pays and co-insurance in 2021. Does this sound reasonable to you for a healthy family who never sees the physician?
To generate $28,000 in retirement income at a 4% rate of return requires me to first amass $700,000 in capital. But I will need to have closer to $850,000 in capital due to taxes. Unfortunately, interest rates have plummeted in the new decade, which means retirees should lower their safe withdrawal rates.
If my family moved to Canada, we’d be eliminating most of our present healthcare costs and could use the savings towards living a better lifestyle. We wouldn’t have to purposefully reduce our income to get healthcare subsidies either. What a shame to stop writing on Financial Samurai, something I love to do, just for the sake of affordable healthcare.
Further, given the average college tuition is only $6,571 a year, we would no longer have to contribute $30,000 a year in our son’s 529 college savings plan. We could easily afford to pay the $26,284 for four years in Canadian university tuition from the money sitting in our online savings account.
It is truly mind boggling that four years of Canadian university tuition costs $9,000 less than one year of private kindergarten in San Francisco.
Massive Savings If We Move To Canada
Saving $51,000 a year in healthcare and college expenses just by moving to Canada sounds like a home run. That’s $1,275,000 less in capital I need to amass at a 4% rate of return.
Even though the average home price in Vancouver is an absurdly high $1.4 million, it’s still about $200,000 less than the median home price in San Francisco.
Moving to Vancouver, Canada might just be the best geoarbitrage move for us. For Americans living in lower cost of living areas, there are plenty of lower cost of living areas in Canada as well.
Our Children Can Take Advantage Of Canada Too
In addition to recommending all adult Americans seeking financial independence to migrate to Canada, there’s also a way for our children to take advantage of Canada too. The best life hack is when you can help your children as well.
One of the reasons why I’m a high school tennis coach is because I want to learn how to interact with teenage boys before my own boy becomes a teenager in 2031. It may sound crazy to prepare so far in advance to be a better father, but I figure why not try? Planning is free to do.
During practice one day, I had a nice conversation with one of my favorite players, a senior who will be attending Occidental College in Southern California.
Occidental College is a good school, but I thought he was going to attend a top-10 ranked school instead. He was super smart, very wealthy, and frequently late to practice due to after school tutoring.
McGill University, The Harvard Of Canada
He mentioned a classmate was attending McGill University in Canada and I was immediately impressed. I remember having a financial analyst classmate at Goldman Sachs who had also attended McGill University.
She was extremely kind and smart. Further, she was the only one in my 1999 financial analyst class who survived the post dotbomb layoffs and made Managing Director 10 years later. MD at 33!
“McGill is the Harvard of Canada!” I exalted in a somewhat joking way. “I wonder what their acceptance rate is?“
My student responded, “Really? The Harvard of Canada? How can that be if their acceptance rate is 50%?“
“There’s no way Mcgill has a 50% acceptance rate! I’ll happily bet you 20 pushups that it’s 45% or less! You’ve got to accept the bet since I’m giving you a 5% buffer.” I retorted.
Secretly, I was thinking McGill’s acceptance rate was closer to 20%. By comparison, the best universities in America have single digit acceptance rates.
“You’re on!” My student immediately looked up McGill’s acceptance rate on Google and started to dance.
McGill University Acceptance Rate
He showed me his phone and Google had the acceptance rate at 46.3%. “Time to do some push-ups coach!“
Never one to surrender so easily, I looked at the data closely and the 46.3% acceptance rate was from 2016. As someone who is proficient with the search engines, I knew Google often had old data in its featured snippets.
Once I clicked on McGill’s website, it showed they made 15,385 offers to 37,505 applications for a 41.7% acceptance rate for the 2018 school year.
“Bahaha, never challenge the coach! 20 pushups right now!” I boomed.
A 41.7% acceptance rate for arguably the best university in Canada is comical by US standards for the top school. Does everybody get a participation trophy in Canada too? The high acceptance rate shows that Canadians really are much more accepting of everybody than we in America.
Thankfully, we didn’t make the bet in late 2020. If we did, I would have lost! The latest stats for Fall 2020 admission show an even higher acceptance rate at McGill. The university made 17,385 offers out of 35,505 applicants for an astounding 49% acceptance rate!
Conversely, the Harvard of Harvard has an acceptance rate of about 5%. If your kids are academically mediocre, then it is much wiser to at least apply to a university like McGill. The career paths of many university graduates tend to end up at the same place.
Acceptance Rates From Other Top Canadian Universities
Let’s say you disagree that McGill is the best university in Canada. Here are the acceptance rates for the other top universities in Canada.
- University of British Columbia: 52.4% acceptance rate
- Queen’s University: 42% acceptance rate
- University of Toronto: 40% acceptance rate
- McMaster University: 58.7% acceptance rate
- University of Waterloo: 52% acceptance rate
- University of Montreal: 57% acceptance rate
In other words, the best universities in Canada have an acceptance rate of 40% – 58.7%!
And one reader even mentioned that Concordia University is supposedly one of the best universities. If so, that’s great because Concordia University has about a 73% acceptance rate!
Acceptance Rates At The Top U.S. Universities
Now let’s take a look at the acceptance rates of some of the top U.S. universities.
Good luck getting into a top 10 school in America. It is nearly impossible. And if your kids are Asian, like mine are, then they’ve really got a Mt. Everest to climb. Is there no wonder why so many Asian families run small businesses? They know their odds are stacked against them, so they do what they can to take care of their own.
Unless you’re a really rich legacy student or cured malaria while fighting against gun violence, you have little chance of getting into a top American university.
Remember, even some rich celebrity kids couldn’t get in on their own merit. Therefore, what makes you think your kids can get in? If you don’t have $500,000 in bribe money lying around, then forget about it.
What is the point of trying to grind so hard in middle school and high school to try and get into a top American university with a 10% or lower acceptance rate? Instead, you can be an average student and still get into a top-five Canadian university!
The reputations of the top Canadian universities are higher than their respective acceptance rates indicate. And many consider the top Canadian universities to have a similar amount of prestige to the top American universities.
The best life hack helps get your kids into a great school and ultimately get better jobs.
The Pressure For U.S. High Schoolers Is Immense
Over the past three years, I’ve seen and overheard my students talk incessantly about their studies. They discuss how they need to go to expensive SAT tutoring after practice. They complain about having to take more practice AP exams and so forth.
Several even showed up late to important matches because they required extra time on their exams. They then wanted to talk to their teachers after. I could feel the pressure they were under to try and do it all.
Maybe the pressure cooker environment has always been there in high school. But is it really a necessary rite of passage given college is becoming less necessary thanks to the free internet?
Instead of spending $48,000 in annual tuition going to Harvard only to end up with the same type of job as everyone else, why not spend 1/9th the annual tuition at University of British Columbia and work at a US-based firm for more money instead? You might have to live in Canada for a year or two to be able to pay Canadian tuition, but it’ll be worth it!
Even if you cannot get any tuition exemption, international tuition is still about $10,000 cheaper than a comparable top rated private university in America.
Not only might you land a $120,000 computer engineering job at Zillow, but you might also even make more than $1,000,000 a year as an MD at Goldman Sachs by your early 30s!
Best Life Hack: Time To Move To Canada
The best life hack is to take advantage of Canada. I encourage all American high school students to apply to Canadian universities to get a great education and save on cost. Then once you’ve accumulated enough capital in America to retire, you can then return to Canada to live off the government’s good graces.
Having a Canadian university education should make it easier to be accepted by the Canadians. You don’t even need a job thanks to Canada’s Express Entry program. All that’s required is at least one year of work experience, proficiency in English or French, and $1,500 – $2,000.
If you intend to be self-employed when you move to Canada, you’ll need to show you have at least two years’ relevant experience in the field in which you intend to self-employ.
But once you get to Canada, there’s no law that states you need to start a successful business. You can just be a hobbyist to keep yourself engaged.
At the end of the day, Canada is great for early retirees, people seeking financial independence, entrepreneurs, and children. Canadians are more laid back as its citizens are more focused on work-life balance.
When it’s time for my family to choose between relocating to Hawaii or Canada, it may be a harder choice than I had initially imagined. But then again, with Joe Biden as President, perhaps he’ll turn the United States more into Canada and we won’t have to leave. Therefore, my preference is still for Hawaii.
Taking advantage of Canada truly is the best life hack for Americans. Who’s with me? Go Canada!
Best Wealth Hack
Now that you know the best life hack, know about the best wealth hack. Stay on top of your overall finances by signing up with Personal Capital. PC is a free online tool I’ve used since 2012 to help build wealth. Before Personal Capital, I had to log into eight different systems to track 35 different accounts.
Now I can just log into Personal Capital to see how my stock accounts are doing. I can easily track my net worth and spending as well.
Personal Capital’s 401(k) Fee Analyzer tool is saving me over $1,700 a year in fees. Finally, there is a fantastic Retirement Planning Calculator to help you manage your financial future.
Best Investment Hack
Real estate is a core asset class that has proven to build long-term wealth for Americans. Real estate is a tangible asset that provides utility and a steady stream of income if you own rental properties.
Given interest rates have come way down, the value of rental income has gone way up. The reason why is because it now takes a lot more capital to generate the same amount of risk-adjusted income. Yet, real estate prices have not reflected this reality yet, hence the opportunity.
If the U.S. housing market ever gets as hot as the Canadian housing market, I expect U.S. real estate prices to go up another 30% – 75%.
Take a look at my two favorite real estate crowdfunding platforms.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eREITs. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most investors, buying a diversified eREIT is likely the best way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot of capital, you can build your own select real estate fund with CrowdStreet.
Both platforms are free to sign up and explore. I’ve personally invested $810,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America.
The Best Life Hack For Americans is a Financial Samurai original post. Another related post is: What If U.S. Home Prices Get As Hot As Canadian Home Prices?
This is hilarious. Suddenly the Canadian system, which is accused of being socialist, should now be embraced by moving to Canada?
This is proof that socialized medicine, subsidized universities and daycare, and strong safety nets are better and would help the U.S greatly. This is contrary to the libertarian nonsense you have been blogging for the past four years.
We can make the Canadian system a reality in the U.S if people like you (who only think about their own money) would step out of the way. Those Canadians worked hard TOGETHER to build their superior pro working family safety nets. And they did it by not bending over for the wealthy elite.
I don’t understand when you say people like me and only thinking about my own money? I’ve been paying six figures in taxes for almost 20 years in a row now to try and help all Americans. And I’ve been publishing for free on Financial Samurai since 2009 to help anybody who wants to listen to in financial independence.
How much in taxes have you paid and what are you doing for free to help others?
If Canadians are coming to America by the tens of thousands and earning higher wages because they have smartly arbitraged the wage differential, why can’t tens of thousands of Americans arbitrage the safety net differential by relocating to Canada? Seems smart and fair.
Even though Canadians come to the US for high earnings, they still pay their taxes, they contribute to economy by spending money in the USA. Wherein if if FIRE folks start moving to Canada, they are not essentially contributing anything in economy, but making a complete use of all of social welfare, adding more stress on government balance sheet. It is not just immigrants coming to Canada from the USA or anywhere from world, but I have seen Canadians doing the same, which is wrong. Canadians have just started with fiscal deficits, but if there are more beneficiaries than actual taxpayers, Canadians will start adding more and more to their debts and making it more difficult for future generations. I don’t pay six figure taxes yet, but our household is in top 5-10% households when it comes to paying taxes. My marginal tax rate is about 45%. And I am proud of being a high tax and I deserve to have these social welfare, but I am okay for government to spend money to make it equal for most less fortunates, but I am not okay to support high net worth families, who don’t contribute to economy meaningfully.
Sam, what about the taxes? Does that offset the cost advantage?
Hello Sam,
Cool article but you forgot to mention Concordia University’s John Molson School of Business. They actually have a better reputation than McGill for their business programs.
When I went to University (Concordia), my semester tuition for 4 classes would cost me around $2,200 CDN. Its probably more expensive today however, I was able to get through it and I paid for the whole thing myself, no student debts after graduating. I had a job, worked part-time while studying, paid my rent, studies, and beer. If I was lucky, I would have enough leftover for food lol.
Anyhow, have a good one!
Jason
Concordia’s 73% acceptance rate is awesome! Especially if what you say is true that the university is highly regarded.
I am definitely going to get my children to apply to Canadian universities. This is such a no brainer.
It’s truly mind boggling that people would pay for private kindergarten… I do have a few friends who worked in Canada after college but they all moved back to the states, mainly due to the cold and housing prices in Toronto and Vancouver. You can always count on Canada articles coming out during an election.
It’s only mind-boggling to people who fail to spend the time to get to know other people. Providing different perspectives is what Financial Samurai is all about.
You don’t want to only associate with people who look like you, come from the same socioeconomic background as you, and only speak only one language.
Believe it or not, some parents emphasize education more and are wealthy enough to pay for private tuition.
All good. If you can stand the cold, let alone the cold in old age. Lolol!
If millions of people are willing to freeze in Chicago, Illinois, I assume that millions more are willing to freeze in Canada with so many more benefits. Let’s do this!
American, McGill grad here. First, I think I know who you are speaking about since I graduated the same time – the McGill IB analyst at Goldman Sachs. That girl was smart as a whip. When I was at McGill in the late 90s, the tuition was $10k/year CAD, and the exchange rate was anywhere between $1.38-1.51 at the time I was there. When I was an U1 student (Sophmore equivalient) they more than doubled the price for international students. Also McGill has three prices – one for international students, one for Canadian citizens, and one for Quebec residents or citizens of French and a few other francophone countries that they have an agreement with. It is not so easy to become a citizen of Canada (I married a Canadian and I can’t get citizenship unless I live there for 5 years -my kids however are Canadian, contrast that with French citizenship, which I easily got from being married to my husband, who has dual French and Canadian citizenship). Additionally, when I was applying for jobs in Montreal about a dozen years ago, it was hard even with a Canadian citizenship holding family to go thru immigration – they had to prove that no one in Quebec could do the job they would be hiring me to do before allowing me to accept the job. Second, you mention the acceptance rate. Canadian universities like McGill have a higher acceptance rate vs. comparable American universities because there are so few of them and they are much larger. There are 96 universities in Canada, compared with over 4,200 in the US. McGill has 40k total students including 27k undergrad. Harvard by comparison has about 6,800 undergrad students. It is definitely harder to get into a specific top US school versus McGill, but it’s definitely possible if you apply to many US schools that are of that caliber, you could at least get into one. Vancouver RE is extremely high – even with the 15% tax they imposed on foreigners buying real estate, it barely saw a blip. Condos in Vancouver have a much lower maintenance/tax cost vs. Montreal for example.
“Second, you mention the acceptance rate. Canadian universities like McGill have a higher acceptance rate vs. comparable American universities because there are so few of them and they are much larger”
If there is much fewer universities in Canada (less supply), wouldn’t that mean it would be HARDER to get into them so demand way outstrips supply?
No because many are that size – about 30-40k students or even more. Vs. 1/10th of that in the US for the elite schools.
I like how you point out that college tuition is cheaper in Canada than in America. I want to go to college soon and am thinking of trying to get a visa to go to school there. I’d like to hire a professional to help me with the process of getting into school in Canada.
After 10 years in LA, I’m now at 10 years in Canada. I can confirm, this is (basically) true.
There are plenty of very good state universities you can attend in the US that have very low tuition for state residents. No reason to go to another country.
UNC (ranked #5): $9,018
UCLA (ranked #1): $13,225
UC-Berkeley (ranked #2): 14,184
I think you missed the main point about Canadian universities: they have a 30% to 50% acceptance rate versus under 10% for the top schools in America. Good luck getting in in America.
Hah this is timely because we visited Montreal last year and loved it, my wife is fluent in French and we lived abroad for 6 months in France in 2015. We certainly don’t have any issues moving abroad eventually, besides relationship ties. Even though we just purchased a house, I could see us renting it out (it was a rental before) and staying in Quebec. I’m a programmer, wife’s a social worker, I’m positive finding work wouldn’t be hard. We could save a ton on daycare (Quebec has universal child care), health insurance, etc. and I could still make equivalent income since I can work remotely for anyone or do my own thing. It’s an attractive option for sure!
Waterloo, maybe considered good by American standards,but local Canadians are not impressed with the structure or the teaching.
Since this article is relavent, I ll share my perspective. I’ve just graduated from McGill from one of its engineering program. Additionally, I m heading down to the states to work at one of the tech companies (I.e amazon, google, Microsoft, Facebook). So yes, I am extracting the most value of what I had put in.
In Canada, getting into a good university isn’t the difficulty part. It’s getting into top tier programs (Waterloo CS, Ivey business). So the acceptance rate doesn’t reflect that. Additionally, if you deviate from the top programs, your chances of landing a top tier job diminishes greatly. I go to arguably one of the highest ranking school, though we’re not renowned for tech, and we place a very low number of people in those top tier jobs. It’s very difficult to get a job in the US coming from a Canadian school. Possible, but you have to have your shit together and be a top performer. I can’t directly compare schools, but McGill is very unforgiving. In a way, it develops character but it can kill your prospect of landing a good job very fast if you’re not careful.
My advice is to apply for schools in Canada in addition to US. If you get a good scholarship/fin aid package, I would choose a top school in the US over Canada.
Top programs (comparable to top schools in the US, tier below HYPMS): Waterloo CS, Software Eng (I think 1/4 gets jobs in the US, which is insane).
Ivey Business – top banking/bayside jobs
HUGE GAP
UofToronto Eng
Can you share with the specific acceptance rates are for these programs? And why do you say McGill is unforgiving? How do you think it’s harder than trying to graduate from a top US university?
Can’t directly comment on the specific acceptance rates but I would wager it around <10%. Acceptance rate isn't a fair metric because the grades needed to get into these programs are nicely laid out. So most student's don't blast applications to every school, hoping they will get in.
Even at McGill, say you wanted to get into computer engineering, you will need an average of ~95% which is quite high. When I was in high school, I think 10/500 actually had the average for it.
McGill is very receptive to internationally students though. I would say almost 1/3 of it is internationally (mostly from US/France).
McGill is a "good" school in that, if you are truly exceptional, you can get anywhere you want. This means being excelling academically, and being resourceful on your own to find your own opportunities. You need both.
The resources there is lacklustre. They bring in shitty montreal companies for their career fair. They don't really have any clout with any industries. On top of that, they probably have the greatest grade deflation. From day one, you can cripple your chance of doing med/banking/grad (i've seen this happen a lot).
The administration there is not helpful. Not supportive. There's not a strong community. So it can feel isolating and challenge to get through McGill even. It's a real mental hurdle.
The people who lands an offer at Goldman from McGill would've been crushing it even harder had they gone to a more resourceful schools (direct PE/HF). Maybe that's why your friend made it to MD in their early 30s.
Most McGill grads are stuck in Toronto/Montreal for their full time career. And trust me. The opportunities pales in comparison to working in CA/NY/Seattle. (in software, this could mean a 4X difference in compensation).
Basically, the only 2 Canadian schools I would consider is:
Waterloo CS/Software Eng
Ivey Business (can do dual degree with CS).
McMaster Health Science – medicine people. (~50% placement to med school).
And
UCalgary is also a decent option if you want to do O&G stuff.
Thanks for all the insights.
Why do you think there aren’t any, or many major Canadian corporations that pay big bucks? I know the United States has a much larger population, but I really don’t know any major Canadian companies today. Maybe I’m ignorant.
Yeah sure. In terms of working in Canada, your best shot of making big bucks is going into investment banking. Just know that while the competition is lower, there’s also way less spots. You really only have 2 cities: Toronto/Calgary. The number of positions in Canada is very limited.
Tech pays like complete shit here. Even at Google, you’re making 2x less than your counterparts in the US.
Working in O&G in Calgary used to be very solid. Especially because the cost of living/tax is the lowest. But they’re going through a downturn right now. Getting a full time offer is tricky.
I suppose sales will always be good regardless of where you are.
Generally, the top students will find their opportunities in the US.
Bob makes some excellent comments.
Justin Trudeau and the Canadian government are repelling business from the country by not supporting the O&G industry.
If a successful person like Fin Sam moved to Canada the government would love to sink it teeth into you and heavily tax your income and capital gains. Top marginal tax rates (54% in Ontario) in Canada kick in at around 200K C$ (150K US) which in Canada qualifies you as “rich”.
Yes your health care would be “free” and yes your kids tuition would be low but you would be hit hard in exchange for those small benefits. (I would focus on getting you kid into a CA state university like Berkely).
In addition, even though you would now be Canadian the US govt would not care and would still require you to fill out a US tax return as well.
Canada does have a rapidly growing technology scene – Shopify is the most recent success store – but there are many other emerging companies especially in the area of Machine Learning in Artificial Intelligience. I hope the Canadian government wakes up and realizes that to keep these kinds of jobs in Canada they need to stop taxing people just because the are successful.
I watched the US democratic debate last night and Elizabeth Warren reminds me of the type of politician that would be popular in Canada (though even Canada does not have “capital” tax like what she is proposing).
I think Canada is still the greatest country in the world but immigrating here to save a few $ on healthcare and education only makes sense for americans who are far less successful than you.
I would add to this list:
University of Waterloo – Actuarial Science / Statistics
I may be biased on this, as a Waterloo Act-Sci grad, but in the actuarial world, Waterloo is cream of the crop among the World’s best Actuarial programs.
I graduated from Waterloo, then worked in the US (Boston) since I made more money than I would have in Toronto. After 4 different jobs in the US through either co-op terms of full time, there were several other Waterloo grads on the actuarial team. US insurance companies had a pretty decent presence at Waterloo, even if they didnt even have a Canadian branch. In fact, when I put on my resume Waterloo Act-Sci grad, that is a pretty good foot in the door when operating in the actuarial profession.
I have recently moved back to Toronto and the difference in income vs cost of living is actually stark. I took a nominal pay cut moving back to Toronto. That means 10% nominal loss + 30% USD/CAD exchange rate loss in real terms. (ie. USD$100 -> CAD$90). Costs for everything in Toronto is generally more in dollars than Boston, and for many consumer goods, we still run across the border to buy things (ie. electronics) since the difference in price in real terms is so large and well worth the time and costs of making a border run.
My personal thought is that the top of the class grads from Waterloo are not ending up in Toronto, nor should they. The opportunities are not as good and the compensation is not as good. Not to mention the serious housing bubble that exists in Canada.
Yeah Waterloo definitely is The most legit school in Canada. Their placecement into the US is unreal. Ivey doesn’t compare.
I actually applied there and got accepted. Except I was naive in high school to not go there.
The fundamental point in your article about Canada universities costing less doesn’t hold true for international students (as multiple other commentors have also pointed out). Rather than 6k CDN you’ll pay around 35k. I’m a Canadian/US citizen living in the USA so in my case this works for my kids, but in the general American case it does not.
$35K is cheaper than $45K – $48K for a private school in the US. That’s $10-$13K in annual tuition savings.
But can’t you gain Canadian citizenship after one year of living in Canada to get local tuition?
no – citizenship takes at least three years’ residence. It is possible that favourable tuition rates would depend on residence rather than citizenship.
Great article. You are very intuitive. This is the first article I have read that recognizes the benefits of living in Canada. I tried to explain this to a relative who lives in the US. They were complaining about the high college tuition for their child (over $50,000 US per year) and I suggested they look into sending her to university in Canada. McGill was one of the universities she looked at. While my sister thought it a great idea (she is Canadian married to an American), her husband just would not consider it as he believed the Canadian universities did not provide the quality education he thought his daughter would receive in the US. (Frankly for undergraduate degrees, who cares? An arts degrees is an arts degree). Bluntly put he was viewing things through a very narrow prism. My daughter did her masters at Queens and her tuition was less than $5500 CDN. (Although tuition rates are rising here but still much less than in the US) I am a Canadian and live on the border near Minnesota on the lake near the Boundary Waters Wilderness area. I do think the US is still the greatest country in the world, but the polarization between north and south is palpable – and destabilizing for the US. I appreciate being able to enter into your country and buy some groceries, pick up my ebay wins and of course, purchase gas. However I would not live in the US. I do love going to the US to get away from winter – at least for 2 or 3 weeks. My son is graduating with a Computer Sciences degree and hopes to move to the US. There are pros and cons to living in either country. Some of Canada’s ‘freebies’ are not financially sustainable. We are blessed with decent health care – less so if you live in a small town or rural area. Medical and Health care in small towns is not good at all. You have to travel hundreds of kilometres for cancer treatments, to see a specialist and many women with higher risk pregnancies are required to live out of town for their last month of pregnancy as obstetric services are not good. But if you live in, or close to a city health care is excellent.
Canadian CPA here. It’s true that very high personal tax rates kick in on employment income at relatively low levels (compared to the US). In Ontario, the combined federal and provincial rate is just under 48% at $150K, and is just over 53.5% at $220K. That’s just income tax – that excludes payroll taxes (let alone things like sales tax, property tax, etc).
On the other hand, if you earn what are considered “eligible dividends” – generally dividends paid out by publicly traded Canadian companies – the rates are very low. A couple living in Ontario could earn $100K in eligible dividends ($50K each) and, assuming no other sources of income or tax deductions, the total tax bill would be exactly $1,200 (a 1.2% effective tax rate).
If earning $100K is too plebeian for you, let’s double it. Even at $200K as a couple ($100K each), just from these dividends, the tax payable is just over $19K (a 9.5% effective tax rate).
So, taxation of upper middle class salaries is very high. But if you have a large asset base and live off dividends, our taxation policies are very generous. Would be curious in hearing how this compares to the US policy for taxing dividends.
Hey Canadian CPA, my passive income (interest, dividends, capital gains, etc) are from US sources so what would be the tax rate? There is also pretax 401K withdrawls which would be taxed in the USA as income.
I am assuming for moving to Canada to make sense, I would have to give up my USA citizen ship and move all my assets to Canada?
What happens to my IRAs? 401Ks?
I am thinking moving there isn’t as simple as this article makes it sound.
I wonder who can advise authoritatively about this…
Apply for dual citizenship as a possibility. Many Americans marry Canadians and vice-versa. Each country advantages.
Sounds like an opportunity for a website:
Marry me, eh?
Find your financial soulmate and reap the benefits from both sides of the border!
Another aside regarding universities abroad in addition to Canada. MY granddaughter recently graduated from the University of Venice in Venice, Italy at half the cost of her hometown college in Boulder, CO where the University of Colorado is located. Yes! Even with the costs of living at home, in state tuition, and the flights back and forth, it was 50% less expensive than U Colorado. And, she graduated in three years fluent in Italian, Spanish and French. Her major was Mandarin with a summer job internship in Shanghai, China. With her extra year savings, she received an MA in Acting in New York City. Now, she is a struggling actress trying to get her first break along the way to stardom. So…moral of story, the USA is a great base, but think globally rather then locally. Our country was great once. The world has moved on.
A great column Sam. Yes! We have thought about moving to Canada for years, especially since our great grandparents were from Quebec. During the Great Depression most moved down to Maine where I have a zillion cousins. So we travel to Canada quite often but on the west coast since we live in Oregon. I went to a hospital a few years ago in British Columbia for an emergency bladder operation, and the care was excellent. I was admitted immediately and they gave me the costs up front before any operation. Within two days the operation was a success and the cost was $10,000 vs $100,000 in the states. Fortunately, I am on Medicare so all of the costs (on my credit card), were reimbursed.
Regarding comparisons. Both countries have their benefits. Having lived in four different coun tries along my way to age 82, I still prefer the USA and Oregon at the present time because I am used to it and I love the climate and the people. I have had so many opportunities because the USA was indeed great from 1950-1980. Most of my graduate degrees were financed by the Government or the Ford Foundation. My undergraduate days at Duke were $2000 a year for everything and I worked three different jobs part-time to pay the bills. Now, life in the USA is a struggle for many. Yes! If I was 18, I would consider moving to Canada. The USA is no longer the greatest country in the world. It’s just another place where human beings are doing the best they can under a government that has been corrupted by money, corporations, and non-stop war.
Hi, did I read that properly that US Medicare reimbursed your medical expenses in Canada? It was my impression that Medicare did not reimburse in foreign countries save an an emergency procedure in Canada when traveling over from Alaska.
Medicare will reimburse up to $50,000 for emergencies in foreign country. I have Medicare Advantage.
As a resident of a town just south of the the Canadian border, also having Canadian relatives, it’s not quite that rosy up there. Bellingham Washington’s local hospital added a cardiac wing a few years back due to the rationing of medical care. Our local Costco is the busiest in the country due to the excessive costs in B.C. due to the high costs and taxation to pay for all the “freebies” and social services. A common sight at the local Costco is lines of B.C. Residents with their trunks and hatchbacks open while they fill up 5-10 five gallon gas cans. Google Peace Arch border crossing car fire to see the tragic results of someone transporting gas home. A cousin from Calgary (in the “oil patch” province of Alberta) complained of not being able to be treated under that provinces medical after being injured while at work. Similar and worse stories from B.C. who’s medical isn’t quite as good due to not having the income from oil revenues. Our country can do better. Let’s hope it does.
In closing I want to say I love the insights and knowledge your newsletter provides. Thanks.
Depending on the type of immigration program you apply for, the length of your immigration procedure can take a few months or years. However, understanding your options for immigration, you can dramatically improve your chances of success.
https://canadapt.ca/migrating-to-canada/
My daughter is graduating next weekend from McGill University with a degree in Math and heading off to graduate school at the University of Washington in the fall.
We live in Michigan. Not only was the international tuition cheaper than in state UM tuition, but I got a 25% discount because of the currency exchange. Also, the cost of apartments in Montreal was much lower than what we would have paid in Ann Arbor.
My daughter went there because she wanted to have an international experience and I think it served her very well. That said, there are things to consider.
The healthcare system may be very good for citizens but it is terrible for international students. The student clinic is always crowded and they send you home if they know they can’t accommodate all the students. The doctors won’t accept appointments for anyone without Quebec healthcare.
In addition, tuition rates are very different depending on the program. My daughter graduated from the Faculty of Arts and Sciences but the business school tuition was much more expensive.
Finally, I can’t speak for other Canadian universities, but McGill expects their students to be very mature and handle things by themselves. In general, there are no dorms for students after their U0 year and they procedure to get into classes is chaotic and confusing.
There are a lot of other plusses to living in British Columbia as well. It has every bit of the recreational opportunities that the Bay Area offers and then substantially more. I’m a WA state resident and spend a lot of time up at Whistler and along the Vancouver Island coast surfing uncrowded waves. After all, there is much more to life than just money. To me it would be a no brainer choosing to raise a child in Vancouver instead of San Francisco.
I enjoy your website, Sam.
How cold does it get there? What are your favorite places in BC? i heard it’s expensive housing wise..but healthcare and education seems like great values
It doesn’t get very cold in Vancouver and most of the coastal areas of BC. Summers sometimes get up to early 30s for a few days and winters only get below 0 for a few days. Gas is extremely expensive $1.60 L and going up (about $6/gallon). Food, housing and taxes are expensive as well. Salaries are also very low compared to the cost of living. Most people with 10 years of experience and a bachelors degree make around 80k (non mgmt role/not computer science). The quality of life is absolutely amazing though and very few places could beat it. Snowboarding in the winter, beaches in the summer, year round hiking and outdoor activity, great restaurants, low crime, good schools, lots of recreation. I would argue it’s one of the best places in the world to raise a family. The pace of work life is much more relaxed than San Fran or Seattle.
The most curious thing is why Vancouver real estate is so high when the salaries are so low. Do you think it’s corruption and Ford investors? I can’t name one major company in Vancouver that pays a lot of money to warrant such high real estate prices.
Here is the reason why real estate in Vancouver and Toronto is so expensive. Spoiler: money laundering by foreign “investors”.
B.C. vows crackdown after Globe investigation reveals money-laundering scheme
https://www.theglobeandmail.com/news/investigations/real-estate-money-laundering-and-drugs/article38004840/
I figured that to be the case, but why does the government allow this, unless they are receiving money under the table themselves?
If wages are half that of American wages, yet average real estate prices are higher.. that seems like a huge problem.
I’m not an economist and may be it is an amateur’s guess, but it looks like that government benefits from it too by receiving higher taxes from hot real estate market/prices; plus 13% Canadian GDP is from real estate. So if government takes measures to control money laundering => lower prices, it will loose certain % of GDP, which will be a real problem.
Thus, all what the government has to do is to balance anger and frustration of most of canadians, who cannot afford buying a house in Vancouver or Toronto with benefits of getting higher taxes and GDP from dirty money.
Vancouver real estate makes absolutely no sense. Much of it is due to foreign money being parked in a safe country. The BC government has finally taken action and implemented a foreign buyers tax and also an empty house tax. This should cause the price of real estate to fall over time
Are you a real estate agent Shyla?
Hi Sam, long time reader, first time commenting after lurking haha. I was super stoked to see you talking about my home country Canada. You definitely make a great point here of using geo-arbitrage to hack the system so to speak. I actually have quite a few friends that are very well educated in top notch Canadian universities and working in reputable American firms in the States. I think given our close proximity, we’re still very different culture wise and system wise, so like you’ve mentioned if you don’t have kids yet then moving around to hack the system is very attractive and doable. I am living in the central part of Canada and wanting to move out to Vancouver but carefully planning it out financially due to its high housing prices; which is still nothing compared to San Fran I bet.
Just a word of caution. The US has the most oppressive, offensive and expensive tax system in the world for its citizens who live outside the country, particularly for those with assets. Make sure you understand the implications before you think about moving. There are a number of websites dealing with tax compliance for US citizens living outside the country. Read them. Talk to an accountant who is an expert in cross-border tax issues. You may at times have to pay tax in the US on top of your Canadian taxes. You will have to report detailed information on your foreign accounts. Foreign financial institutions may not like dealing with you because of the US reporting requirements. In some countries (not Canada) US citizens have trouble opening bank accounts or have had them closed. You won’t be able to take advantage of tax-advantaged investments in either country (except for 401k/RRSP). Be aware that paying for tax preparation will be more expensive than you probably imagine. Also be aware that your US investment accounts may be closed without warning if the company holding them (e.g. Vanguard, Fidelity) finds out you are no longer a US resident. And owning a corporation (no matter how small) in another country if you are a US citizen is a potential minefield. There are other issues I could mention, but the point is to be aware and do your homework before you make any decisions.
Source? I’ve been living it for the last 15 years. Canada is a great place to live, but it’s another country. It’s not like moving to another state. And the US is suspicious of any of its citizens living outside its borders. The reporting requirements and the cost of compliance are significantly higher than it is for US residents.
Mexico offers some of the same benefits, although it would be more work. It would be very interesting to see an article on this.
Healthcare is very affordable – it’s often more economical to carry insurance only for catastrophic illness, and pay for every thing else out of pocket. I recently had an annual physical with bloodwork, x-rays, EKG, and specialist consults with an audiologist and dermatologist for about $250 USD (and remember, I’m not paying any monthly insurance premiums). That’s actually a little expensive for Mexican healthcare, but I went to a hospital in an area with a lot of expats, and everyone spoke very good English.
Educational opportunities are something I’m not familiar with; Spanish would obviously be required. The upside is that someone who knows English and Spanish can work pretty seamlessly throughout the entire Western Hemisphere. Add Portuguese and you’ve covered it, and have some options in Europe as well.
There are downsides, violent crime being the most often cited. But if one stays away from the drug gangs (easy to do) and practices some common sense, there is very little chance of becoming a victim of anything more serious than some petty theft. And I would think that anyone attending a good university in Mexico is going to be making friends with some of the top 1% of families in the country, which can’t hurt for job/investment contacts.
Good post but those acceptance rates are misleading! Just for context, am in post secondary sector in Ontario.
Look up the acceptance rates for in-demand programs (e.g. Engineering, Nursing, Computer Science) and you will be looking at single digit acceptance rates. Moreover, the tuition rates quoted are for domestic students; international tuition fee is substantially higher. Come if you want – but it is no roses here. Emergency room wait times routinely exceed 5 hours and any specialist appointment time is in weeks/months rather than days.
Grass is greener… nowhere. Just depends on the patch you are looking at.
Fellow Canuck here. I second the concept that Canadian universities have specialties that are hard to get into.
Waterloo is a STEM school so getting into math or engineering at Waterloo is hard and its even harder for international students. Getting into Philosophy there probably not so hard.
Here is a link for engineering admission rates at Waterloo vs grades.
https://uwaterloo.ca/engineering/future-undergraduate-students/application-process/admission-averages
I do think Canada is a pretty great retirement destination though. Largely because of the minimized future uncertainty. Healthcare is covered, and old age security equivalent is also solvent.
Come on up!
I’ve been subscribed for a while and read your post on Canada with some interest. It’s interesting and has some merit, but there are a couple really big things you missed.
Just so I have some credibility…I’m a US citizen who moved to Canada in 2003 with my family in a corporate transfer that I engineered. Now I’m a dual citizen and hope to never move back to the US. I have an MBA from a top tier US school and was successful in the idiocy that is the US corporate world. After taking some time off, I bought a business here (bricks and mortar) about ten years ago and could retire but will be working a few years yet to transition the business.
Back to the topic at hand…the really, really big thing you missed is that the US government hates expats living abroad. They assume that expats are tax cheats, money launderers or terrorists unless proven otherwise. I mean that seriously. Some of the financial disclosure forms say they are from the US Treasury financial crimes division. The US’s citizen-based taxation (only country in the world other than Eritrea to tax based on citizenship rather than residency) combined with it’s financial reporting requirements make life miserable for Americans living and working abroad. The gov’t has bullied other countries into providing banking information on Americans and some institutions won’t open bank accounts and investment accounts for Americans–fortunately that’s less of an issue in Canada than other countries. When you move out of the country, US investment institutions (Vanguard, Fidelity) will close your accounts as soon as they find out. And if you move abroad, don’t even think about buying or starting a business.
I could go on for hours. My tax compliance costs are currently running about $8k-10k per year. I have to hire an over-qualified accountant who is certified in Canada and the US. I have an accounting degree and an MBA and the complexity is mind-boggling. Last year I paid $80k in taxes I wouldn’t have had to pay as a Canadian that’s not a US citizen. It’s out of control and more than I can succinctly explain in an email. If you want to understand the nightmare, google FATCA, transition tax for expats, tax filing for US expats, etc. and you’ll start to get a feel for it. The more money you have (like your readers) the worse it is. Being in Canada means that I can’t take advantage of tax breaks in Canada (because the US won’t allow them) or US tax breaks. Sorry for the rant…I won’t even start on what happens if you try to renounce citizenship or the penalties for non-compliance.
Another thing to consider is the culture. Canada is a different country–more liberal, more tolerant, etc. A politically conservative American may not be comfortable or fit in very well depending on where they move. Also, moving back and forth with kids may not work out as easily as it looks on paper. We moved here when our kids were just starting school. You’ll find that once your kids start school, moving becomes more difficult from a family perspective. There’s also the issue of living away from extended family. We’ve stayed and I suspect our kids (currently in two of those excellent but affordable Canadian universities!) will never leave Canada. Partly because Canada is home now and partly because, from an outside looking in perspective, they have no interest in living there.
I hope this is somewhat informative. As someone who accidentally did part of what you’ve suggested, I just thought you might be interested in an on the ground perspective from someone who’s been here for a while.
I enjoy your writing!
Thanks for your insights based upon real life experience.
If Trump gets re-elected I think you’ll see a ground swell of Americans moving north.
Sadly, those of us up north agree. You missed a lot of cultural innuendos too. Please don’t bring your mess here.
I’m an American and lived in Japan for 10 years working in an investment bank. Even though I had to file US taxes, the overall tax burden and complexity factor were not significant. The biggest long term issue is the social security windfall elimination provision. And having an international family, as you and I both do, certainly has its tradeoffs — but so does leaving your hometown. I kept all of my US banking, credit, and brokerage accounts open for the whole 10 years because I had family in the US where I could receive mail; I might have forgotten to inform any counterparty besides the government that I was living abroad. Due to your income (as suggested by the taxes you pay) and the legal structure of your business, I’m not doubting that it’s rough for you. But as a former expat employee, I wanted to voice that it’s not that bad for most of us. Give it a try!
Excellent post! About 8 months back, I quit my finance job in NYC and moved to Peterborough, Ontario (near Toronto). It works for me. I did get a severance. My cost of living here is much lower, for example my rent is 30% of that in NYC. I have retained my investments in the US because the US capital markets are more robust, and I’d rather have my financial assets in US$. Another factor, was immigration. I am not a US citizen, and Canadian stance on immigration is much more friendly. So here I am. Having completed my first masters in the US and currently pursuing my second one in Canada, I can vouch for the fact that, Canadian schools are not only cheaper but there’s lot of grants/scholarships in the system. Its a free ride for me, just have to pay my rent. For anyone making the move, I’d suggest, retaining your US cell plan (couple of carriers have free Canada/Mexico roaming) and US credit cards (travel card).
Interesting post.
I used to live in the US in the early 2000s before moving to Canada, where I’ve been living since then.
Canada is very different from the US.
At a high level, the most expensive things in the US- education and healthcare- are cheaper. Housing is par for course when comparing Toronto and Vancouver with NYC/Boston/Seattle/SF. Toronto and Vancouver have most of the economic opportunities but come with a very steep cost of living.
Almost all visitors from the US to Canada like Canada, until they get the sticker shock. Everything is very expensive, especially food.
Salaries are much lower as compared to those in the US for tech and finance people. Top tax brackets kick in much earlier. e.g. Ontario’s top tax bracket kicks in at about 200k CAD(150k USD). The top tax rate is 54% plus CPP of about 5% (Canadian social security).
For a working professional, being in Canada makes almost zero sense if you are in a typical corporate gig.
If you are a public sector person though, things are very different. Public sector salaries, pensions and benefits are very generous.
Almost every month has a long weekend for government employees. Minimum vacation time is about 3 weeks.
If you are a cop, nurse, unionized worker, Canada is wonderful.
Things begin to go awry if you go past 200k income mark. What’s the incentive to work? Why would you work hard to hand over more than 54% of your income to the government?
Canada looks tempting from a distance- it did to me 20 years ago. But it’s an economic mirage plagued by a handful of oligopolies in almost every sector of the economy(Banking, Insurance, Airlines, Telecom, Dairy, Meat) leading to higher prices. Housing is much more expensive when compared with rents and income.
If you are lower income person though, Canada could be great. Less taxes, more benefits and way better quality of life than a similarly placed person in the US.
Top 10% in the US have it way better than their counterparts in Canada.
Since you mentioned education, a quick comment.
There’s a huge chasm in the quality of US universities. e.g. compare Harvard/MIT with University of Mass at Lowell. It’s day and night difference.
But if you compare Univ of Toronto with say University of Calgary, there’s very little difference.
The top 20 universities of Canada are very similar in terms of amenities , faculty with certain universities better than others in certain areas. That goes with the overall theme of Canada- it’s mediocristan(in Taleb speak)-unlike the US which is extremistan- the highs are much higher and the lows are much lower.
Another data point- if you look at the list of richest 100 people in Canada, it’s very static. Most of the changes occur due to some Canadians moving to the US and starting an eBay or Uber. Intersting factoid- Uber’s cofounder Garrett Camp is from Calgary and Calgary was one of the last cities in Canada to legalize Uber.
Which takes us to the next thing-regulation. Much higher regulation in Canada than in the US. Canada’s CRA has twice the number of officers per capita than the IRS. And IRS has bed rep!
A+ comment! You rock! Thank you for all your wisdom.
I’m focused on your $200,000 income mention, and why bother if you plan to make more and pay more taxes in Canada.
I agree!
So if you can generate up to $200,000 in retirement income while living in Canada, that could be great. I don’t think anybody really needs more than $100,000 a person to live a happy life in retirement.
With a 42% acceptance rate to the Harvard of Canada, I really think applying to Canadian universities is a no brainer. A 5% acceptance rate to Harvard in America is just too brutal. It’s like winning the lottery.
But a 42% acceptance rate is like everybody getting a participation trophy. The reputation is still excellent, so why not?
Mr. Nick is spot on! the top 20 Canadian Universities are great and dirt cheap, crazy thing is that we still have students complaining about student loan debt and politicians saying the cost is too high, they must want it to be like denmark where you get a stipend as a student and the average graduation time is 6 years.
Interesting fact to add, I work for a multinational and can see pay grids as a people manager. The same positions have about a 15-20% higher pay band in the US than Canada! factor in the taxes and its quite a hit for a working person.
Great post and a pretty accurate assessment of the differences between Canada and the US. If you are a top 10-20% earner live in the US for highest quality of life. If you are in the bottom 50% earner live in Canada for a higher relative quality of life and live off of Canada’s highest earning 10-20%’s generosity.
– a 28 year old Canadian who paid 34% of my gross income in tax (not my marginal rate).
I am an Indian citizen who worked in the US for 5 years and then moved to Canada because getting a green card was almost impossible. My experience has made me hyper aware of present and future immigration laws in both these countries.
Your readers should know that the Express Entry has a major age component. Anyone over the age of 35 will find it extremely difficult to emigrate to Canada under their points system, unless they have a job secured in a specified shortage field.
In addition to this, the conservatives in Canada have targeted ‘citizens of convenience’, who move to Canada just to use it as an insurance policy for old age. In 2015, the conservative government changed laws which made it easy to revoke such citizenships without a court hearing. Trudeau reversed this law, but with a conservative government likely to come to power this fall, we can expect another reversal.
Great food for thought!