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Most discount brokers charge about 1-2% per CAD to USD currency exchange, while most banks charge up to 4-5%. Interactive Brokers has been long trusted as one of the most low-cost ways to convert foreign currency. If you feel uncertain about trying Norbert’s Gambit for a low cost way to convert CAD to USD, don’t worry, there are other options available, such as Interactive Brokers.
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It may sound complicated, but here is a step by step on Norbert’s Gambit. At a high level, the investor will purchase inter-listed stock (stock listed on both a US and Canadian exchange) like RY in USD, then immediately sell the same stock in CAD.īMO and RY trading accounts will automatically move shares from USD to CAD, so there is no delay, so less risk of the stock moving against you. Most discount brokerages will require a phone call to “journal” your shares from your USD to CAD account. To start, this strategy is best with RBC and BMO trading accounts. Norbert’s Gambitįor those of you with a lot of USD in a trading account and looking to capitalize on a weaker CAD, there is a strategy called Norbert’s Gambit that you should be aware of. While this strategy is not for novices, it can basically reduce your FX spread to two trading commissions (plus buy/ask spread). In other words, very cheap. Whatever your reason for wanting to exchange CAD to USD, whether it’s for a new investment, or to escape the frigid winters of the North, we’re here to explain the best ways to save in the process. This is likely a sacrifice of 1% or so – and who wants to needlessly donate 1% of their portfolio?! When this transaction occurs, Canadians are effectively taking their CAD, converting it to USD, and purchasing a stock/ETF – all at the same time. The other obvious example of investors needing to pay attention to exchange rates is when Canadian investors purchase stocks on a USA stock exchange (such as the Nasdaq or New York Stock Exchange).
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For instance, if you’re looking to purchase real estate in the US, you’ll need a lot of USD, and if you’re not careful about how you exchange your CAD for USD, you could lose thousands to unfavorable exchange rates and fees. Well, if you are a savvy investor (which you clearly are since you are reading MDJ), you want to research all investment options to make sure you’ll get the most bang for your buck. What does this have to do with the cheapest way to convert CAD to USD you ask? Assuming that the condo did not appreciate since 2014, the condo today would cost $126k CAD. In November 2014, it would have cost $113k CAD (forget about foreign exchange fees for now). Well, say you want to purchase a $100k USD condominium in Florida. At the time of that post, it cost $1.13CAD to purchase $1 USD, or a 13% premium.ĭue to falling oil prices and inflation, it now costs $1.26CAD to purchase $1USD. Updated November 2021 to provide additional information in regards to converting large amount of CAD to USD using Currency Brokerages/Money Transfer Comparisonīack in late 2014, we wrote about how great it was to be holding US Dollars (USD) due to the declining Canadian dollar (CAD).