[This post was updated in February 2015 to reflect recent changes at some brokerages.]
Norbert’s gambit remains the least expensive way to convert Canadian and US dollars at a discount brokerage. For investors looking to buy US-listed ETFs, learning this technique can save hundreds of dollars by sidestepping the wide currency spreads charged by brokerages.
With the 2013 launch of excellent unhedged foreign equity ETFs from Vanguard and iShares, there’s less of an incentive to use US-listed ETFs than there used to be. In fact, in a non-registered account or a TFSA it may not even be worth the added cost and inconvenience if the only difference is a few basis points of MER. But in an RRSP, there’s a significant benefit: using US-listed ETFs can dramatically reduce the impact of foreign withholding taxes, which can add an additional cost of 0.30% to 0.70% to US and international equity holdings.
The problem with learning to pulling off Norbert’s gambit, however, is that there’s no simple set of instructions that works at every brokerage. RBC Direct Investing and BMO InvestorLine both allow you to hold US dollars in registered accounts, but only RBC allows you to do Norbert’s gambit online: at BMO you need to pick up the phone. Scotia iTRADE doesn’t even allow Norbert’s gambit in an RRSP: instead, they offer a unique service that eliminates the retail spread on currency exchange for a flat fee.
As part of our DIY Investor Service, we helped clients do Norbert’s gambit at all of the big-bank brokerages. And for the last few months, Justin Bender and I have pulled that experience together and created a series of five white papers—one for each brokerage—with step-by-step instructions you can follow on your own. Each of the papers includes screenshots and detailed descriptions of each part of the process, all specific to each brokerage’s unique quirks:
Norbert’s Gambit: A better way to buy US dollars in an RBC Direct Investing RRSP
Norbert’s Gambit: A better way to buy US dollars in a BMO InvestorLine RRSP
Norbert’s Gambit: A better way to buy US dollars in a TD Direct Investing RRSP [Update: As of late 2014, TD Direct Investing allows investors to hold USD in registered accounts, which makes “automatic wash trades” no longer necessary. A TD representative discusses the new process here.]
Norbert’s Gambit: A better way to buy US dollars in a CIBC Investor’s Edge RRSP [Update: CIBC apparently now converts currency very close to the spot rate in RRSP accounts. However, they have not been forthcoming with the details: we recommend calling the brokerage before making a USD trade in your account.]
Norbert’s Gambit and US-Friendly RRSPs: A better way to buy US dollars at Scotia iTRADE
We’ve worked hard to make sure these papers are accurate and up to date, but we welcome your feedback. If you have had different experiences at any of the bank brokerages, please let us know and we’ll keep these resources up to date.
Anyone tried HSBC investdirect with this method?
NORBIT’S GAMBIT FOR Q-TRADE USERS
—I do this about once a year and I always forget the steps involved. This year I wrote them down. Perhaps this will be helpful to some of you.–
1. Buy DLR using a limit order (I usually set the limit price the same as the asking price)
2. After the purchase is filled, go to the top left menu bar “my accounts” and select “account history”. Under the 2nd column you will see the settlement date. You must wait until this date or later to switch DLR to DLR.U
3. On or after the settlement date, go to the top left menu bar “my accounts” and select “service centre”.
4. Under the “manage your funds” heading click on “transfer securities” and move the DLR to your USD account.
5. DLR is now in your USD account. Don’t panic when you look at the avg cost and current price. It is neither the current price of DLR nor DLR.U, but DLR converted to the USD equivalent.
6. Sell DLR as DLR.U. It is essential that you change it to DLR.U. Also it sells on the Canadian market even though it is in USD so select “Canadian Market”.
THAT’S IT THAT ALL!
**These steps are a guide. If you have any questions or doubts don’t hesistate to call Qtrade. I have found the reps at Qtrade to be quite helpful**
I’ve done Nobert’s Gambit with BMO with an interlisted stock just like Cory Banack and I find it goes very smoothly, you just need to wait a few days for everything to settle, but the dollars are immediately available.
I’m much happier doing this entirely online than having to depend on a phone call to a rep who may or may not be quick, immediately available, cooperative or competent (not that I’ve ever had a problem at InvestorLine, but you never know)
For safety’s sake I always pick an interlisted stock I could imagine holding for a while if ever something went wrong, though.
If anybody feels like putting pressure on TDDI to support USD in registered accounts, they are actively monitoring this thread:
http://www.td.com/to-our-customers/tdhelps/#psce|cid=871|lid=1|tid=001|vid=b011435f2
There is a good chance that when you buy and sell DLR/DLR.U that you will realize a capital gain or loss. At the request of my accountant, I will fill this out when I sell and file it away in my tax documents.
DECLARATION OF CAPITAL GAIN/LOSS
On I purchased _____ shares of DLR at $_____ CDN per share (total of $________CDN)
On I sold ________ shares of DLR.U at $_____ USD per share (total of _________USD)
From the Bank of Canada website, the noon exchange rate on was _______
Thus I sold DLR.U for $___________CDN
The capital gain/loss of this transaction is $__________ CDN
below is the website
http://www.bankofcanada.ca/rates/exchange/
@Ryan, I believe you should be using the exchange rate you realized not the Bank of Canada rate. Check with your tax advisor.
http://www.cra-arc.gc.ca/E/pub/gl/p-222/p-222-e.html
@CCP wrote: “… the value of the services offered by the larger brokerages, such as rate of return calculation, GIC inventories, customer service, integration with banking services and the like.”
As a trial, I have my TFSA at Questrade and rest at Scotia iTrade. Both are near identical in terms of equities but iTrade is better for bonds. As far as I can see, neither does rate of return calculations or has GIC inventories.
iTrade has one huge bug that they introduced when the eliminated the eTrade platform, that is, they don’t show any symbols in your Transaction History. I used to be able to export a transaction history to a spreadsheet and then automatically update my ACB calculations after reinvestments but that’s not possible now because of the missing symbols.
Frankly, neither one is great.
Dan, you could point me to a better broker? I would love the features you mentioned.
After reading the Globe & Mail’s annual review of brokerages where they put VB at the top of their list,and TD so far down, I am thinking of switching. Is there any chance you will create a white paper for VB, so that I can assess the complexity?
I don’t have an account at Questrade, but am considering opening one (simply due to the low commissions/free ETFs). Reading online, there seem to be a lot of dissatisfied customers (bank transfers getting lost/stuck, splits not being handled properly, CRA reporting mix-ups, lousy/ineffective/clueless customer service), with some people saying that things are improving recently. Can anyone comment? (also a lot of blog owners seem to be getting referral bonuses, hard to get a clear picture)
The other option would seem to be RBC. The $10 trades each way are more expensive, but would seem to be more reliable (and converting to/from USD using Norbert’s Gambit would seem to be a bit simpler which is a bonus).
I’m generally a no-frills guy, so QuestTrade appeals to me… but I don’t want to waste time on the phone dealing with broker screw-ups…
B, thanks for the link, I goona also raise my voice … also you can call TDDI , tell that you’re planning to move out to another brokerage and ask to speak to manager and express your concern… I did it already… more people will bug TDDI, faster they will do something.
P.S. at least at TDDI there is a auto wash feature, I have another accounts in CIBC Investor Edge, they don’t even have autowash
I have executed the gambit at TD for the non-registered account twice. The first time I was lucky enough to get a knowledgeable rep and things went smoothly. The second time the rep appeared to be novice but over-confident and messed up quite a bit. A second call and a different rep corrected the errors.
Would like to try the gambit in RRSP account. I gather that the auto trade-wash, once requested and set up, will be permanent and one can proceed with the gambits in future without the intervention of a rep.
@Robert
Virtual Broker has an explicit policy of disallowing Norbert Gambit.
If you want to do Norbert Gambit, you should not use Virtual Broker.
@Tyler, I’ve had a few issues with Questrade but nothing big. I got each resolved quickly using their online chat and e-mail but not phone (my preference.) I haven’t had to deal with tax reporting though because I have a TFSA and a small amount of my RSP there. They changed their trading platform a few years back which was rocky and ultimately a downgrade in my opinion. Their old platform was a feature rich HTML site, the new platform is either a feature poor HTML site or a Silverlight site that’s still feature poor compared to their old platform. Transfers are slow and not convenient but they get done… eventually. The platform seems to have issues now and then, but they are good about pushing out notices when something is not working and often it’s an issue with an exchange, etc. They’ve gone to self-clearing, which I am not sure it a good thing… but that could be my paranoia.
I’ve had issues with iTrade as well. That bug I described above showed up when they dropped the E*Trade platform (which was ugly but feature rich) and replaced it with iTrade which looks yucky and has bugs. Customer support and acknowledgement around this issue was prompt but they couldn’t give me an ETA when it would be fixed… that was about 2 years ago and it’s still not fixed. They had to reissue tax slips retroactively one year for many people apparently. I had to re-file my taxes (an adjustment) because of it. iTrade did give me $100 for my troubles though. iTrade never seems to issue push notices about problems on exchanges to the same level of promptness that Questrade does.
Every platform/broker seems to have issues. Is anybody happy with their platform? Cost per trade is important but not at the top of my list. I’d love a platform without bugs, a personal rate of return graph, ACB calculations, a what to conveniently buy GICs at a good rate, fast transfers, no CSR mistakes, etc.
@slacker, I would be surprised if that isn’t illegal or at least against the rules of the exchanges. Fact is when you own, for instance 100 TD Bank shares, you can choose what exchange to trade them on, TSX or NYSE. That’s your choice not theirs. Without free markets a lot of things would break. For instance, that’s the whole point of arbitrage and the carry trade that ensures that nothing gets too out of wack.
If you can’t conduct arbitrage trades on VB which aims itself at heavy traders, then that’s a huge gaping hole.
Thanks for explaining the technique in such detail, Dan, especially in the broker-specific way you’ve done in the links above. I’m happy to see more and more people using the technique. It’s unfortunate that it’s so hard to accomplish at many discount brokerages due to system limitations.
I use BMO Investorline myself and it’s quite a painless operation. I didn’t know about the DLR/DLR.U problems at BMOIL, but that just confirms that I’ll continue to avoid those particular products as a vehicle for doing the Gambit. I wouldn’t be satisfied with a security choice that on average costs 0.2% in any case, which is at least partially due to trading where the bid-ask spread is routinely 0.2% or higher on both sides. I’ll stick with higher priced liquid interlisted stocks. Yes, I take my chances with market movements that way but that evens out to zero in the long run (and it’s a really small risk at BMOIL because their system runs so smoothly). The smaller bid-ask spreads, as a fraction of the stock price, mean total losses on the conversion are more like 0.05% in the absolute worst case.
Keep up the good work!
@Tyler: I have used Questrade for years now and am generally satisfied. My observation has been that they are evolving very quickly – over the period I have been there they have continually added new features, functions, interfaces, etc – and that sometimes the rapidity of the change causes some issues. Sometimes you are not used to the new things, sometimes their own customer service staff, perhaps, needs a month or two to get used to things, etc.. I have had “small hiccups” but nothing resembling any serious issue (money “stuck” or “lost”), and their customer service staff is always supremely friendly, but at times, per the above, I have felt that they may be “learning with me”. At the end of the day, if you’re a worrier, or of the personality to be stressed out or frustrated and lose sleep over little things, then maybe go with a more mainstream broker. If you’re a lower-stress person, you can’t beat Questrade’s prices.
@Brian, @Willy: Thanks for the feedback.
@Brian: During my research into brokers, I did come across the daily bonds report from Questrade, where they seem to offer GICs from a number of different organizations (without commission), if this is what you’re looking for. Obviously, I have no experience with Questrade. See the last page or two: http://campaigns.questrade.com/Libraries/bonds/Questrade_Bonds_List.sflb.ashx
Totally unrelated question.
I know it kind of goes against the CC theory, but given the incredible returns we are probably all experiencing this year. Is there a efficient way to crystalize some of that value… by taking some money off the table, waiting for a market set back… Thoughts… It’s likely that next year will be a tougher year.
@Tyler: I moved all my accounts to Questrade and had no regrets. I have had no more hiccups there than I had at TD Waterhouse and I have been very happy with their customer service using secure webmail that there site has.
The one issue I did have was that my US Vanguard holdings came over from TD as Canadian (because TD has no US side) and had to be journaled properly to the US side of the account. I did not originally catch this issue and it caused a problem with the first DRIP. They fixed the problem and refunded the fx charge.
One minor complaint is their RESP account does not only you to hold US cash so while I have Vanguard holdings and they are able to DRIP without Fx charges any unused money is converted to Canadian (this is an issue at many of the other brokerages as well).
If you do decide to switch make sure you negotiate them covering your account fees and they sometimes have promotions for amounts in excess of $100,000. My wife and I both received an iPad mini when we switched.
@Norbert: Great to hear from you, and thanks for the comment!
If you’re able to an “instant gambit,” where the two trades are done within a minute or so, it’s true the risk of using an interlisted stock is extremely small. At brokerages where the shares have to be journaled, then you have to be comfortable with the risk of a significant price movement.
@VinceM: Why not just rebalance the portfolio? The only other option is market timing, which as you say, undermines the whole point of the Couch Potato strategy.
This year returns have been very poor for REITs, real return bonds, and bonds in general. US stocks are up far more than Canadian stocks. These present ideal opportunities for rebalancing.
@Brian: Regarding your question about brokerages, in our experience RBC offers the best range of services: full rate of return reporting, online inventory of GICs and bonds, US dollars in registered accounts (as well as the easiest Norbert’s gambit process), and good overall reporting. BMO InvestorLine is probably a close second. If one of these happens to be where you do your daily banking, all the better, since the integration is very convenient.
You might be interested in the piece I wrote for MoneySense earlier this year. Unlike the Globe article, we did make commissions the most important factor, and we used a lot of hard data from our partner, Surviscor:
http://www.moneysense.ca/invest/canadas-best-discount-brokerages-2
@slacker: OK, that rules out VB. I am thinking Questrade might be the next best option. Is there anyone who can post instructions for performing N’sG with them?
I am wondering if there is a way to perform an instant gambit on Questrade and/or that doesn’t require contacting a Questrade rep to perform the journal from one side to the other?
I deal with Interactive Brokers for unregistered and RBCDI for registered accounts. I’ve been very happy with both. IB seems to have very low spreads for forex conversions and trading fees but the drawback is nothing registered at all.
Hey CCP, thanks so much for publishing these guides. There are no words for how valuable your blog is – I’ve learned so much and every time I come back it seems like there’s something new. Simply incredible.
I had a quick question about executing the gambit – I’ve never done it before but I wanted to try in the new year to buy VXUS at TD Waterhouse. I read the guide and you say that any excess US dollars are automatically placed in the TD USD Money Market fund. That’s fine, but here’s where I get a bit confused:
1. I buy x shares in DLR
2. Same day, I sell equivalent shares in DLR.U, so the proceeds from the sale go to the USD money market fund.
Now how do I tell TD to use those same funds (held in the USD money market) to buy VXUS? I’m worried that after executing the first two steps, when I go to buy VXUS it will just use the CAD cash in my account (charging me TD’s default rate) rather than allowing me to use the USD held in the money market (which were acquired at the gambit rate).
Sorry if this question doesn’t make any sense, and thanks in advance for shedding light on this important topic. The internet needs you!
@Dan D: Many thanks for the kind words. Very happy to hear you find the blog helpful.
Your question is a good one. But don’t worry, you don’t need to instruct TD to use the US money market fund as the source of cash when you purchase of VXUS. When you place an order to buy a US security, they will automatically use any USD cash that is available before taking anything from your CAD cash.
Just a quick note for TDDI and RRSP wash trades. If you have less than $100US cash remaining after your trade, the remaining cash balance won’t be added to the US$ Money Market Fund as you do not meet the minimum purchase requirement for TD mutual funds (i.e. $100). Instead, your remaining US$ will be converted to C$ at their chosen exchange rate and added to your C$ balance. Needless to say, this confused me thoroughly on my first trade.
@CCP: One thing to note is that in non-registered accounts, instant gambits can be done even if a phone call to journal is required. You just need to set the account up for short selling. Instead of buying on one side then selling on the other, you short on one side then buy on the other. Then wait three days for settlement and call to journal the shares over to cover the short position. (It’s important to do the short before the buy though; otherwise it’s “shorting against the box”.) This is my standard process at TD DI and it works fine. I’ve gotten explicit word from BMOIL that it will work there as well.
@Brian: That’s a good brokerage wish list. I would add:
1) No long “maintenance” windows every night. It boggles my mind that TD requires hours *every* night to keep their website operational. (And I own a web-based business.)
2) Quickly accessible support – ie short wait times and long hours of operation (ideally 24h).
“No CSR mistakes” sounds fantastic, but I can’t imagine a world where that would exist. :) ACBs would be handy too, but I don’t think I’d trust them except to double-check my own calculations.
I deal with both TD and RBC and prefer TD. Trades cost the same. No account fees for either. RBC has a good set up to connect to your personal accounts, TD has a great layout for it’s news and information pages. TD updates by 10pm same day, RBC takes untill the next day. The biggest draw back for TD is that they don’t allow USD in registered accounts, and for RBC I found it quite frustrating to not be able to drip the majority of ETFs. RBC is more expensive when you consider not being able to utilize drips, and TD can cost with the automatic currency exchange for DRIPs on US holdings.
@Robert: Checkout this link for detailed Questrade instructions. It has a long confusing comment thread, but my May 10th post puts it to rest.
http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/
any guide for HSBC InvestDirect?
@Electoys: the same link
http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/
also contains my February 15, 2013 report on my white-knuckle experience the previous day converting $1.4M US to CAD using NG for the first time (for me), by buying and selling TD shares on the NYSE and TSE respectively, after months of careful information gathering and set-up. I should mention that the long preparation and the “white-knuckle” aspect were only due to my relative inexperience and my need to get every detail right before committing; the actual performance of the gambit went so smoothly it was anti-climactic.
The choice of using TD rather than DLR was justified by reducing my cost from 2 cents (bid-ask spread for DLR) divided by $10 (cost per share) which is 0.2%, to 2 cents divided by $82 (for TD shares) which is about 0.025%, in theory, plus the cost of the trades involved. This was a considerable saving (>$2K), given the large amount converted, making the hassle (it was more of a hassle for me than it would be for most other investors, due to some unique account circumstances of mine) of preparing a set up where trades could be executed promptly on the NYSE then immediately on the TSE worth while.
@Oldie: Good point, I had forgotten that. I will be using a stock with a high price and volume next time.
@Oldie, Electoys: When converting really large amounts (6 figures and higher) I find it can be useful to spread it out over multiple trades (and yes, to use a high volume, low spread stock – I’ve generally used POT). By using multiple trades you can avoid moving the price too much with any given trade, which should potentially result in slightly better rates. You also reduce any risks of the market moving or anything else going wrong (small as they are already). The extra $20 in commissions becomes negligible pretty quickly.
One thing to note though is that if you’re using the short sell + buy approach, you can’t do a second gambit with the same stock until after you’ve journalled over, as afaik it’s still considered shorting against the box.
@Nathan: As it turned out, I divided my $1.4M that I had for conversion into 4 roughly equal tranches, reasoning that this would speed up the sale of each transaction lot so as to minimize the risk of the eventual sale price price drifting too far out of the original bid-ask spread range during the waiting period for the lot to sell. I was impressed with the speed at which the tranches sold — within 30-60 seconds, I seem to recall. Therefore I had made a mental note to myself that, in the unlikely event I needed to do this again for such a large amount, I probably didn’t need to break up the amount into 3 or 4 smaller lots to do separate transactions on, at least judging purely from any perceivable lack of delay in obtaining a quick sale.
It hadn’t occurred to me that there might be another valid reason for breaking up the large amount into 3 or 4 smaller tranches. Your rationale (to avoid the risk of affecting the price, irrespective of any time delay that might not necessarily happen) sounds reasonable and prudent, and as you say, the extra cost in trading commissions is trivial compared to what one is saving by doing a NG with stock possessing this particular price and set of trading characteristics.
@karim @RJ @Willy @CanadianCouchPotato
What I did for QT was as follows. I did this in my RRSP account so YMMV for Margin, and I wouldn’t bother in the TFSA.
1) I funded in my amount in CAD that I was planning on switching over.
2) Bought DLR, like the other methods. Simply because the price is rather stable.
3) Called QT Trade Desk 1 (866) 980-9590. It’s free despite them saying it’s $40 a trade. Remember we are not making a trade, we are just journaling the stock.
4) Speak to the rep and tell them you want to “Journal your shares of DLR to DLR.U”.
5) The journaling will happen the same day, but it will take 2-3 days for it to ‘settle’ to let you sell. (If after 3 days you still can’t sell DLR.U call to ensure everything went smoothly)
6) Sell DLR.U in USD in your account. Funds should show up right away.
7) Profit++
Fees for me were as follows: Note: These were prices in Sept ’13 when I did this. I don’t know if I have a magic promotion applied to my account to not have the $4.95/$9.95 costs applied to buying and selling. I’m going to use approximate numbers. And I did $5000 just to test out how well it works and how good a rate I got.
Price of DLR $10.28, bought 440 = $4,523.20 CAD + $1.55 CAD commission fee = $4,524.75 CAD
Selling DLR.U $9.95, sold 440 = $4,378.00 USD + $6.50 USD commission fee = $4,384.50 USD
The spot rate that day was 1 CAD = 0.9698 USD so $4,523.20 CAD = $4,386.60 USD.
I got 4,523.20 CAD = 4,384.50 USD. So including fee’s I managed to get an amazing rate.
Ah so I just double checked. DLR is an ETF so no $4.95/$9.95 fee’s just the commission. So I paid ~$8 to get almost spot rate. (0.01% from spot)
Thanks again for another excellent set of white papers. It’s truly unbelievable what value you provide to the D-I-Y investors.
From your earlier guide, I had performed the gambit with DLR at RBC, but came up with a different exchange cost than the Horizon’s description, then creating a spreadsheet to monitor the various exchange rates depending on the three-tier pricing that RBC had set for forex based on amount to be converted.
With most of our accounts at TD and BMO, wanting the scheme to work there is my current wish, and your broker-specific guides are a real blessing.
When you say you need to call BMO trader to execute the short-sell of DLR.U, you use the standard $9.95 commission rate, though in the TD case you indicate a premium cost to work through a trader, rather than doing it online.
Can you confirm that BMO will only charge you $9.95 for transacting this?
Once traded, does it also mean that you could process a buy of the desired US equity on the same day as the above two transactions, without waiting 3 days for the trades to settle? (This worked for RBC DI just fine in my earlier use there).
And does this DLR.U trade cause any issues with short-selling rules, as one of the online comments suggested you might be “trading against the box” if you do “short-selling” in the wrong order?
Another comment referred to a glitch with BMO, but I could not find the details of this glitch when I looked over the total list of postings — just the reference that there was one.
Some comments suggested that, while DLR is more stable than a higher price interlisted stock like TD, that the bid/ask spread of $0.02 on each end generates quite a bit higher exchange premium than would happen with TD. Assuming the buy/sell is almost simultaneous, the variance risk seems small to use this equity instead of DLR, right?
Do you suggest holding back if the bid/ask spread is $0.02 rather than $0.01 on one or both ends of the DLR/DLR.U or is this too much to ask for the spread to be this small?
Thanks for any reply you may offer, and all the best of the season to you.
Are we sure that VB is legally allowed to refuse to buy and sell and inter-listed stock? They might not like the idea of having to do a NG but actually refusing your trade execution orders? Really?
For iTrade, instruction #5 says “call and ask the trader to place a limit order to sell 2500 share of DLR.U at the current bid price in your USD Cash Account”.
Can’t this be done online? Why do we have to speak to a trader?
I did not read all comments so this may repeat.
I use RBC..9.95 commission..
this works in all accounts..margin..tfsa..rrsp
Usually am converting Cdn to US.
If I can time it right I will make the conversion on a day when market is
in a rally phase…I use ( choose one ..BBD..PPL..POT..BNS etc..)
Just buy the stock in Canada and sell it in US, ..Toronto..nyse
If you time it right buy in AM and sell later in day, might even make
some $ on the conversion.
I tried Norbert’s Gambit for the first time in a self-directed RSP account at TD today. I followed the guide, but ran into an issue which required a phone call to TD to fix. Summary: If you plan on selling funds in an ISA as the first step to buy DLR -> DLR.U -> VTI on the same day, then you have to call in for the last step.
Starting point: CAD$XX,XXX in TDB8150 (Investment Savings Account).
Ending point: US$YY,YYY invested in VTI.
My process:
1) Called TD and confirmed wash trading was enabled on my SDRSP (I set this up a week before).
2) Placed a sell order for the complete balance of TDB8150 ISA (open).
3) Bought DLR (filled)
4) Sold DLR.U (filled)
5) Tried to buy VTI with proceeds from DLR.U sale, but got an error message “insufficient cash”.
6) Called TD and they did the VTI buy manually for $9.99 commission. TD said that because I was selling TDB8150 as the first step, it was too many transactions and I could not do it electronically. They said in future, I should start the day with a cash balance and then DLR -> DLR.U -> VTI would go through without a phone call.
Thanks for making the guide, Dan. It was very helpful and I thought I’d just share this wrinkle just in case anyone is trying to start with funds in an ISA and do everything on the same day.
Had gambit today at CIBC Investor Edge….. bought 250 POT:TSX, sold 250 POT:NYSE, bought DEM and rest put into US MM. The problem with CIBC, after all transactions were filled, I should’ve call trader and ask for FX netting….spend close to 40 min on the phones, as trader should call their back office and “lock” the FX rate and this back office is always busy….
@gibor: I don’t understand your concern. Any delay would be of concern AFTER buying POT/TSX and BEFORE unloading POT/NYSE. But once you’ve sold the latter, you’re past the risk of CAN$/US$ rate drifting to your detriment. What further potential risk are you trying to avoid? What is FX netting, and why the concern?
@Oldie, it’s not concern, but it’s a waste of time :) In TDDI I don’t need to call anyone, my trades will be “washed” automatically, but CIBC doesn’t have this feature, so I should get trader on the phone before 3.30pm or before 3pm if i want to put $$ into US MM
Would the reverse hold true for Norbert’s Gambit? That is, using it to exchange USD to Canadian dollars without loosing as much to brokerage / bank fees. Or is there a better way of exchange?
(Only asking as I live in Canada but my income is mostly in USD and well, I need Canadian dollars to pay my bills here haha).
@Ellie N: Yes, the gambit works the other way around as well (USD to CAD). Each paper contains a description of any changes you need to make in order to go the other way.
Cool, thank you so much for helping the DIY investor community.
I plan to do the NG after we sell our house.
Did some more research regarding CIBC IE FX rates in Registered accounts and came to conclusion that “gambit” over there doesn’t make sense, as you will pay more in trading fees.
I tooks randomly 5 trades from LIRA and RRSP when I bought US stock directly (without FX Netting or so),
Rates I paid: 1.036, 1.029, 1.0325, 1.029, 0.998
BoC Spot noon rates for the same dates are:
1.0348, 1.029, 1.0314, 1.0285, 0.9987
So if I’d buy those 5 stocks without netting (assuming I invest 10K in every stock), the differencr between rates I paid and spot noon rate is $21 ! The maximum difference between rate I paid and spot rate (again for buy of 10K) wa jusr $12, and 1 time I’d pay even less than spot rate by $7