Hello I have heard that using Norbert's gambit to avoid currency conversion fees is most useful in an RRSP account but not in a TFSA account. I have a Canadian TFSA and would like to invest in US stocks this year. I also want to use Norbert's gambit to avoid the currency conversion fee (even if it's hidden!) but don't fully understand the reasons why it is or is not a good idea in a TFSA account. Can anyone with a lot of experience explain this to me please? Thanks in advance. Ed
Welcome to Stockaholics.net, Ed. This is primarily a US oriented site, however, I can help with your gambit question. You cannot use Norbert's gambit in a TFSA account. It simply doesn't apply, as there are no TFSA accounts denominated in USD. The way the gambit manages to avoid FX fees is this: - You buy an amount of Horizon DLR ETF (listed in CAD on TSX) - You journal (transfer, in-kind) the DLR shares to a US account. If you're in Canada, you need to transfer DLR.U shares to change the currency denomination. Despite not having DLR.U, it will work. They are interchangable. - Once the DLR.U shares show up in your US account, you sell the DLR.U shares and it will settle in US funds. Total FX cost will be one buy and one sell transaction. You don't need to use DLR. You could use any cross-listed equity. It just happens Horizon set up DLR for this purpose. You could use IBM, or whatever, as long as you can both buy and sell the stock natively in the source and destination currencies. It works both ways, by the way. You can transfer $3M for that dream house in Florida and it will cost you under 20 bucks in fees. Norbert Schlenker brought this mechanism to the Internet many years ago. That is why it bares his name. Norbert is still around and active on a Canadian investment forum. I won't cite the site out of respect for Stockaholics but I'm sure he could be found with Google and 4 seconds of typing. At this point, you don't need Norbert. You have me. lol! I just explained it to you and why it doesn't apply to a TFSA. It would work on a TFSA, if you had two accounts, one on the CAD side and one in USD. I'm not aware of USD TFSA accounts, as the law does not allow it, but if this is possible now, let me know. I would love to have one, also. I still have a few bucks kicking around in a Canadian TFSA.
You can have TFSA account in CDN$ and US$, check with your bank to see if they still offer US$ account I'm with itrade which use to be etrade. If they don't offer US TFSA account you can still trade US stocks in a TFSA account it have it's advantage which can work in your favour currency wise.
Hi, guys. At Questrade, my TFSA account has CAD and USD: Does that mean that I can do Norbert's Gambit successfully and cheaply?
Do you mean you have a USD TFSA account and a CAD TFSA account (two accounts) or are you saying you can have US and CAD stocks in the same account? If they are two different accounts, you can use Norbert's gambit. Just buy a cross-listed equity, journal it to the other side, and sell in the native currency.
I appreciate the nod toward Questrade. I'm just reading Questrade has a TFSA that can have USD cash in the account, as of late 2019. I need to check them out. In 2017, TD told me the law didn't allow for it. Norbert's gambit should work just fine in this case. It works for non-registered accounts, also.
That makes a lot more sense. Interesting you can keep cash in usd. I don't see why it wouldn't work. It should but they might stop you from doing it to preserve the lucrative fx business.
You can have US$ -TFSA account and CDN$-TFSA account. With itrade you get TFSA 123456account when you go to trade in the account a drop down box will have cash US or cash CDN. If you are trading US instrument then you choose TFSA US cash account and vice versa. The best way to avoid complications have a US checking account and CDN$ checking account. transfer US$ to TFSA US$ account and vice versa. Not to knock questtrade but rumour have it execution of trades can be a bit slow hence the low fees, I don't know cause I don't use them but people I know that used them in the pass that's their complain. CIBC, RBC from what I understand have low fees and execution is fast. itrade fees are 4.99 that's for 150 trades per quarter 9.99 for 30 or more trades per 1/4 and 19.99 for less than 30 I think.
