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Received Canadian funds. Best way to convert to U.S. dollars?

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  • Received Canadian funds. Best way to convert to U.S. dollars?

    Hello folks,

    I am about to receive a 5-figure windfall in Canadian funds.  What's the best way to convert it into U.S. dollars?  The last thing I want to do is bring a Canadian check into my local Bank of America branch with their terrible rates.

    Thanks in advance for your ideas.



  • #2
    Those of us who live in the Great White North face this issue on a regular basis.

    Converting Canadian dollars to US dollars is a necessity for low cost investing. For example, Vanguard's total stock market ETF has a MER of 0.04%, but it's equivalent ETF listed on the Toronto Stock Exchange has a MER of 0.15%.

    The cheapest way of converting a large sum of $CND to $USDis to use Norbert's gambit, which involves buying a highly liquid stock with low bid-ask spread which is listed on both the Toronto stock exchange and the New York exchange. You buy on one exchange in one currency, and immediately sell on the other exchange in the other currency, and get the spot rate exchange rate at the moment, minus two commissions for stock buy and sell. One example of such an interlinked stock is RBC.





    • #3
      is this the kevinmd?



      • #4
        Thanks.  What kind of brokerage accounts will I need?  Can this be done, say, with a regular Fidelity account?



        • #5
          I regularly use Norbert's Gambit, and I use a "regular" account at my discount brokerage, but I'm on the Canadian side of the border, so I can't speak to whether a regular US Fidelity account would do this. Providing your account allows you to buy stocks and ETF's on non-US stock exchanges, I wouldn't think there should be a problem. (e.g. in my brokerage account I can buy XIC, which is a Toronto listed Canadian total market index ETF, and I can also buy VTI, which is Vanguard's NYSE listed US total market ETF). Sometimes it takes a phone call to the brokerage help desk, but I don't have any sort of "special" account.

          I use Norbert's gambit to cheaply exchange large sums (greater than $50k) of Canadian dollars to US dollars. The cost is the bid-ask spread between buying and selling the interlisted stock, and the cost of two brokerage trades. This is worth it if you are exchanging >$20k at once, but would definitely not be worth it if you were simply exchanging a $100 birthday cheque from your Canadian aunt in Winnipeg.

          It is cheapest to use a high volume, low bid-ask spread interlisted stock such as Royal Bank. The risk of using a bank stock is price volatility between buying in Toronto and selling on the NYSE.

          If you want to avoid the price volatility, there is an ETF company that has an ETF that holds only US dollar cash, which can be bought in Canadian dollars (DLR) and sold in US dollars (DLR-U). With this ETF, you lock in your exchange rate when you buy DLR (with no risk of stock or currency volatility once you've bought), but the ETF company makes its money by having a fixed bid-ask spread of 0.2 for a $10USD (but that is still much better than the currency exchange rate if you simply took your Canadian dollar cheque to your local bank).

          details (written for an audience doing it from the Canadian side of the border) are at:


          If all this is too much trouble, and you are having difficultly unloading your 5-figure Canadian dollar windfall, you could just endorse the cheque payable to me, and I would be happy to "take care of it" for you!