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Save Money With USD To CAD Foreign Exchange Using Norbert's Gambit
Save Money With USD To CAD Foreign Exchange Using Norbert's Gambit
milliondollarjourney.com
With the U.S Dollar (USD) gaining strength in the global currency game, it
has resulted in the Canadian Dollar (CAD) losing some ground. While this
means that shopping in USD is more expensive for Canadians, it’s great
news for those who have some of their nest egg or generate income in
USD.
While it’s a great time to own USD, how does someone convert USD to
CAD without getting gouged by the bank? The answer – Norbert’s Gambit.
I wrote an article about Norbert’s Gambit using the DLR and DLR.U ETFs
as a cheap way to convert CAD to USD. Basically you would
2. Ask the discount brokerage to journal your CAD DLR position to USD
DLR.U (usually by phone and free of charge, others are automatic); and,
Voila, you now have USD without the big FX fees (up to 2% of total
conversion). While the process may take up to 5 days to complete, there is
very little currency risk as your foreign exchange rate (FX) is locked in as
soon as you buy DLR. Here’s an article providing a little more detail on the
DLR/DLR.U conversion with Questrade.
Using DLR/DLR.U is a cost effective and low risk way to convert CAD to
USD, but not as great when converting from USD back to CAD. The
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Save Money with USD to CAD Foreign Exchange using Norbert's Gambit about:reader?url=https://www.milliondollarjourney.com/save-money-wit...
reason is that going in reverse order, buying DLR.U and selling DLR,
exposes you to FX volatility. In other words, while waiting for your shares
to journal over (up to 5 days), the FX rate (ie. the value of DLR) can
changed dramatically.
Buying and selling highly liquid “inter-listed” stocks (ie. stocks listed on both
the TSX and NYSE); and,
Inter-listed Stocks
Here are a list of potential high volume, low bid-ask spread stocks that are
inter-listed on the TSX and NYSE(generated from TMX.COM). Personally,
I like using the big banks, the higher the share price, the better.
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3. You may notice that the balances in your brokerage account may seem a
bit “off”. Effectively, you have shorted a stock thus sometimes showing a
negative balance, but the system will sort itself out within a week or so.
Final Thoughts
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Save Money with USD to CAD Foreign Exchange using Norbert's Gambit about:reader?url=https://www.milliondollarjourney.com/save-money-wit...
I’ve used this strategy a number of times with my BMO Investorline account
and it has saved me money every time. Check out my full review here.
If you would like to read more articles like this, you can sign up for my free
newsletter service below (we will not spam you).
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