If you live in Canada and want to invest in US stocks you have two options to choose from. The first option is plain simple, open the Investor’s Edge CAD account and buy the “Apple or Facebook” stock.
What really happens here is that your CAD gets converted to USD, using CIBCs exchange rate at the moment and your buy trade gets triggered. When you want to sell the stocks, the same repeats, you sell the underlying stocks and the amount gets converted back from USD to CAD.
So everything till now sounds pretty simple and straightforward, right? It is actually. Then why do you have to open the TFSA or RRSP USD accounts, or why do you have them in place. Another question you might probably be thinking is that, why should you go through the hassles of exchanging from CAD to USD in the first place? Let’s find that out.
Note: You can purchase and hold the US stocks in your TFSA or RRSP Canadian account as well. In this case, your Canadian Dollars will be exchanged to USD automatically upon the stock purchase and similarly when you sell the stock.
Instead of holding US stocks under the Canadian Account, keeping it under the TFSA or RRSP USD makes more sense, you get to control when to exchange the money back and at what time. That’s the whole point of discussion here. Let’s get started.
How To Convert CAD to USD Using the Investor’s Edge Platform?
If you Invest using the CIBC’s Investor’s Edge platform and want to buy US stocks, here’s how you can convert Canadian Dollars to US dollars in a simple way.
Remember, your CIBC Investor’s Edge account has four components:
The Pros of holding US stocks in RRSP are:
- A dividend cut of 15% will not be applicable to you. For example, apple stock pays out a dividend of 0.82 USD per quarter at the moment.
The Cons of holding US stocks in RRSP are:
- You cannot take out the money if required without paying the taxes applicable per the Canadian Government and your tax slab, except buying a first house or student loan
Pros of holding US Stocks in TFSA:
You can invest in US stocks anytime you want to and how much you want to (within the TFSA limits of course)
You can take out the money to your chequing account when needed (counts against the annual quota)
If you invest in US stocks using the TFSA CAD account type, your Canadian dollars are going to be converted to USD, but still, you will see the stock value increase/decrease in Canadian dollars, per exchange rate at that minute.
If you invest in the TFSA USD account, you will have to first convert CAD to USD and then buy the individual stocks or ETFs trading in the US exchanges.
Let’s look at option 4 here.
Investor’s Edge TFSA CAD To USD Money Exchange
Steps to be followed to convert TFSA CAD to USD account:
- Login to your CIBC Investors Edge Account here – https://www.investorsedge.cibc.com/en/home.html
Click “Cash Transfers” from the left menu
Click on Foreign Exchange>Submit A Request link
Make sure you have sufficient funds in the TFSA Canadian account (TFSA CAD)
Select the TFSA CAD account and enter the amount you want to convert to USD
The system should automatically populate the equivalent US dollars and “choose the TFSA USD account” for exchange
Click on submit the request. (Double-check the exchange rate you’re getting)
The Canadian amount should be converted and you should see the USD amount in your TFSA USD account within 5 minutes max.
Remember: You cannot exchange the money at any time you want to, you will have to always do it during the regular market trading hours.
Following the above steps is extremely convenient and easy. This way, you don’t have to call CIBC Investor’s edge every time you need to convert money and wait on hold to speak to someone.
You can also follow similar steps to convert money from RRSP CAD to RRSP USD in your Investor’s Edge Account.
A quick note about the Wealthsimple Trade App
Using The Wealthsimple Trade app, you can buy and sell Canadian/US stocks at $0 commission. (No affiliate link, don’t worry :))
Whereas with CIBC Investor’s Edge, I usually pay $6.95 per trade. $13 for buying and sell in total.
I’ll personally recommend anyone just starting to invest to signup for Wealthsimple Trade and, it’s free and the iOS app is extremely useful to start transferring money and investing. If you trade frequently or plan to Invest in ETFs every month, you’ll end up saving a ton of money in fees and will also benefit from the dollar cost average (no sponsored links here).
Once you’ve signed up, for example, if you end up transfering $100 to your Wealthsimple trading account every month:
And the price of the ETF for example is:
By Dollar Cost Averaging: 10+15+12 = 37/3 = 12.33 + $6.5*3 = %19.5 saved in fees.
CIBC Investor’s Edge is one of the best investment platforms in Canada used by millions of Canadians every single day.
Moreover, Investor’s Edge has a flat fee of $6.95 per trade (whether it’s a buy or sell order) is the highlight of the platform. You can invest in ETFs, Canadian & US Stocks, and Mutual Funds using the platform.
If you’re planning to open a new investor’s account, always remember to open both US and a Canadian Dollar account both for the TFSA and RRSPs. By doing so, you can easily convert the Canadian dollars to US Dollars and save the constant spread and exchange fees when buying US stocks through Canadian dollars. Likewise, you can reverse the process as well from USD->CAD.
To place a trade on the Investor’s Edge platform, you can trade using the online web portal, mobile smartphone app, or by using tablet. The platform is quite robust and neat to use.
Please let me know your thoughts and comments below. Thanks for reading!
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.