[Kinny]

Being a Canadian and earning Canadian dollars, i'm curious to see how you guys are investing in US listed stocks in the US market. So my question is,

How do you buy US stocks in your RRSP and Non-RRSP accounts? (e.g. Do you convert a lump sum of $CAD into $USD and keep it in a US trading account or do you borrow $USD to purchase these stocks?)

I'm curious to see what are the benefits/disadvantages of doing so. Also, seeing how there may be a possibility the USD will keep tumbling in the long run, this may have a substantial impact with rising/declining stock price listed in USD (especially if you want to sell and transfer the money back into CAD.)

 

[HaroldCrump]

How do you buy US stocks in your RRSP and Non-RRSP accounts? (e.g. Do you convert a lump sum of $CAD into $USD and keep it in a US trading account

Most brokerages will open a USD trading account for you.
Mine does (iTrade) without any additional hassle (one extra form, though).
How you put funds into it are upto you.
You could transfer money into your CAD trading account and then transfer into the USD trading account from there (incurring the brokerage's conversion spread/fee).
You could acquire USDs on your own and send a USD cheque into the account.
There are many ways.

or do you borrow $USD to purchase these stocks?

The only reason to do so would be to hedge the USD.
If you hold US listed stocks, you could create a simple hedge by borrowing USD from your bank and investing.

Regarding RRSP, I believe Questrade allows a USD RRSP account.

 

[Sampson]

How do you buy US stocks in your RRSP and Non-RRSP accounts? (e.g. Do you convert a lump sum of $CAD into $USD and keep it in a US trading account or do you borrow $USD to purchase these stocks?)

I periodically convert $CAD to $USD. I time the market cuz I'm good at it

Seriously though, I do periodically convert currency when I feel the $CAD is strong. I hold both CAD and USD high interest savings accounts and keep cash there until I'm ready to buy.

Because my discount brokerage does not allow me to hold USD inside the account, I often purchase the holding in my non-registered account first, and if the CAD is dropping, I'll try to make an in-kind contribution when most advantageous.

 

[leslie]

Problems with US $ transactions within RRSPs
How-to and why hedge US$ holdings

If you have not yet transferred any Loonies into USdollars then you should consider simply opening a US dollar broker account and buying the US securities in that account creating a US$ overdraft. Keep the equivalent Loonies to cover the debt free in the Cdn account. buy/sell the N-FXC to adjust the debt level as the value of your securities changes.

First find out the interest rate on the overdraft. I use Interactive Brokers at 1.5% roughly, so the cost of the hedge is tolerable. If your broker's interest is higher consider buying futures contracts to hedge. You must spend time learning first.

I keep a hedge on foreign exposure unless I get VERY certain that I would benefit from going naked. I never take a position in a foreign currency, even at those times, beyond what was created by my securities' position.

There are always thing I want to buy that are not available in the Cdn market, so I moved Loonies into USdollars once only and leave it there (adding when my portfolio grew). There is a hidden 1.5% to 2% charge to transfer between currencies, so the fewer the movements the better.

 

[Kinny]

Thanks guys!

Currently I do not hedge by borrowing US$ to buy US-listed stocks, as I've been doing currency conversion CAD - USD whenever I feel it's a good time to do the exchange. I guess since I have long-term in mind, keeping a USD trading account is beneficial.

Thanks!

 

[Smac20]

Trading US holdings in your RRSP does present a few extra issues, but this can be a huge benefit. I am using Questrade and it is very easy to set up.

Good luck.