Canadian Money Forum banner

US stocks in Canadian dollars?

4019 Views 3 Replies 4 Participants Last post by  drip99
I spoke to my financial planner the other day about investing in some stocks listed on the NYSE. He told me I could do it in US or CDN currency. We went over the pros and cons of each relating to the foreign exchange. At the time it made sense, but now I cannot remember how it works.

Can someone explain this here?
1 - 4 of 4 Posts
You must pay for any purchase of NYSE stocks in US dollars (there may be exceptions - ignore).

If you make the purchase from within your Cdn$ account, the brokerage will take out the equivalent Loonies PLUS charge you their fee for doing the conversion to US$ (expect 1.5% ot 2%). You will not see the charge. They bury it in the exchange rate they quote. When you sell the stock the reverse happens and you are charged that 1.5% again. So this is a VERY BAD IDEA.

When you open a US$ account you move Loonies into it in one big FX transaction. They charge a lower % for big transactions. The $$ to pay for the stock comes from the already existing US$$. And then when you sell the stock, the proceeds (in US$$) will simply stay sitting in that US$ account. So there are no more FX transactions until late in your life when you start repatriating value.

RRSP accounts cannot hold US dollars (with only one brokerage being the exception). So they work like the the first example. See this discussion.

Your exposure to currency effects is a different issue. Read details.
See less See more
To add to what leslie wrote; anytime you get a dividend payment for a US stock held in a CAD account, you will get hit with another foreign exchange fee. High FX fees on small regular amounts really start to add up over time.
us stocks

I just bought Johnson and Johnson recently. I paid in Canadian dollars. The exchange cost me $1.08 per Canadian dollar. I told the bank to keep everything in US dollars including dividends. I'm 33 and plan on keeping this stock for a long time.
1 - 4 of 4 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.