If you live in Canada and want to invest in US stocks, you have two options to choose from. The first option is very simple: open the Pro-Investors account in CAD and buy “Apple or Facebook” shares.
What actually happens here is that your CAD is converted to USD, using the current CIBC exchange rate, and your purchase transaction is triggered. When you want to sell the shares, the same thing repeats, you sell the underlying shares and the amount is converted back from USD to CAD.
So, so far everything seems pretty simple and straightforward, right? This is indeed the case. So why do you need to open USD TFSA or RRSP accounts, or why do you have them in place? Another question you might probably be wondering is why should you bother trading from CAD to USD in the first place. Let’s find out.
Note: You can also buy and hold US stocks in your Canadian TFSA or RRSP account. In this case, your Canadian dollars will automatically be exchanged into USD when purchasing shares and the same way when you sell the shares.
Instead of holding US stocks in the Canadian account, it makes more sense to hold them in a US dollar TFSA or RRSP because you can control when and when to exchange the money. That’s the whole point of the discussion here. Let’s get started.
Why should you convert CAD to USD using the Investor’s Edge platform?
1. Integrated management:
Advantage: The InvestorPro platform allows you to seamlessly manage Canadian and U.S. investments in one place.
Why it’s important: This integration simplifies portfolio management, providing a holistic view of your holdings and facilitating effective decision-making.
2. Real-time rates:
Advantage: Access to real-time currency conversion rates on the platform.
Why it’s important: Updated rates allow you to make informed decisions, ensuring transparency and accuracy of currency conversions.
3. Profitable Conversions:
Advantage: Potentially competitive currency conversion rates.
Why it’s important: Lower conversion costs can contribute to overall investment profitability, making Investor’s Pro a profitable choice for currency trading.
4. Streamlined Trading:
Advantage: Run currency conversions on the same platform you trade US stocks on.
Why it’s important: Streamlining the trading process improves efficiency, eliminating the need for external services and creating a consistent user experience.
5. Effective portfolio monitoring:
Advantage: Consolidated portfolio monitoring for Canadian and American securities.
Why it’s important: Efficient monitoring of your entire portfolio makes it simple to track performance and assess the overall health of your investments.
6. Research and analysis tools:
Advantage: Access to robust research tools and market analysis for Canadian and U.S. securities.
Why it’s important: Informed decision-making is facilitated by in-depth research, helping investors navigate the complexities of both markets.
7. Risk management opportunities:
Advantage: Tools for implementing currency hedging strategies.
Why it’s important: For those looking to manage foreign exchange risk, having access to hedging options within the platform enhances risk management capabilities.
8. Customer Support:
Advantage: Availability of customer support for currency related queries.
Why it’s important: Responsive customer support ensures that investors can seek help when needed, fostering trust in the platform.
9. Integration of tax declarations:
Advantage: Consolidated statements and reports for tax reporting purposes.
Why it’s important: Simplified tax reporting streamlines the administrative aspects of managing a diversified portfolio.
Investing with CIBC Investor’s Edge offers not only a trading platform, but also a complete ecosystem that meets the needs of investors operating in the Canadian and American markets. The benefits described above collectively contribute to a user-friendly, efficient and cost-conscious investment experience.
How to convert CAD to USD using the Investor’s Edge platform?
If you invest using the CIBC Investor’s Edge platform and want to buy US stocks, here’s how to easily convert Canadian dollars to US dollars.
Remember that your CIBC Investor’s Edge account has four elements:
-
Canadian RRSP
-
American RRSP
-
Canadian TFSA
-
American TFSA
The advantages of holding American stocks in an RRSP are:
A 15% dividend reduction will not apply to you. For example, Apple stock currently pays a dividend of $0.82 per quarter.
The disadvantages of holding US stocks in an RRSP are:
You cannot withdraw the money if necessary without paying applicable taxes according to the Canadian government and your tax bracket, except for the purchase of a first home or a student loan.
Advantages of holding US stocks in a TFSA:
-
You can invest in US stocks at any time and in any amount you want (within the TFSA limits of course)
-
You can withdraw the money from your checking account if necessary (counts in the annual quota)
-
If you invest in US stocks using the TFSA CAD account type, your Canadian dollars will be converted to USD, but you will still see the value of the stocks increase/decrease in Canadian dollars, per exchange rate at that minute.
-
If you invest in the TFSA USD account, you will first need to convert the CAD to USD and then purchase the individual stocks or ETFs traded on US exchanges.
Let’s look at option 4 here.
Money Exchange TFSA CAD to USD Pro-Investors
Steps to convert a TFSA account from CAD to USD:
- Log in to your CIBC Investor’s Edge account here – https://www.investorsedge.cibc.com/en/home.html
-
Click on “Money transfers” in the left menu
-
Click on the Foreign Exchange>Submit a Request link
-
Make sure you have enough funds in the Canadian TFSA account (CAD TFSA)
-
Select the TFSA CAD account and enter the amount you want to convert to USD
-
The system should automatically fill in the US dollar equivalent and “choose TFSA USD account” for the exchange.
-
Click submit request. (Check the exchange rate you get)
-
The Canadian amount should be converted and you should see the USD amount in your USD TFSA account within 5 minutes or less.
Remember: you cannot exchange money at any time, you will always have to do so during normal market trading hours.
Following the steps above is extremely convenient and simple. This way, you don’t need 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 a CAD RRSP to a USD RRSP in your Investor’s Edge account.
CIBC Investors favor US stocks by investing in Canadian dollars
Investing in U.S. stocks in Canadian dollars through CIBC Investor’s Edge provides Canadians with access to the large and dynamic U.S. stock market. Here’s a handy guide on how you can navigate this process:
1. Account setup:
Start by opening a brokerage account with CIBC Investor’s Edge. Make sure your account is set up to handle Canadian and US currencies.
2. Fund your account:
Deposit funds into your CIBC Investor’s Edge account in Canadian dollars. You will have the option to convert your CAD to USD when you decide to invest in US stocks.
3. Currency conversion:
When you are ready to invest in US stocks, you can convert your CAD to USD in your Investor’s Pro account. Please be aware that there may be currency conversion fees associated with this process.
4. Search and selection of titles:
Use the research tools provided by CIBC Investor’s Edge to analyze US stocks. The platform usually offers various resources, including market analysis, stock charts, and financial news.
5. Place a trade:
Once you have selected the US stocks you want to invest in, use the Investor’s Pro trading interface to place your order. Specify the quantity of shares and any other relevant details.
6. Monitoring your investments:
Keep track of your US stock investments with the Investor’s Edge platform. Monitor market trends, news and any changes in the value of your portfolio.
7. Managing currency fluctuations:
Be aware of currency fluctuations, as they can impact the value of your U.S. securities when converted back to Canadian dollars. Some investors may choose to implement currency hedging strategies to manage this risk.
8. Tax Implications:
Understand the tax implications of investing in US stocks as a Canadian resident. Consider consulting a tax professional to ensure compliance with Canadian and U.S. tax regulations.
9. Customer Support:
If you encounter any problems or have questions regarding investing in US stocks through CIBC Investor’s Edge, contact their customer service. They may provide assistance with account-related queries or technical support.
10. Stay informed: – Stay informed about market changes, economic conditions and any developments related to your investments in US stocks. This knowledge will help you make informed decisions over time.
Last words
CIBC Investor’s Edge is one of Canada’s best investing platforms used by millions of Canadians every day. In addition, Pro-Investisseurs offers a fixed fee of $6.95 per transaction (whether it is a buy or sell order), which is the strong point of the platform. You can invest in ETFs, Canadian and US stocks, and mutual funds using the platform.
If you are considering opening an investor account, always remember to open an account in US dollars and Canadian dollars for the TFSA and RRSP. By doing so, you can easily convert Canadian dollars to US dollars and save the constant spread and foreign exchange fees when buying US stocks in Canadian dollars. Likewise, you can also reverse the process from USD -> CAD.
To transact on the Pro-Investors platform, you can transact using the online web portal, the mobile smartphone application or using a tablet. The platform is quite robust and easy to use. Please let me know your thoughts and comments below. Thanks for reading!
