The Canadian dollar crossed the USD/CAD 0.8 (reciprocal 1.25) mark for the first time since the economic crisis. Part of this was a sudden reaction down to the US Federal Reserve’s statement basically saying they are waiting and seeing.
Eventually there will be a time to shift out of US currency and into Canadian dollars, but now does not feel like the right time.
Sacha,
What is the best way, (i.e. cheapest and safest), to switch $US to $CDN in a brokerage account?
In the past you mentioned you have an account with Interactive Brokers and their FX costs are minimal. Not so with most CDN brokers.
Here are some options I see that are possible:
Buying CDN stocks on US exchanges and then journaling them over (Scotia Itrade) to the CDN account and selling them. Costs two transactions ($20) but you have to be right in many ways, namely that the stock price stays constant or up and the exchange rate does not turn against you during the time you have to wait for it to be journaled.
There is also a scheme where you can use DLR and DLR.u to make the exchange. Seems safer.
Here is the link:
http://www.milliondollarjourney.com/low-cost-currency-conversion-with-dlrdlr-u-etf.htm
As an aside, and unrelated to this topic, are you still with Interactive Brokers? All the reviews I read discourage use of it other than by very active traders. Reading your blog all these years you do not seem to fit that type of investor so I was wondering what your opinion is of them from a cost and ease of use perspective for an average user. Is there something you should NOT do in regards to fees as they tend to be variable depending on how you place orders, i.e. market, limit, penny stocks etc. I have started to look at them again; now that they offer RRSP and TFSA accounts. Any feedback would be much appreciated as they are barely mentioned in any Canadian Brokerage Review and the process of switching from one brokerage to another is never straightforward.
Regards,
Frank
Interactive Brokers continues to be the best brokerage out there by a mile. I still use them even though I am not what you would call an active trader.
I do not think of commissions when trading with them. I instead think of the real cost of trading, how to get good executions. Layering in very small amounts, for example, is easily done with IB. Example: You want to buy $100k of something at $50/share. Don’t buy 2,000 shares at 50. Instead, buy 200 at 50, 200 at 49.90, 200 at 49.80, etc., and you can let natural market volatility give you a better price at the risk of not getting a full execution. You can also trigger orders in sequence or in a random pattern to avoid market makers from picking up on your intentions (although I do not trade in amounts where I will move markets).
My initial review of IB still pretty much applies today. As long as you understand the logic of their interface (and there will be a lot of people that do not), they are the best in almost every category.
I can’t comment on other brokerages, but DLR in theory would provide a low friction method of conversion providing you can deal with the delay. Questrade has actually gotten quite a lot better since a few years ago when I wrote about them.