Norbert’s Gambit is a way to change USD to CAD or vice-versa cheaply. (Most brokers take 1.5% off of such transactions). I talked a bit about the Gambit previously, and a very up-to-date blow by blow account of how to do it is found here, but I figured I’d show the practical benefits of doing it.
On April 14th, I decided it was time to covert some of my USD RRIF holdings into CAD. I did this by selling some of my AOA shares. I then immediately purchased DLR.u on the TSX, using the US dollars from the AOA sale. (DLR is the usual ETF people use to do the Gambit, but any inter-listed stock/ETF will do.)
After making sure I had sufficient cash in my account to cover the journaling fees ($9.95 plus HST = $11.24 CAD), I submitted the journal request on the Questrade website.
Two days later (April 16th), the journaling fee was charged to my account.
And then one day later, April 17, DLR showed up in my account, replacing the DLR.u that had been there.
I immediately sold the DLR shares to create CAD in my account, which I then used to buy XEQT.
After subtracting the fees, my effective conversion rate was 1.385. Compare this to the Bank of Canada’s published rates, and I think you’ll agree that it’s a pretty sweet deal:
I’m tracking all my Gambit transactions over here, so I can see how often I come out ahead.
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