“Bread” is apparently1 common slang for “money”, although it’s a word you won’t hear me use in that context.2 Anyway, in case you missed the news, Loblaws and Weston conspired to fix bread prices, were caught, and now Canadian adults who bought bread between 2001 and 2021 are eligible for up to $25 in free money. I figure that’s about one loaf of bread for every 2.5 years3 the conspiracy lasted.
The claim is easy to submit; the hourly rate if you get the full amount is rather decent. (And I would suggest you set up autodeposit for e-Transfers if you haven’t already done so).
Since I hold a fair amount of USD in my retirement portfolio and most of my expenses are in CAD, I do have to convert between the two worlds from time to time. Most of the time I’m converting USD to CAD, but because of higher US interest rates, I’ve recently converted some CAD into USD to take advantage of that fact and earn a little more money on my cash positions1. My normal way of dealing with this conversion is using Norbert’s Gambit, which I’ve talked about here and here.
Anyway, I’ve decided to keep track on what these movements are costing me using my current broker of choice, Questrade. The answer is not quite as straightforward as you might think.
Fixed Cost
With Questrade, a journaling2 fee is charged every time you do the Gambit. This costs $9.95 plus HST for a total of $11.24, always charged in Canadian dollars. If you choose to subscribe to Questrade Plus, then your monthly fee covers these costs. I’ve done the Gambit twice this year, with one more planned in the 4th quarter. So for me, the cost of journaling is a pay-as-you-go cost. This cost is the same whether you are journaling one share or 10,000 shares, so larger transactions are better here.
Variable Cost: Changes in USD/CAD rate
Performing the Gambit using Questrade takes several business days. The foreign exchange rate moves all the time, so by the time you complete the conversion, the rate has almost certainly changed from when you started the process. Sometimes this works in your favour, sometimes not. Most of the reading I’ve done suggests you ignore this variability, since over time it should even out. For kicks, I’m tracking it.
Variable Cost: Buying and Selling DLR/DLR.u
Any trade you do has an inherent cost, even if you pay $0 commissions3, as I do. That cost is buried in the bid/ask spread. You may have noticed this at work immediately after completing a trade — it almost always seems that the market value of what you just bought is a little lower than what you just paid4. This variable cost is buried, but can be estimated by looking at the average bid/ask spread of DLR, which is featured on its fact sheet. It’s currently stated to be 0.07% when buying/selling DLR and 0.1% when buying/selling DLR.U5 . So, on average, you will sustain a total 0.17% cost when doing the Gambit. But I must reiterate — this cost is buried in the actual price per share you get when buying/selling DLR. Now, I actually paid very close attention to the bid/ask pricing last time I did the Gambit and I paid about half that rate but that’s all down to things like the volume of trading on the day, how many shares you’re moving and a whole bunch of other things that I don’t fully comprehend.
Anyway, here’s my tracking table that I’ll update as I do more of these trades:
Some definitions are in order:
DLR Buy: date upon which DLR (or DLR.u) was purchased.
DLR Sell: date upon which DLR (or DLR.u) was sold. There’s a lag because that’s how long Questrade takes to complete the journaling request. Seems like it’s 3 business days.
USD: The USD value of DLR bought or sold as reported by the trade confirmation6
CAD: The CAD value of DLR bought or sold as reported by the trade confirmation7
Effective rate: divide the previous two columns to come up with a USD in CAD rate8
Spot Rate on BUY/SELL date: daily average exchange rate9 as reported by the Bank of Canada
Target currency: what we end up with, USD or CAD. It’s the opposite of what we start with
Ideal in target currency: This is a calculation that takes the starting currency and applies the spot Rate on the DLR buy day to come up with the target amount. The ideal would be what you would have gotten if you had access to a no-cost conversion on the day you decided you wanted it.
Net Cost subtracts either the USD or CAD column from the ideal amount. If it’s negative, it means the foreign exchange rate moved in our favour between the buy and sell dates. Net Cost is given in the target currency.
Journal fee is charged by Questrade
Total cost adds the journal fee and the net Cost and converts everything to CAD using the spot Rate on the buy day. If it’s negative, we actually made money doing the conversion.
% cost takes total cost and divides by the CAD column
If you want a comparative cost, a typical broker charges 1.5% of the amount changing hands. Looks like I’m doing far better than that so far!
And by “cash” I mean either ICSH or ZMMK, which are ultra-short-term bond funds denominated in USD and CAD, respectively. They are both featured as ETF All-Stars.↩︎
“Journaling” is the technical term for moving an interlisted stock/ETF from the CAD side to the USD side of your account or vice versa. ↩︎
An attractive feature of Questrade, among others ↩︎
This effect is often masked by the volatility in the asset you’re buying, but when you buy very stable priced assets like ZMMK or ICSH or CASH it becomes quite noticeable. ↩︎
And 0.07% happens to be one cent divided by the current DLR Canadian price of $14.12. And 0.1% happens to be one cent divided by the current DLR.u price of $10.24 USD. ↩︎
Disclaimer: I am neither a tax lawyer nor a tax accountant. Engage the services of a professional if you have doubts.
For most of my working career, I earned more than my spouse did and as a result, paid more income tax, too. Spousal RRSPs are a very easy way to split income down the road1, but what about the here and now? Is there a way to shift income from one spouse to another without a whole lot of complexity2 for THIS year’s tax return?
One thing I set up a few years ago was a spousal loan. The concept is pretty simple:
These funds are used by your spouse for investment in a non-registered account
You charge your spouse interest on that loan, which you must declare as income (and your spouse can deduct as an investment expense)
Your spouse gets to keep capital gains, dividends and interest payments in their name and file them on their return, and thus pay less tax than you would on those gains.
Now, of course, there is the small matter of “what interest rate do you charge”? Since the name of the game is income-splitting it’s advantageous to charge as little as possible. But before you run to the exit and give an interest-free loan, there are prescribed rates set by the CRA, found here. The rate to use is called the “The interest rate used to calculate taxable benefits for employees and shareholders from interest free and low-interest loans” and it currently4 sits at 3%56.
The nice thing about setting up such a loan is that the interest rate is fixed at the time you set it up. I feel pretty smart knowing that my spouse is paying a rock-bottom 1% annual rate and has done so since the 4th quarter of 2020.
So how to go about it? Like all things involving the CRA, it’s good to have records, so
I set up a formal loan agreement dated, signed and archived. It spells out the date the loan was made, the amount, the payment schedule and so on. There’s lots of templates out there.
I transferred the funds to my spouse using a cheque to create a paper trail.
My spouse pays the interest due annually via eTransfer so there’s an email record
I declare the interest as income on my tax return
My spouse declares the interest expense on her tax return
One thing I haven’t figured out yet is when to dissolve this loan. In retirement, I’m not making more than my spouse, so perhaps it’s time to wrap up this arrangement7.
And if you’re careful, you can arrange to have you and your spouse have the SAME amounts in your respective RRSPs when it’s time to convert to a RRIF. ↩︎
I suppose there’s probably some way involving setting up a corporation and paying your spouse a salary, but that concept doesn’t work for everybody ↩︎
Left unsaid, is that you have to have spare cash available to actually loan this money and your spouse needs a way to invest it ↩︎
According to multiple sources this is the interest rate of the 3-month treasury bill sold at auction. Who knew? ↩︎
If I were a betting man, I’d say this rate is likely to go lower before the end of the year. Returns need to exceed the interest rate charged for this to make sense but 3% is a pretty low bar. ↩︎
Or perhaps I’ll just wait until my bonus payouts from Questrade are done. Decreasing my spouse’s holdings will have an adverse effect on the bonus being paid. ↩︎
What seems to be normal nowadays is to have online brokers write cheques to investors in an attempt to attract new money. I wrote about Wealthsimple’s latest offer yesterday, and now I see that QTrade is the latest broker to try to entice investors to move their money. I’ve been a QTrade client for many years (you can read my take on them here), but this year moved most of my holdings to Questrade1 (my take here).
Anyway, the maximum possible free money you can earn is $2000 with this latest QTrade promotion. All the details are captured here, and the fine print is found here.
I’ll save you the trouble, the details as I see them:
To be eligible, you can be a new or existing client, but you have to open a new account23 with QTrade before November 30, 2025 using the promo code QTRADE20254
Fund your account5before the end of the year to be eligible for your free money
5% matching on the first $15k (total possible: $750)
1% matching on the next $125k (total possible: $1250)
No matching after that (i.e. the total reward is capped at $2000)
Keep your money there until December 31, 2026 and get paid in a lump sum in February 20276.
If you’re also a new client, you get free trades7 until the end of the year
Comparing Wealthsimple’s latest offer to QTrade’s offer might be fun. In the table below, I’m ignoring the margin account bonus offered by Wealthsimple and the impact of free trades offered by QTrade8.
QTrade’s offer is the clear winner for amounts up to $200k, but Wealthsimple wins if you’ve got more loose change. One big difference is how fast you get your hands on the bonus money. Wealthsimple starts paying out 1/12 of your bonus 60 days after the money lands, whereas QTrade makes you wait a whole year (and then some) before giving you the money.
As a certified cheapskate, I’m always happy to take advantage of free money, and more and more providers13 seem to be taking this route in an effort to attract new customers. It’s a good time to be a DIY investor!
To take advantage of THEIR free money offer, naturally ↩︎
My interpretation of the Ts and Cs is that opening multiple accounts will NOT increase your ability to collect free money. The limit is $2000 per client, across all new accounts opened by that client ↩︎
There’s no restrictions that I see on the type of account. QTrade provides all of the ones you might care about: TFSAs, RRSPs, RRIFs, RESPs, non-registered. They also support USD accounts. ↩︎
Speaking as a current QTrade client, opening a new account takes only a minute or two. I would expect it take a little longer for a new client, but this step needn’t dissuade you. ↩︎
Has to be “net new” money, so my thought of shifting from one account to another isn’t eligible. Darn. ↩︎
Paying out bonuses month by month seems to be a more common way of doing this, but to each his own I guess. ↩︎
UPDATE September 18th: Wealthsimple extended the registration window; it’s now October 15th. Still time to get free money if interested.
Summary: Wealthsimple announced a new promotion in an effort to drum up more business today. Ignoring the margin component, you could stand to make 1% cash back on new deposits, up to $2M. That’s up to $20k in free money.
You may get the impression that the promotion is only targeting investors who trade on margin1, something I don’t do myself2. But no — they are paying 1% match for all money moved, margin or not. I think it’s worth taking a closer look if your current broker isn’t giving you free money to earn their business3. 1% cash back is a nice incentive, right?
The details of the promotion as I see it (you’re welcome):
You must first register your intent to participate no later than September 5th October 15th.
Once registered for the promotion, you have 30 days to initiate a fund transfer, and you have 90 days to complete it.
You have to move at least $25k4, and 1% bonuses will be paid out to a maximum of $2M in assets moved
Bonuses are paid out in 12 equal monthly instalments
Removing more than 10% of what you transfer inwithin the year will cause your bonus to be reduced accordingly
As I still have a few RRIF accounts with QTrade (reasons why here), I thought, perhaps, I could score a bit MORE free cash. Unfortunately, Wealthsimple doesn’t support self-directed spousal RRIFs (and my call to support confirmed this) so I guess I’ll have to wait this one out. As it turns out, this is indeed possible, but spousal RRIFs cannot be opened as brand new accounts; they have to be converted from an already-existing spousal RRSP account. This means that you need special agent support to pull this off without issue. As I like free money, I’ll be giving this a try.
Anyway, if you’re new to the world of Wealthsimple, want to earn $25, and want to use my referral code, it’s here.
The promotion pays 2% match for margin accounts if there is active margin. They want to make money off of people who borrow money to invest which makes sense of course. ↩︎
My wife does, though, thanks to a spousal loan. I really should write a bit about that. It’s a nice way to get a bit of income-splitting in certain instances. ↩︎
My broker (Questrade) pays me a bonus every month as a thanks for moving my business there. ↩︎
$25k is the minimum amount that has to be moved before Wealthsimple will cover transfer-out fees as well ↩︎
The Money Engineer 