If you have no idea what Norbert’s Gambit is, it’s a way to cheaply convert USD/CAD in your online brokerage account. Most brokers support it1.
Because I hold a lot of USD assets in my retirement savings, and since I live and spend most of my money in Canada, I need a way cheaply convert to Canadian funds in my RRIF. So last week, I had to convert some of my AOA holdings into XGRO holdings and so I updated the log I’m keeping. So far, I’ve done the Gambit three times this year, and twice I’ve lucked out on the FX rate changes and actually made money2 on the transaction.
And many people expect Wealthsimple to join this club soon. ↩︎
What I mean: if the funds had converted instantaneously with no fees rather than waiting around for the 3-5 business days for the Gambit to complete, I would have received LESS money than by using the Gambit. Over time, I expect this will even out, but right now I’m about $55 CAD ahead. ↩︎
Wealthsimple’s prepaid Mastercard (aka the Cash Card) has stopped offering cashback on purchases, effective October 2nd, 2025. Don’t confuse this with Wealthsimple’s Visa card, which is an actual credit card, and still offers a nice 2% cashback reward.
I’ve been a fan of Wealthsimple’s prepaid Mastercard for a while now. I wrote about it over here. My favourite feature of this prepaid Mastercard is that it does not charge the usual 1.5% foreign exchange fees most other credit cards bury in their transaction costs.
The demise of the 1% bonus isn’t a deal-breaker for me but it was nice while it lasted. The card is also noteworthy because it permits ATM access globally with no fees. This isn’t a feature I’ve used, but it might be of interest.
I signed up for the waitlist for Wealthsimple’s Visa card when it was released, but the rollout has been v-e-r-y slow, and I’m still waiting for that to materialize1. Once I get my hands on one, I will have no incentive to use the prepaid card since the Visa card also offers no-charge foreign exchange AND 2% cashback on all purchases. That’s a great deal.
About every third post on Reddit’s Wealthsimple sub is complaining about the slow rollout. ↩︎
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. ↩︎
I have a dedicated non-registered account in my retirement portfolio that is the cash cushion for VPW’s decumulation strategy. You can read about the details of how I currently get paid in retirement here.
That non-registered account holds about 85% Canadian dollars, invested in ZMMK, with the remaining 15% invested in ICSH. Both of these ETFs are very short-term bond funds and give me a slight advantage over investing in zero-risk HISAs. ZMMK and ICSH are part of my ETF all-stars lineup, and I track HISA rates on a monthly basis.
The fact is that US interest rates are a lot higher than Canadian interest rates, almost 2% higher as of July 2025. It seems to me that I should take advantage of that fact. Taking advantage of this situation would mean selling some ZMMK, performing Norbert’s Gambit with the resultant cash, and then buying ICSH. There are costs involved at every step of the way1:
Selling ZMMK means I’ll get dinged with the bid/ask spread2
Performing Norbert’s Gambit costs $9.95 plus HST on Questrade to do the necessary journaling
There will be bid/ask spreads to pull off the Gambit…once when buying DLR, once when selling DLR.U
Buying ICSH means another bid/ask spread
So at what point is it worth it? Let’s do a bit of math using the following assumptions:
The delta between US and Canadian rates is 1.8% in favor of the US rate. That’s an annual rate, and I’ll just divide by 12 to get a monthly rate3.
The bid/ask spread for DLR per the ETF fact sheet is 0.1% on the CAD side and 0.07% on the USD side
So clearly, for amounts around $1k this isn’t such an attractive proposition as the costs will take a fair bit of time to be negated by the bump in interest rates. For larger amounts, I’d say it’s worth it. Given ZMMK hasn’t yet paid out its dividend for the month, I guess I’ll wait until I’m ex-dividend (July 30, 2025, per the fact sheet) before doing this transaction.
I’m also ignoring the tax on any capital gains I might pull off. It will be quite small, and will be close to 0. ↩︎
Bid/ask spread is the difference between what the price holders are willing to sell at versus the price offered by a buyer. For ZMMK this is typically 1 cent. ↩︎
Whether this delta continues to hold is anybody’s guess. ↩︎
Which, admittedly, has no hope of being correct. If you do this sort of thing frequently enough, it ought to even out over time. ↩︎
This is true at Questrade. YMMV with your broker. ↩︎
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.
The Money Engineer 