Tag: interactive brokers

News: Wealthsimple Norbert’s Gambit in Beta

RobHLeave a comment

Norbert’s Gambit is a way to save money on USD/CAD conversions. (Want to learn more? I’ve written about it here). Most brokers take extra margin points on these conversions, hidden in the relatively crappy exchange rate you actually get. Since a lot of my retirement holdings are in USD, and since I am a cheapskate, I’ve used Norbert’s Gambit at three different brokerages (BMO Investorline, QTrade and Questrade1) over the years.

And now, Wealthsimple has joined the fray. It’s not open to the general public quite yet, but I did get a notification that I can now perform the Gambit on this platform. This brings Wealthsimple agonizingly close to being a contender for my retirement savings business. They only lack (puzzlingly) USD support in RRIF accounts. Otherwise, they check the other boxes in my “need to have” list for any broker:

  • $0 trading commissions
  • Support for USD accounts in non-registered, RRIF, and spousal RRIF2
  • Norbert’s Gambit3

Wealthsimple’s implementation of the Gambit seems to mirror that of Questrade insofar as they charge a $9.95 plus tax fee for journaling shares, a necessary step of performing the Gambit. There are a few oddball wrinkles documented on their website, none of them show-stoppers in my view:

  • Not available on the Wealthsimple app
  • You can only journal DLR/DLR.U. Other cross-listed shares aren’t supported4.
  • The journaling fee is always charged in Canadian dollars, and by the language used on the website, it sounds like you are blocked from doing the journaling unless you have the cash in your account at the time of the request5

Normally I’d give the feature a whirl to see if it’s comparable to the Questrade/QTrade experience, but I only hold CAD assets at Wealthsimple at the moment. It’s not really a complicated thing to do, the only way Wealthsimple could make the experience better is to do the journaling faster. I’ve documented the timelines involved with doing the Gambit at Questrade here.

  1. Other brokers also support it, but I just have no personal experience with it. ↩︎
  2. Wealthsimple doesn’t support this per their website ↩︎
  3. People (especially on Reddit) frequently cite Interactive Brokers as the best game in town to do currency conversions. I did at one time have an IB account, and I can confirm that their currency conversion rates across the board are a pittance, and in most cases will be cheaper (and faster) than even Norbert’s Gambit. HOWEVER, if you want to actually get hold of the cash you’re converting, then you can expect VERY long delays before you are allowed to withdraw the funds. ↩︎
  4. Most people use DLR/DLR.U to do the Gambit but it isn’t obligatory. At BMO Investorline, if you didn’t want to place a phone call, you had to use some other share combination (I usually chose a Canadian bank stock like RY). Not sure this is still true. ↩︎
  5. Questrade lets you carry a negative balance, but of course they will charge interest on that. ↩︎

Buying US Stocks or ETFs? Save money on US dollar foreign exchange.

RobH5 Comments

I have a lot of US dollar assets in my retirement portfolio. I’m not really convinced it’s a good idea, but it has taught me the ins and outs of USD foreign exchange rates. Here I’m talking about getting access to (or changing from) US funds for the purposes of investing in your brokerage account. Getting access to US funds to buy things is a different1 animal, one that I covered in a previous post.

Here’s a few things I’ve learned.

Google is your friend for real time foreign exchange (FX) rates

“1000 USD in CAD” is a terrific search term to get an instant FX rate. (also: Euro, GBP, THB…). This is as close as you’ll get for the absolute best FX rate and should serve as your target.

For most brokerages, foreign exchange is a profit center

Meaning: They’re making money every time you convert one currency to another, usually on the order of 1.5% a transaction. Some providers seem to go to great lengths to hide what rate they are using on any given transaction. (I’m looking at you, QTrade2).

There are exceptions in the brokerage community, to be sure.

  • Interactive Brokers comes very close to the ideal rate for any sizable transaction3 and is the big winner when it comes to converting currency for investing purposes45
  • Wealthsimple recently introduced a tiered FX rate depending on how much you’re converting6:
    • Under $10k, 1.5%
    • Up to $25k, 1%
    • Up to $100k, 0.5%
    • Over $100k, 0%

The cheapest way to convert at most brokerages is to use Norbert’s Gambit

Norbert’s Gambit, in a nutshell, involves the following steps.

I must say at this point that although the steps are reasonably straightforward, there are usually delays introduced at each step. For example, you probably have to wait a day for the initial trade to settle before making the journaling request. And journaling may not be instantaneous either11.

With no guarantee that any of these are accurate, here are the specific steps to do the Gambit on a number of popular platforms.

  1. For most people. Since I am a CIBC USD savings account client, using Norbert’s Gambit is also a way for me to fund my USD shopping purchases. ↩︎
  2. When attempting to buy a USD ETF from my Canadian account, the only indication I’m about to get fleeced is the warning message “The account funds do not match the market currency. Currency conversion and foreign exchange rates will apply.” No indication of what the exchange rate they are using. ↩︎
  3. Their posted rates are very close to the google ideal, but there is a small (very small) minimum charge of $2 per trade per https://www.interactivebrokers.com/en/pricing/commissions-spot-currencies.php ↩︎
  4. It’s not ideal for getting cash access for shopping since they have very long hold periods where you cannot withdraw your money. See https://www.interactivebrokers.com/campus/glossary-terms/withdrawable-cash-subject-to-origination-restriction/ for the details. ↩︎
  5. But that web interface, wow is it ever complicated ↩︎
  6. See https://www.wealthsimple.com/en-ca/legal/fees/trade for the details. You’ll need a Wealthsimple USD account to pull this off, of course, and the only kind of USD account Wealthsimple offers is non-registered. ↩︎
  7. Did this at BMO Investorline since you cannot buy DLR online. Apparently you can buy it if you call in your order. At BMO using RY, I was able to get USD on the same day. ↩︎
  8. HOW to do this will vary considerably depending on who your broker is. Best to Google for specific instructions involving your broker. ↩︎
  9. Possibly for buying and selling the ETF, possibly a fee imposed for journaling, something Questrade is doing starting April 1, 2025. ↩︎
  10. And minus (or plus) any changes in the price of the thing you bought. Depending on your broker, each step in the process may take a day or two. If you do the Gambit often enough, I figure this sort of thing just averages out. Sometimes you win, sometimes you lose. ↩︎
  11. Per https://www.questrade.com/learning/investment-concepts/dual-listed-securities/journaling-shares it can take five (!) business days. ↩︎