Investing

Help with math - TD Waterhouse, US RRSP

  • Last Updated:
  • Oct 7th, 2012 1:51 pm
Tags:
None
Deal Guru
User avatar
May 6, 2005
11907 posts
1734 upvotes
GVR

Help with math - TD Waterhouse, US RRSP

As I've recently learned TD Waterhouse basically cannot handle US funds in RRSP

So if I want to buy a US dividend-paying stock in my RRSP I am going to get hit with:
- Conversion to buy stock
- Conversion on every dividend
IF I drip the stock (just rebuy with dividend.. no official discount or otherwise...)
- Conversion to cad on dividend
- Conversion back to USD on buy

Can anyone help me figure out just how much money I'll be losing as a result? I really like the idea of keeping everything in one place but I'm wondering if it's worth it to open up a questrade RRSP JUST for USD and drip some US stocks there...
13 replies
Newbie
Oct 1, 2008
48 posts
5 upvotes
Toronto
Kaitlyn wrote: As I've recently learned TD Waterhouse basically cannot handle US funds in RRSP

So if I want to buy a US dividend-paying stock in my RRSP I am going to get hit with:
- Conversion to buy stock
- Conversion on every dividend
IF I drip the stock (just rebuy with dividend.. no official discount or otherwise...)
- Conversion to cad on dividend
- Conversion back to USD on buy

Can anyone help me figure out just how much money I'll be losing as a result? I really like the idea of keeping everything in one place but I'm wondering if it's worth it to open up a questrade RRSP JUST for USD and drip some US stocks there...
When you do US transactions within the day in your RRSP account, give them a call to ask for a "wash" (not sure about the spelling). There are no exchange involved. Let say you buy 100 shares of FB in the morning for $23 and sell it in the afternoon for $25, TD will credit you with shares of US money market fund based on your profit.

In your case you can buy US money market funds (exchange apply here) when our dollar is high. Then sell the US money market fund when you are ready to buy the stock (just make sure you do a "wash"). I'm pretty sure it'll work with the dividend also.

When you sell your stock, you can either put the settlement in US money market fund (let say our dollar is low) or take cash (exchange apply here).

You may even make some extra money on the exchange if your timing is good.
Deal Guru
User avatar
May 6, 2005
11907 posts
1734 upvotes
GVR
Ah yes I forgot about the wash - but I recall speaking with TD and my understanding is that this is NOT an option for dividend payouts...
Deal Guru
User avatar
May 6, 2005
11907 posts
1734 upvotes
GVR
S5 wrote: Didn't we already go over this in your previous thread about this issue? td-waterhouse-us-stocks-dividends-1201312/#post15021482
Ah, doh! I forgot to post reply in that thread instead of creating a new one...

I saw a couple numbers/percentages thrown out but was hoping someone could help with an actual showing of the "cost" of just keeping it in TDW

No matter what conversion happens and there will be a TD rate and a questrade rate... but beyond that, how does the conversion of every single dividend affect the earnings?
Deal Addict
Oct 4, 2009
3590 posts
2953 upvotes
Montreal
Kaitlyn wrote: Ah, doh! I forgot to post reply in that thread instead of creating a new one...

I saw a couple numbers/percentages thrown out but was hoping someone could help with an actual showing of the "cost" of just keeping it in TDW

No matter what conversion happens and there will be a TD rate and a questrade rate... but beyond that, how does the conversion of every single dividend affect the earnings?
Already adressed this in post #6 of the other thread. If you drip the cost will be even less as only the non dripped excess funds will get converted.
Deal Guru
User avatar
May 6, 2005
11907 posts
1734 upvotes
GVR
S5 wrote: Already adressed this in post #6 of the other thread. If you drip the cost will be even less as only the non dripped excess funds will get converted.
But within a TD Waterhouse RRSP it's a "synthetic drip" is it not? So are you sure there is no conversion? The rep on the phone made it sound like it WOULD be converted

USD Dividend -> CDN balance -> USD currency transfer to buy

They mentioned was/$US money market but it only applied to sold securities, not dividends...
Deal Addict
Oct 4, 2009
3590 posts
2953 upvotes
Montreal
Round and round we go, what the point is nobody knows. :D

Again, previously addressed in the other thread. The poster who claimed they were converted never provided evidence. Meanwhile Canadian Capitalist and his readers offered first hand knowledge that they were converted. I won't personally be able to confirm this until late December in accounts I manage.

Why anyone would worry about such meaningless details while simultaneously actively trading and getting stock tips on a message board that will cost said investor many orders of magnitude more is beyond my level of comprehension.
Newbie
Dec 21, 2009
2 posts
Edmonton
Unfortunately the Canadian Capitalist was incorrect and has since corrected his blog post http://www.canadiancapitalist.com/how-t ... dividends/. TDW cannot wash US dividends. Based on my experience with TDW I have found that the fx charge is 1.7% each way (see my post in the other thread for more details). This would equal 1.7 charge on the total distribution and a further 1.7% on any funds converted back to US to purchase whole shares using a synthetic drip. How much that will mean will depend on the dividend yield of your holdings and your portfolio size. If you portfolio generates $5000 in US dividends in a year the cost would be roughly $170 if the DRIP process was highly efficient (ie. all dividends were re-invested in US shares). Of course some cash will not be able to buy full shares and therefore will only experience Fx charges one way so you might pay a little less than $170 in actual fact.
Banned
Feb 17, 2007
3190 posts
203 upvotes
you can wash trades, but not dividends. i dunno why anyone want stay with tdw. just switch to bmo or rbc. their customer service is just as good and their system is as good as well.

you can trade stocks for only 9.95 instead of 9.99 at tdw lol.
big deal? imagine you do tons of trades a year, the cost adds up.
Deal Addict
Dec 11, 2007
1959 posts
582 upvotes
Markham
ACC-Major wrote: you can wash trades, but not dividends. i dunno why anyone want stay with tdw. just switch to bmo or rbc. their customer service is just as good and their system is as good as well.
yea, i was actually going to migrate everything to TD, cuz their hours are better, but then they told me they dont have the option of USD in RRSP
that was a deal breaker for me.
Banned
Feb 17, 2007
3190 posts
203 upvotes
Cerenity wrote: yea, i was actually going to migrate everything to TD, cuz their hours are better, but then they told me they dont have the option of USD in RRSP
that was a deal breaker for me.
Do you really needs to bank on Sundays?
At most branches at RBC, then have late hours on certain days, and they open on Saturdays too.
I remember back in the days when I used TDW to buy 5 shares of BRK.B; however, the commission took around $400+ equivalent.
Deal Addict
Dec 11, 2007
1959 posts
582 upvotes
Markham
ACC-Major wrote: Do you really needs to bank on Sundays?
At most branches at RBC, then have late hours on certain days, and they open on Saturdays too.
I remember back in the days when I used TDW to buy 5 shares of BRK.B; however, the commission took around $400+ equivalent.
TD hours, at least at the branch near where i live, is longer too, till 6pm every day and 8pm on thurs/fri, and open sat/sun
the BMO that i used to go to was basically 4pm close every day, 6pm on thurs/fri, and open sat

means i have to leave work early to go to the bank

but actually a new location just opened up at Hwy7 past Warden, near the new whole foods, that has same hours as the TD nearby.
so looks like i wont need to move to TD after all

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)