Best Investing platform for Norbert’s Gambit for 70k USD> CAD?

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Mar 26th, 2022 9:33 pm

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Mar 20th, 2022 2:28 pm

AmberD17 [OP]: Jr. Member; Mar 2, 2018; 109 posts; 84 upvotes

Mar 20th, 2022 2:28 pm

Best Investing platform for Norbert’s Gambit for 70k USD> CAD?

Gonna be exchanging ~70k USD > CAD in a few months - only just heard about Norbert’s Gambit recently. I don’t currently have an investor account with anyone. Which platform would be the best to do this with in terms of total cost and ease of use? I am only going to be using it for the conversion and then moving the funds to my personal account so it can be used for a mortgage deposit.
I was considering opening a business account with RBC just because of the convenience cuz I use them to move funds cross-border & they have a direct deposit service for payments.
I also have the echecking free CAD business account with BMO - I have an appointment with them to see what they will charge if I open a USD account with them to make it easier to do this and add the direct deposit service for payments. I have been reading BMO is the easiest for this but I also read you have to call in with them. Does that mean the other banks require more hassle? (having to call in is already a hassle)
Also considering Scotia iTrade cuz I opened their ult account for the cash bonus & to accept a wire (country not supported by wise). Gonna close that account after the cash bonus is deposited.

Edit: ideally, I’d eventually move the funds into my Tangerine or Scotia personal account to have it withdrawn via check to the mortgage lender.
Edit 2: I also have a Wise account that I normally use for currency conversions.

13 replies

Mar 20th, 2022 4:02 pm

dropby: Member; Jan 9, 2017; 461 posts; 645 upvotes

Mar 20th, 2022 4:02 pm

Just open an IBKR account where you can do currency exchange directly. The fee is about USD$2 and the exchange rate is very good.

+1

Mar 20th, 2022 5:07 pm

AmberD17 [OP]: Jr. Member; Mar 2, 2018; 109 posts; 84 upvotes

Mar 20th, 2022 5:07 pm

dropby wrote: ↑ Just open an IBKR account where you can do currency exchange directly. The fee is about USD$2 and the exchange rate is very good.

Thanks. Since I don't have an account with them, I used this website to see what their exchange rate is: https://www.remitbee.com/how-to-exchang ... -us-stocks
70k USD would exchange into 87,647 CAD
Wise: 70k USD -> 87,883 CAD

So Wise would be the better option between these two. Is the exchange rate with interactive brokers the same you get on the other investing platforms?

Mar 20th, 2022 5:17 pm

reps001: Deal Addict; Jan 6, 2015; 1500 posts; 696 upvotes

Mar 20th, 2022 5:17 pm

AmberD17 wrote: ↑ Thanks. Since I don't have an account with them, I used this website to see what their exchange rate is: https://www.remitbee.com/how-to-exchang ... -us-stocks
70k USD would exchange into 87,647 CAD
Wise: 70k USD -> 87,883 CAD

So Wise would be the better option between these two. Is the exchange rate with interactive brokers the same you get on the other investing platforms?

At current time you web shows 1 USD = 1.2522 CAD, I see 1 USD=1.2612 CAD on IB.
So I suggest to open account first, the website you mentioned either outdated or wrong about IB canada.

+2

Mar 20th, 2022 7:04 pm

AmberD17 [OP]: Jr. Member; Mar 2, 2018; 109 posts; 84 upvotes

Mar 20th, 2022 7:04 pm

Thanks for the info!

Mar 20th, 2022 8:34 pm

yvrbanker: Sr. Member; May 2, 2019; 837 posts; 1110 upvotes; Vancouver

Mar 20th, 2022 8:34 pm

AmberD17 wrote: ↑ So Wise would be the better option between these two. Is the exchange rate with interactive brokers the same you get on the other investing platforms?

Interactive Brokers will have the best rate, no doubt, of all brokerages or foreign exchange firms you could access as a retail customer. Your expected cost will be less than $10. For comparison, Norbert’s Gambit would cost you at least $70 (mostly due to the difference between bid/ask prices for DLR.U if that's what you'd use). Wise.com is convenient sometimes, yet in this case would cost about $300.

Note IB is not really designed for such one-time usage. In particular, there can be significant hold times if you deposit money through EFT and then withdraw to a different account (which it would be, as they are in different currencies). The holds are reasonable if you deposit via bill payments (which for USD only works if the money is in a US bank) or if you wire the money in.

Mar 20th, 2022 9:52 pm

AmberD17 [OP]: Jr. Member; Mar 2, 2018; 109 posts; 84 upvotes

Mar 20th, 2022 9:52 pm

Thanks! I’ll call them during business hours to understand how to fund the account, withdrawing, and any fees involved in the process. I don’t mind waiting a couple of weeks for this process.

Mar 22nd, 2022 10:33 am

vaitheeb: Banned; Mar 21, 2022; 1 posts

Mar 22nd, 2022 10:33 am

Everyone is saying interactive brokers is good. So that I wanted to try their service. Created account in december and submitted all the proofs, even i funded my account (to get fast approval)

You know what

still waiting for their approval. i don't think they will approve my account anytime soon.

Best time to open interactive brokers account is 10 years ago!

Mar 25th, 2022 6:49 pm

JWL: Deal Guru; Nov 18, 2005; 11751 posts; 3385 upvotes; Kingston

Mar 25th, 2022 6:49 pm

reps001 wrote: ↑ At current time you web shows 1 USD = 1.2522 CAD, I see 1 USD=1.2612 CAD on IB.
So I suggest to open account first, the website you mentioned either outdated or wrong about IB canada.

yvrbanker wrote: ↑ Interactive Brokers will have the best rate, no doubt, of all brokerages or foreign exchange firms you could access as a retail customer. Your expected cost will be less than $10. For comparison, Norbert’s Gambit would cost you at least $70 (mostly due to the difference between bid/ask prices for DLR.U if that's what you'd use).

Agree on the cost for Norbert's Gambit $70.
Using reps001's rates the cost would be over $300 (rate to buy CAD vs the midpoint between the buy/sell rates they noted)

For FX transactions it doesn't get better than Norbert's Gambit using DLR.U

2012 Thread of the Year: Nestea 12-pack - BOGI deal (Buy One Get INFINITY)!!!!!

Mar 25th, 2022 11:48 pm

HammerRFDer: Deal Addict; Jul 13, 2007; 1187 posts; 697 upvotes; Toronto

Mar 25th, 2022 11:48 pm

JWL wrote: ↑ Agree on the cost for Norbert's Gambit $70.
Using reps001's rates the cost would be over $300 (rate to buy CAD vs the midpoint between the buy/sell rates they noted)

For FX transactions it doesn't get better than Norbert's Gambit using DLR.U

It's too early to say NG would cost $70 in spreads. Since OP could sign up for any broker, they could sign up for one allows instant journal (e.g. RBC DI), avoid DLR, and pay about 1/5th to 1/10th as much in spreads (e.g. buy/sell Royal Bank stock) while only taking a few seconds of holding risk. Do need to add 2x commission cost to that.

Or signup for a broker that doesn't do instant journal and hold that bank stock for a few days (could go up, or could go down). That's what I do because I can stomach the volatility to save on spreads.

Mar 26th, 2022 8:09 am

JWL: Deal Guru; Nov 18, 2005; 11751 posts; 3385 upvotes; Kingston

Mar 26th, 2022 8:09 am

HammerRFDer wrote: ↑ It's too early to say NG would cost $70 in spreads. Since OP could sign up for any broker, they could sign up for one allows instant journal (e.g. RBC DI), avoid DLR, and pay about 1/5th to 1/10th as much in spreads (e.g. buy/sell Royal Bank stock) while only taking a few seconds of holding risk. Do need to add 2x commission cost to that.

Or signup for a broker that doesn't do instant journal and hold that bank stock for a few days (could go up, or could go down). That's what I do because I can stomach the volatility to save on spreads.

How does holding it a few days save on spread? If you are buying one day and selling another you are still paying the bid/offer spread.

Either way, the point of the post was that Norbert's Gambit is a cheaper way to convert funds to a different currency rather than a straight FX purchase/sale.

2012 Thread of the Year: Nestea 12-pack - BOGI deal (Buy One Get INFINITY)!!!!!

Mar 26th, 2022 9:42 am

yvrbanker: Sr. Member; May 2, 2019; 837 posts; 1110 upvotes; Vancouver

Mar 26th, 2022 9:42 am

JWL wrote: ↑ Either way, the point of the post was that Norbert's Gambit is a cheaper way to convert funds to a different currency rather than a straight FX purchase/sale.

But it's not. At least not for Interactive Brokers, where the spread on FX is 1 pip (0.0001), give or take. The total cost on 70K would be 0.0001 * 70K + $2 commission = $9. Well, $2 commission is in USD, to be precise.

Mar 26th, 2022 4:59 pm

HammerRFDer: Deal Addict; Jul 13, 2007; 1187 posts; 697 upvotes; Toronto

Mar 26th, 2022 4:59 pm

JWL wrote: ↑ How does holding it a few days save on spread? If you are buying one day and selling another you are still paying the bid/offer spread.

Either way, the point of the post was that Norbert's Gambit is a cheaper way to convert funds to a different currency rather than a straight FX purchase/sale.

You pay the bid/offer spread per share.

DLR trades for $10/share, and you pay a 1 cent spread. Bank shares can trade for $100/share and you pay a 1 (maybe 2) cent spread for each $100 you're moving because they have massive liquidity and a bajillion marketmakers.

Result: you pay 1/5th to 1/10th the spread. You're also not paying DLR their MERs for a few days. At least bank stocks go up on average. DLR just... stays flat.

+1

Mar 26th, 2022 9:33 pm

CanadaDealSeeker: Member; Jan 28, 2010; 346 posts; 54 upvotes; Montreal

Mar 26th, 2022 9:33 pm

not an advice (always do your due diligence as per your requirement/situation), but what I ended up doing in the similar situation when I was looking to do CAD->USD.

don't forget the tax implications if you do NG in non-registered account. (might be avoided with a broker that allows instant journal)
convert-cad-usd-50k-2515524/?thanks#p35668413

I went with IBKR because not only it gives me slightly better rates, but also better in terms of tax implications and NG hassle/wait.
one to note that you would have longer wait time if you fund it through EFT but wait time is 3 days if you fund it with online bill payment.

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