How much does Norbert's Gambit save?
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- Updated On:05-Dec-2022
- Replies:1
Short Answer
You will save a considerable amount on conversion fees, by following the Norbert's Gambit. Our calculations suggest that you can save around $2,100 CAD for converting $100,000 CAD into USD.
Detailed Answer
What is Norbert's Gambit?
You can convert Canadian dollars to US dollars using banks or exchange kiosks. However, Norbert’s Gambit is a cheaper method to convert Canadian dollars (CAD) to US dollars (USD), by making use of online brokerage account that has access to both US and the Canadian stock exchanges. Since it is claimed to be a cheaper way of conversion, it is natural of people to ask how much one can save in via Norbert’s Gambit method in comparison to a bank. Let us explore.
How much does Norbert's Gambit save?
Let us image you would like to convert $100,000 CAD to USD. As at 10th October 2022, the conversion rate is $1 USD = $1.37 CAD. Given you have an account with TD Commercial bank in Canada. The bank offers conversion at $1.4113. For $100,000 CAD, you need to get $72,992.70 US dollars before any fees, but you receive only $70,856.66 when you convert with TD bank, after fees. So basically, the conversion fee is $2,136.043 CAD.
The DLR trades at $13.88 CAD per share as on 10th October 2022. This means you need to buy 7205 units of shares.
Let us imagine you buy this with Questrade, the commission is $1 cent with a minimum of $4.95 CAD and a maximum of $9.95 CAD. For 7205 shares, you will be charged a maximum commission of $9.95.
The ECN in Questrade is $0.0035/share. When you buy DLR, TSE you need to pay an ECN of $0.018 CAD and when you sell the DLR.US, you need to pay $25.218 USD. The total fees you pay in CAD is $9.97 and the total fees you pay in USD is $25.218. When converting $25.218 into CAD it will result in $18.41 CAD. Thus, the overall fees you need to pay is $28.37.
You will save $2,107.673 fees by following the Norbert’s Gambit method.
Savings through Norbert's Gambit
Thus, with Norbert’s gambit method you can save substantially when you need to convert huge amount of money.
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Discussion (0)
Using Norbert's Gambit is worthwhile given some conditions - when you do not have to convert your currency immediately and/ or when you need to convert a large sum of money.
Norbert's Gambit process has various steps starting from buying DLR.TO, journaling the shares, selling DLR. UTO, and finally selling the shares in the US stock exchange.
Yes, Norbert's Gambit method of currency conversion is legal in Canada. It is not restricted by any registered authorized of Canada.
In Norbert's Gambit, you need to buy, journal and sell DLR ETF. It takes around 5 business days for the Norbert's Gambit process to be completed.
Norbert's Gambit is a cheap method to convert CAD to USD and vice versa using an online discount brokerage account. It is named after its founder Mr. Norbert Schlenker.
Yes, international Yes, international students can have two or more bank accounts in Canada as per their discretion. There is no cap on the upper limit.
Tax-Free savings Account (TFSA), Canada can be considered the equivalent of Roth IRA, USA. Let's get into some more details on the similarities and differences, Roth IRS vs. TFSA.
There are various online brokerage platforms in Canada. We believe that Questrade, Scotia iTrade and CIBC investor's edge are the best alternatives to Wealthsimple.
No minimum amount is required to open a brokerage account in Canada. However, if the balance is less than $20,000, you will be charged $100 annually as an account fee.
The standard commissions that are charged by the platform cannot be evaded but you can save some of the additional charges in exchange fees or advance market data charges, you can get a full rebate on the market data charges by generating a certain amount of brokerage every month.