Exchange rates and tax effects are often frightening for investors. While putting money into your “home market” is good, you are likely missing out on some great opportunities. There are dividend producers out there who can make you forget the effects of currency and taxes!
For this reason, investors with dividend growth should consider both Canadian and US stocks.
You will learn
- The advantages of both markets.
- What stocks should Canadians hold in the US? and which ones should Americans in Canada watch.
- The actual impact of exchange rates and the tax effects and how to manage them.
- The Norbert’s Gambit technique to save fees.
- A few words about international and emerging markets and their challenges for North American investors.
What is Norbert’s Gambit strategy?
A financial advisor named Norbert Schlenker of Libra Investment Management, an investment firm in British Columbia, found a solution for his client. According to the online legend, this creative consultant came up with a strategy to skip the middleman and avoid paying conversion fees. This is how it works:
Some companies trade on both Canadian and US stock markets. You can think of Canadian banks, for example. So if you buy shares in Royal Bank (RY.TO) through your online brokerage account, you can call your broker and ask them to transfer the shares on the market exchange to the same quote in the foreign currency and then rate the shares in the Sell the currency you want to end up with.
This strategy would convert money invested in Canadian dollars in Royal Bank stocks into US dollars once you have sold those same stocks in the US markets. The only fee paid would be that charged on the buy and sell transactions. Depending on the converted amount, the transaction fee would be minimal.
On the podcast, I explained how to use the Horizons US Dollar Currency ETF (DLR and DLR.U) to convert your currency. This is the one I personally use on a regular basis.
Here are the videos that we mentioned below. If you want more you can go to my youtube channel.