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Hi,

I am a Canadian citizen and resident, Can I invest in US Stocks/Index funds and a Roth IRA through ameritrade or another online broker? Would my funds have to be in US dollars? Please let me know, thank you in advance.

FoolishlyWise
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You probably want to check out another board, like the Canada (General) board, which is investment related. This board is for non-investing topics like whether there will be a non-Liberal federal government in our lifetime.

You can invest in US securities through any Canadian broker, or through Ameritrade and a few others who offer accounts to Canadians. Commissions on US trades are quite a bit lower with the US brokers, so if you are a frequent trader, that's the better route.

With the Canadian brokers, you can choose to have a US$ account, or a CDN$ account. You can even have a CDN$ account and buy U.S. securities, although you'll pay an exchange rate premium on each buy/sell, so there isn't much reason to do it. I have both CDN$ and US$ accounts at TD Waterhouse, so I can move cash between them with a phone call. If you don't trade that much, the extra convenience may be worth the extra commission.

Don't know about the Roth IRA, though. Since it's a U.S. tax issue, I'm not sure why you would want one.


Fool on, Jerry



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I forgot. TD recently added the ability to transfer cash between accounts, including CDN/US accounts, to WebBroker, so I don't have to do it on the phone anymore.

Jerry
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Jerry, that's interesting. How do you do that exactly? Do they just take any C$ funds to pay for U$ transactions and vica versa if necessary?

Used to be if you didn't make the conversion yourself they'd charge you for insufficient funds even if they were there sitting in the other side of the account.

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Jammer, it was several years ago, before I opened the US$ account, so I'm a bit hazy on the details. But here's my recollection.

I had a CDN$ account with TD Greenline (WebBroker), and wanted to buy the Foolish Four (so, you see how long ago that was). I called the support line for the account to ask how to do this, and they said I could buy that day for the CDN$ account, or open a US$ account. I elected to buy that day. Seems to me I just put in the order on WebBroker, same as I would for CDN$ stocks. They bought the US$ stocks, and debited my CDN$ account for the appropriate amount of CDN$ to cover the US$ purchases.

However, a year later when it came time to cycle the Foolish Four, the sales of US$ stocks were converted back to CDN$, the CDN$ were then used to purchase the next iteration of the US$ stocks.

Since this was a bank, the exchange rate to/from US$ were different, resulting in revenue for the bank. The delta was large enough to convince me to open a US$ account. I probably could have called them to unwind the charges. Several posters to the Canadian board reported success with doing this. I just chalked it up as an learning experience. I transferred the newly purchased FF shares to the new account and have held the account ever since, although I no longer invest in the Foolish Four.

I'm on the verge though, of dumping that account and opening an account with Ameritrade or ScottTrade. I'm becoming a little more active on the U.S. side, and it just doesn't make sense to me that TD Waterhouse is charging me US$29/trade, when they are charging their U.S. customers US$10 for the same trade.

Jerry






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Howdy:

The only way it makes sense to me is to put a portion of your assets into a USD denominated account and leave them there.

Nothing is automatic. If you need more dollars in your US account you have to move them yourself. Switching back and forth is extremely expensive .... you get nailed on the worst exchange rate of the day in both directions, every time.

For the same reason, I do not buy foreign equities in my RSP account.

Wayne
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Wayne, that's a good point. A lot of people miss the fee charged by the brokerages because it is hidden in the exchange rate.

In my experience the best place to exchange your C$ for U$ and vicea versa is at your brokerage account. But even there you'll pay close to 1% or so on the transaction.

Pay that 1% enough times and you'll quickly eat away any gains you might have made.

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Jerry, yes, I have a Cdn and a US side to my account, but I usually still have to call in to make conversions. At least that's what I'd been doing.

I'll have to ask if they now do it automatically.

Technically, I think you might now have trouble opening a US account in US.

Good luck.

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Jim,

Sounds like typical burocratic, (it is easier to say no then find out the truth) mumbo. My son-in-law has been a tax lawyer working for both Revenue Canada and (on contract) for the IRS (amoung other things ;-). His trans border moves are becoming legendary in the family and he does have investments on both sides (and currently residences). I will talk to him and see if he has any insights for us.

Tim
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Howdy Tim ....

If he's not gonna' charge you too much, can you try to dig out some info on the latest rumors we are hearing on treatment of Income Trusts by the IRS?

Thanks, Wayne
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Howdy Tim ....

If he's not gonna' charge you too much, can you try to dig out some info on the latest rumors we are hearing on treatment of Income Trusts by the IRS?

Thanks, Wayne

Wayne,

He won't charge me anything as I paid for his wife's MBA and she is the biggest earner in their family. LOL

He and I actually had that conversation recently, his feeling is that the IRS sees no problem with the current system and that in fact many "similar structures" are used and considered acceptable. It is only the accounting firms that are "running scared". Now having said that, he says that getting someone from the IRS to actually "say that" could take time. ;-(

Paul (my son-in-law) has some "interesting" qualifications in that he is a lawyer with an economics Masters and an MBA. He also taught economics at Berkly for a year while taking his MBA. He is currently working for the Ontario Government in the Energy Dept but did an interview with PG&E two weeks ago in San Francisco. He also does sub-contracting work for the IRS (his company is "Economic Impact Inc" but don't look for an IPO as he is the only staff member ;-), some of which was being done while the INS was trying to kick him out of the country. LOL

I could ask him if there is anything new but he might not be in that mode at the moment as he is looking at moving back to San Francisco in November and becoming a new father in Dec.

Tim
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Jammer, I may have missed the point of your earlier question. To move funds between US$/CDN$ accounts on WebBroker, just go to 'Transfers' in Quicklinks on the bottom left of the main account screen, or on the menu bar at the top of the screen.

Jerry
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