How to save on currency exchange fees while investing

Are you looking to invest in American stocks, but the currency conversion fees have you dragging your feet? This nifty little hack called Norbert's Gambit can help you cut those costs.

What is it: Popularized by Norbert Schlenker, the method avoids conversion fees by using stocks that trade in both CAD and USD. 

  • It sidesteps the 2.5% exchange fee by buying shares in one currency and selling those shares in the other.

How it works: Whether you're trying to buy USD and sell CAD or vice versa, an ETF was established to simplify the process—the Horizon US Dollar Currency ETF (ticker symbols for which are DLR.TO/DLR.U.TO).

  • If you want to convert USD to CAD, you will buy shares of DLR.U.TO.

  • You take those US shares and hold their value in CAD, also called "journaling." It is possible because the shares are dual-listed on a US and Canadian exchange. 

  • Then you sell your shares as DLR.TO. After a few days for the trade to process, you'll have the value of the sale in Canadian dollars in your brokerage account.

Now they are yours to withdraw and spend!

Who should use the hack? Norbert's Gambit might be useful if you're looking to exchange a large amount of currency with no sense of urgency. But if you’re exchanging less than $1,000 it might not be worth the wait to save a couple bucks.