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Updated 2mo ago.
Updated 2mo ago.
Norbert's Gambit is a technique used by Canadian investors to convert Canadian dollars to U.S. dollars (or vice versa) at a lower cost, avoiding brokerage currency conversion fees.
Instead of paying 1.5% to 2% in conversion fees at your brokerage, you buy DLR.TO (Horizons U.S. Dollar Currency ETF) in CAD, then ask your broker to "journal" your shares to DLR.U.TO (the USD version). You then sell DLR.U.TO to receive USD. The total cost: just the trading commissions (often $0 at online brokers). On a $50,000 conversion, you save about $750 to $1,000.
If you buy U.S. ETFs like VOO or VTI directly in USD in your RRSP, you save on the higher MER of Canadian-listed versions AND foreign withholding tax. Norbert's Gambit makes this strategy accessible by eliminating the conversion cost that would otherwise wipe out the savings. It's especially worthwhile for amounts over $10,000.