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Norbert's Gambit at TD Direct Investing | DIY Investing with Justin Bender - YouTube
Channel: Justin & Shannon Bender
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Hello, I’m Justin Bender, Portfolio Manager
at PWL Capital in Toronto, and today I’ll
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be showing you how to cheaply convert your
Canadian dollars to US dollars at TD Direct
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Investing, using a strategy called Norbert’s
gambit.
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For this tutorial, I’ll be exchanging about
6,000 Canadian dollars for US dollars in my
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RRSP account.
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Before getting started, please ensure that
you have a US dollar RRSP account already
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set-up.
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If you only see a Canadian dollar account,
call TD Direct Investing at 1-800-465-5463
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and ask them to open one for you.
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When you’re ready to get started, click
on the ‘Buy/Sell’ icon at the top of the screen
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For our first step, we’ll enter ‘DLR’
in the ‘Symbol’ field.
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DLR is the Horizons US Dollar Currency ETF.
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The fund invests in US dollar cash equivalents,
but can be purchased with Canadian dollars.
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When the fund name appears, click on it to
generate a quote to the right.
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We can then select ‘Buy’ as our ‘Action’.
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To calculate the number of shares that we
need to purchase, we’ll use our computer’s
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calculator:
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Taking our Canadian dollar cash of $6,000
and subtracting the $9.99 trading commission
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gives us about $5,990.
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We’ll then divide this value by DLR’s
current ask price of $13.27, which equals
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451 shares – we can then go ahead and enter
451 in the ‘Quantity’ field.
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We’ll select ‘Limit’ as our ‘Price’,
and enter the quoted ask price, which is $13.27.
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After you’ve selected the ‘Remember password
for this session’ check-box and entered
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your trading password, you can click on ‘Preview
Order’.
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When you’re ready to confirm the order,
click on ‘Send Order’.
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And to check the status of the trade, click
on ‘Go to Order Status’ – here you’ll
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note that the trade has been filled.
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Before moving to our second step, we’ll
need to wait until our initial trade settles,
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which is three business days after we placed
the trade.
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As we placed the initial trade on January
20th, 2017, we will need to wait until the
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trade settles on January 25th, 2017.
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Please note that the investment industry is
scheduled to implement a T+2 settlement cycle,
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beginning September 5th, 2017 (so you will
soon be able to complete the gambit in one
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less business day).
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For our second step, we’ll call TD Direct
Investing at 1-800-465-5463 and ask them to
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transfer 451 shares of DLR from the Canadian
dollar RRSP account to the US dollar RRSP
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account.
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When the transfer has been completed, your
451 shares of DLR will now be showing in the
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US dollar RRSP account (this generally occurs
by the end of the day or the next business
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day).
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For our final step, we will be selling 451
shares of DLR.U. DLR.U is the exact same security
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as DLR.
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The only difference is that DLR.U is transacted
in US dollars, while DLR is transacted in
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Canadian dollars.
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Click on the ‘Buy/Sell’ icon at the top
of the screen, and then enter ‘DLR.U’
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in the ‘Symbol’ field.
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When the fund name appears, click on it to
generate a quote to the right.
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We can then select ‘Sell’ as our ‘Action’.
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We can also enter 451 in the ‘Quantity’
field, as we will be selling the same amount
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of shares that we originally purchased.
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We’ll select ‘Limit’ as our ‘Price’,
and then enter the quoted bid price, which
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is $9.94.
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After you’ve selected the ‘Remember password
for this session’ check-box and entered
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your trading password, you can click on ‘Preview
Order’.
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When you’re ready to confirm the order,
click on ‘Send Order’.
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And to check the status of the trade, click
on ‘Go to Order Status’ – you’ll note
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that the trade has now been filled.
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When you refresh the screen, you’ll find
that your 6,000 Canadian dollars have now
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been converted into about 4,500 US dollars.
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You are now free to purchase US-listed ETFs
with cash available in your US dollar RRSP
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account.
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If you have any questions, please feel free
to send them to me by email: [email protected]
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