We’ve all complained about those extra FOREX fees when buying US stock within an RRSP, but none of the big brokerages have done anything about it.
Complain no more because Questrade now offers the ability to hold U.S Dollars (USD) within their RRSP accounts!
What does this mean?
- Cheaper to Invest in the US Market. Before, no Canadian Discount Brokerage would allow USD to be held within an RRSP account which resulted in heavy FOREX fees when diversifying south of the border. Now, Questrade will allow you to diversity into the US without having to worry about the FOREX gouge with every buy AND sell that can add up to around 3% round trip.
- Now there is more incentive to hold USD dividend paying stocks. As explained my dividend taxation article, USD dividends are taxed like interest thus making it unattractive to hold outside an RRSP. However, as the taxes are unappealing outside an RRSP, the FOREX fees are also a deterrent inside an RRSP. Now, with the ability to hold USD inside an RRSP, it will mean that all RRSP US stock purchases will be slightly discounted.
- More competition among the brokerages. With Questrade taking the big leap and meeting what investors want in an RRSP account, I expect that their client base will increase. This will hopefully force the other discount brokerages and the big banks to follow suit.
Questrade charges an extra $5 /day for USD based purchases with an RRSP. As the $5 is only charged on the days that you trade with USD, you can make as many trades on that day as you like for $5. Note that commission fees apply in addition to the daily $5 surcharge.
With regards to their regular commission structure, they are among the cheapest in the (Canadian) industry. No annual or maintenance fees and a choice of commission structure. The choice being $4.95 for 495 shares or $9.95 for unlimited. Users can switch between plans once a month. In addition to the low fees, they offer free real time data and real time Canadian charts (US charts are 15 min delayed).
On the downside, there are have some complaints about their customer service and they don’t provide fraud prevention key fobs like other brokers (IB, E-Trade).
If you would like to read about my Questrade experience thus far, check out my Questrade Review.
If you want some US market exposure within your RRSP, it may be a good bet to open an account with Questrade solely for your USD investments. My wife already has a Questrade RRSP account, but I will be opening another for myself for US dividend paying stocks.
If you want to join, check out the Questrade referral promotion below for the $50 trading credit for new members.
Questrade Referral Promotion
If you deposit at least $1k when you open an account from a referral, you will receive $50 in your account when you trade $100 worth in commissions (10-20 trades depending on your share volume/trade).
If you are considering opening a Questrade account and would like the $50 trading rebate, sign up through the link below. The link will bring you to a Questrade URL that will automatically recognize you as a referred client. If you decide to sign up later or if you’ve already started an application, you can use the Affiliate ID: MillionDollarJourney to get your $50 trading rebate.
If you have any questions regarding the $50 trading credit, you can contact me here.
If you are a webmaster and would like to take advantage of Questrade’s new affiliate program ($70 for every new sign up), you can join their new affiliate system here. Make sure to use MillionDollarJourney as your parent affiliate ID for quick approval.If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).