How to Buy US Stocks in Canada
Want to buy Apple, Tesla, or Vanguard's VOO? Here is exactly how Canadians can buy US stocks in their TFSA, RRSP, and FHSA without getting killed by fees.
Quick Answer
Yes, Canadians can buy US stocks! Here is the most efficient way to do it based on your portfolio size:
- Small amounts in TFSA/FHSA: Buy Canadian-listed ETFs that track US indexes (like XEQT, VFV, or XUU). You avoid currency conversion fees completely.
- Wealthsimple Investors: If you are a Premium client ($100k+ assets), you get Free USD Accounts and can use the built-in $9.95 automated Norbert's Gambit right in the app. Otherwise, USD accounts cost $10/month.
- Questrade Investors: USD accounts are free standard. Convert CAD to USD using self-serve Norbert's Gambit ($9.95 flat).
- Active US Stock Traders & Large RRSPs: Use Interactive Brokers (IBKR) for instant spot conversion at a ~$2 flat fee.
The Silent Killer: The 3.0% "Double FX" Trap
Before you hit the "Buy" button on Apple, Nvidia, or Vanguard's VOO, you need US Dollars (USD). If you buy a US stock using a standard Canadian CAD account without a dedicated USD holding feature, you get hit with a double conversion penalty:
How Standard Retail FX Fees Rob Your Returns:
- When you buy: The brokerage automatically converts your CAD to USD at a 1.5% markup (or 2.5% at Big 5 banks).
- When you receive dividends: The brokerage forces an automatic conversion from USD back to CAD at another 1.5% markup.
- When you sell: The brokerage forces another automatic conversion of the entire sale proceeds back into CAD for another 1.5% markup.
Total round-trip loss: 3.0%+ of your capital vanished into thin air before you even calculate investment gains!
The Solution: Holding USD Directly in USD Accounts
To avoid getting hit with conversion fees on every trade and dividend, you must use a brokerage account that lets you hold raw USD cash:
USD Accounts & In-App Gambit
- Cost: FREE for Premium ($100k+) and Generation ($500k+) clients; $10/month for Core users.
- How it works: Hold USD cash, collect USD dividends without forced conversions, and buy/sell US stocks with $0 commission.
- Built-in Gambit: Integrated 1-click Norbert's Gambit directly in the mobile app for a flat $9.95 CAD fee.
Dual CAD/USD Accounts
- Cost: FREE for all accounts (no monthly fees or balance minimums).
- How it works: Automatically keeps CAD and USD cash balances separate in the same TFSA, RRSP, or Margin account.
- Norbert's Gambit: Self-serve online journaling via web portal for a flat $9.95 fee ($0 with Questrade Plus).
The 3 Ways to Convert CAD to USD
If you want to fund your USD balance, here are your three options:
Standard Auto-FX
Let the broker auto-convert per trade. Simplest method, but very costly.
- Cost: 1.5% (WS/QT) to 2.5% (Banks)
- Effort: None
Norbert's Gambit
Use DLR.TO to swap currencies at spot rates. Ideal for medium to large sums.
- Cost: $9.95 flat fee at Questrade or Wealthsimple
- Effort: 1-click on WS; self-serve on QT
IBKR Spot FX
Interactive Brokers offers true institutional spot currency conversion.
- Cost: ~$2.00 USD flat fee
- Effort: Instant (Interface is advanced)
The Withholding Tax Trap (15% Tax)
The IRS imposes a 15% withholding tax on dividends paid by US companies to foreign investors (including Canadians). However, your account type matters significantly because of the Canada-US Tax Treaty.
| Account Type | U.S. Withholding Tax | Is it Recoverable? |
|---|---|---|
| RRSP / RRIF | EXEMPT (0%) | N/A (Full dividend received) |
| TFSA | 15% Withheld | No, tax is permanently lost. |
| FHSA | 15% Withheld | No, tax is permanently lost. |
| Non-Registered | 15% Withheld | Yes, via a Foreign Tax Credit on CRA tax return. |
Math Example: TFSA vs RRSP
Imagine you hold $10,000 of the Vanguard S&P 500 ETF (VOO), which pays a roughly 1.3% dividend yield ($130/year).
- In an RRSP: You keep the full $130.
- In a TFSA: The IRS takes 15% ($19.50) before the money hits your account. You only get $110.50.
Note: 15% is only taken off the dividend yield, not the total growth of the stock. It is a minor drag on performance, but not the end of the world for small accounts. Capital gains are never taxed by the IRS.
Canadian-Listed vs US-Listed ETFs
If you just want broad exposure to the US stock market, you don't necessarily need to buy US-listed stocks. Canadian investment firms offer ETFs that trade on the TSX (in CAD) but hold US stocks.
- Canadian-Listed Example: VFV.TO or XUU.TO You buy in CAD. No FX conversion fees to worry about. The 15% withholding tax is taken out behind the scenes by the fund manager. Perfect for TFSAs, FHSAs, and smaller accounts.
- US-Listed Example: VOO or VTI You buy in USD. You convert CAD to USD via Norbert's Gambit or IBKR. If held in an RRSP, you get the full dividend with zero withholding tax. Best for large RRSP portfolios where the dividend tax savings outweigh the conversion costs.
The Decision Tree: Which Brokerage & Strategy Should You Choose?
Scenario 1: You have >$100,000 and want an all-in-one app
Choose Wealthsimple: As a Premium client, USD Accounts are 100% free. You can use their built-in $9.95 Norbert's Gambit tool in the app to convert your money and trade US equities with $0 commission. Get Wealthsimple.
Scenario 2: You have <$100k and want free USD accounts
Choose Questrade: Questrade gives you dual CAD/USD accounts for free on all account sizes with $0 commission stock/ETF trades. Use their self-serve portal to execute Norbert's Gambit ($9.95 flat). Get Questrade.
Scenario 3: You are an active trader or have a large RRSP
Choose Interactive Brokers: Swap currencies at the true institutional spot rate for ~$2.00 flat with zero wait times. Get IBKR.
If you want to see exactly how much you can save by avoiding standard FX fees, check out our Currency Conversion Fee Calculator.
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