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When trading U.S.-listed stocks and exchange-traded funds (ETFs), wouldn’t it be great to minimize foreign-exchange fees whenever possible? After all, if you’re getting dinged with currency conversion fees each time you want to buy or sell a U.S. security, those fees can add up! That’s where a U.S.-dollar trading account can help.
At RBC Direct Investing, virtually every account automatically comes with a Canadian dollar side and a U.S. dollar side. (The exception is a Registered Education Savings Plan (RESP), which only has a Canadian dollar side.)
Having a "dual currency" account means you have the option to hold Canadian cash and securities on the Canadian side of your account and U.S. cash and securities on the U.S. side. You don't even have to take any action when you open an account — the U.S. dollar side is automatically available to you (again, with the exception of RESPs).
So, when you buy or sell an investment, you get to choose the currency in which you wish the trade to settle by selecting "USD" or "CAD" on your order entry. If you choose to buy a security in U.S. dollars but only have Canadian funds, you will need to do a foreign exchange conversion either before you place your buy order (which is best practice so you know exactly how much money you have to spend) or before the settlement date.
How does having both sides available benefit you? You can:
Save on Costs
Raise your hand if you like to save money. Having a U.S.-dollar account means you can buy and sell U.S. stocks and limit foreign-exchange costs because you don't have to convert from one currency to another with each trade. If you trade often, settling trades in the same currency (e.g. buying and selling U.S. stocks in U.S. dollars) can help you save on transaction costs.
Have U.S. Funds at the Ready
Whether for travel or shopping, you can easily transfer your U.S. dollars to your RBC Royal Bank U.S.-dollar bank account or perform your foreign exchange when the timing is right for you.
Save a Step
If you like to keep cash on hand, when you buy a Canadian or U.S. investment and settle the trade in the same currency, you don't have to remember to do the currency conversion.
Enjoy Flexibility
You can choose to buy in one currency where you might have a balance or sell in another to raise cash. It's up to you!
Help Diversify Your Portfolio
There are lots of ways investors can diversify their portfolios – including with currencies. Having both Canadian and U.S. dollar assets can help add a level of diversification to your portfolio.
View "Apples to Apples" Performance
If you buy U.S. securities and settle in U.S. dollars, the performance of those investments is also reflected in U.S. dollars. That makes for a straight forward "apples to apples" comparison when looking at performance.
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© Royal Bank of Canada 2021.
Any information, opinions or views provided in this document, including hyperlinks to the RBC Direct Investing Inc. website or the websites of its affiliates or third parties, are for your general information only, and are not intended to provide legal, investment, financial, accounting, tax or other professional advice. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Direct Investing Inc. or its affiliates. You should consult with your advisor before taking any action based upon the information contained in this document.
Furthermore, the products, services and securities referred to in this publication are only available in Canada and other jurisdictions where they may be legally offered for sale. If you are not currently resident of Canada, you should not access the information available on the RBC Direct Investing Inc. website.
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