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How to buy US stocks in Canada
4 steps for buying US Stocks in Canada, plus the platforms with the lowest fees when you trade US stocks.
It’s inexpensive and easy to invest in US stocks from Canada. There are plenty of online trading platforms that give Canadians access to major international stock exchanges, including the New York Stock Exchange (NYSE) and the NASDAQ, where you can buy stocks in companies like Meta Platforms (Facebook), Netflix or Tesla. With so many stock trading platforms to choose from, which one should you choose if you want to invest in US stocks in Canada? And once you open an account, how do you buy US stocks? We break it down for you below.
Buying US stocks in Canada in 4 steps
- Compare brokers with access to US stocks
- Open your account by providing your personal information
- Fund your account by transferring money from your bank account
- Search and select the stocks you want to invest in and start trading
Compare online trading platforms to buy US stocks in Canada
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Buying US stocks in Canada
A couple of decades ago, investing in global companies was fairly costly. Today, most trading platforms allow Canadian investors to buy and sell in Canada, the US and other international markets for less than $10 a trade in brokerage fees (plus any applicable FX fees).
However, not all trading apps available in Canada offer access to US stocks. Before signing up to a new account or a broker, it’s important to check which countries and exchanges are accessible and what the associated fees are. Online stock trading platforms are arguably the easiest way to buy US stocks in Canada. By using a platform that offers access to US exchanges, you can deposit funds into your account and start trading US stocks.
Each platform works in a different way, however the same general rules apply as with buying Canadian shares. For example you’ll usually be charged a brokerage/commission fee and a foreign exchange (FX) fee when you trade US stocks. Brokerage fees or commissions might be higher on international trades, but not necessarily. They can be represented as a percentage of the value of the trade, or as a fixed amount. FX fees also vary by provider, and you may want to look for brokers that offer USD accounts so that you don’t need to pay to exchange CAD to USD every time you want to make a trade.
You can also invest in US stocks in Canada via exchange traded funds (ETFs) that hold US stocks. You can find out more about ETFs in our comprehensive guide.
Why invest in US stocks from Canada?
There are many reasons for Canadian investors to own stocks listed in the U.S:
- Historically greater returns. The U.S. economy is one of the most powerful in the world. In the last decade, Wall Street’s S&P500 index has delivered annualized average returns of around 14.1%, while Canada’s equivalent the S&P/TSX index returned around 6.9% for the same period.
- Access to U.S. market. U.S. exchanges a wider variety of companies than what is available on Canadian exchanges only. The NYSE and NASDAQ are the two largest stock exchanges in the world in terms of market capitalization, and also offer some of the most lucrative opportunities. Many of the world’s biggest global growth companies, such as Facebook (Meta), Amazon, Apple, Netflix and Google (or collectively called FAANG stocks) are listed in the U.S.
- Diversify your portfolio. Investing in different exchanges, markets and industries diversifies your holdings and mitigates risk.
Our list of the best US stocks to buy
Aside from opportunities to profit, it’s important to have a diversified portfolio of stocks. This means investing in companies from a range of sectors as well as countries. If Canada’s economy slows down, stocks listed in another country can act as a buffer.
Which trading platforms allow you to invest in US stocks from Canada?
There are a growing number of Canadian online share trading platforms that offer access to international stock exchanges.
Here are some of the platforms that support US stocks in Canada:
Online stock trading platforms for buying US stocks in Canada
Not all brokers or trading platforms provide access to global stock exchanges, so if you want to buy and sell US shares, you’ll need to find one that offers the service.
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How do I compare trading platforms to start investing in US stocks?
Make sure that you take the following features and questions into consideration when comparing the benefits of US share trading sites:
- How much is the brokerage fee? Compare the fee each company charges every time you place a trade on US stocks. Be aware that this will be different to broker fees for TSX-listed stocks.
- What’s the exchange rate? Exchange rates vary from platform to platform and this will partly be used to offset low broker fees. Check what these are first.
- Will you need to pay a monthly fee? Some platforms require you to pay a monthly fee in order to keep your account running or to access certain features.
- How is market data displayed? Check how up-to-date the market data offered by each platform is — being able to make trades based on current information is critical.
- How many international markets can you access? Some platforms offer access to a few key international markets while others let you to buy and sell shares on a much larger number of exchanges.
- How easy is the platform to use? Is it fast, simple and convenient to execute a trade and monitor market performance?
- What trading options are available? Is the platform just online or can you also place trades over the phone? Are flexible options like limit orders available to let you take advantage of market fluctuations?
- Are education and research resources available? Trading shares is complex, so does the platform offer the necessary tools to increase your investment knowledge?
- Is customer support available if you need it? How can it be accessed and when?
Pros and cons of buying US stocks in Canada
Pros
- Access to different investment opportunities. Trading via US stock exchanges allows you the freedom to take advantage of investment opportunities that are not available in Canada.
- Increasingly more affordable. As a growing number of online share trading platforms compete for market share, brokerage fees are becoming more affordable.
- Diversify your portfolio. If all your investments depend on the performance of one national economy – i.e. Canada’s – is your portfolio really as diverse as you think? Buying international shares protects you against having all your eggs in one basket.
Cons
- Exchange rates. The CAD-USD rate fluctuates frequently which might negatively impact your investment.
- Foreign exchange rates. Most platforms charge a fee to convert your funds from CAD to USD in order to buy USD stocks.
- Higher brokerage/commission fees. You’ll need to contend with potentially higher fees when you trade internationally.
What are some of the risks of buying US stocks in Canada?
One of the key risks to be aware of when buying American stocks in Canada is that you may not have the same level of knowledge and expertise as you have when trading TSX stocks. Investing in an area, industry or country which you know little about is always risky, so it always pays to make sure you know what you’re getting yourself into.
Another factor worth considering is the tax implications of international trading. You don’t want to make any mistakes when declaring your income and capital gains. Familiarize yourself with the tax treatment of your investments as soon as possible to avoid fining yourself on the wrong side of the Canada Revenue Agency (CRA).
Buying US stocks in Canada: Tax implication
Canadians are taxed on their worldwide income, not just their income from Canadian holdings. If you hold US assets, you are also responsible for paying withholding tax to the IRS (unless you are a US citizen or resident, in which case you are bound to other tax rules and should consult a tax specialist). Canada and the US have an agreement which means Canadians who hold US assets are required to pay 15% withholding on dividends and 10% withholding on interest. The CRA also allows you to claim a foreign tax credit for the foreign tax paid in order to avoid double taxation of the income.
Finally, unlike trading Canadian-listed stocks, you’ll be on the hook for exchange fees. Plus, many brokerages also charge a currency conversion fee on top of that. Make sure to factor the exchange rate into your investments when trading US stocks from Canada.
Bottom line
Investing in US stocks from Canada is a solid way to diversify your portfolio and gain exposure to US players across multiple industries. Plus, it’s easier than ever before to buy and sell US-listed assets through popular platforms. Before you get started though, you’ll first want to consider the tax implications, foreign exchange rates, and any fees you may incur for trading internationally. As with trading any assets, there is potential for gains as well as losses, so make sure you research the stock and industry before you buy in.
How to buy US stocks in Canada FAQs
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
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