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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. Keep reading to find out how to buy US stocks in Canada.
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
Top online trading platforms to buy US stocks in Canada
- Access to international stock exchanges
- Low margin rates
- Powerful research tools
- $50 in free trades
- Low commissions
- Easy-to-use app
Buying US stocks in Canada
Investing in US stocks from Canada is easier than you might think. Most Canadian trading platforms allow investors to buy and sell in Canada, the US and other international markets for low brokerage fees (typically ranging from $0 to $10) plus any applicable FX fees.
However, not all trading apps available in Canada offer access to US stocks, so you’ll need to compare brokers before deciding which one is right for you. Keep reading for our detailed guide to the four steps you need to follow to buy US stocks in Canada.
Step 1: Compare Canadian brokers that let you trade 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. By using a platform that offers access to US exchanges, you can deposit funds into your account and buy US stocks in Canada.
To find the best platform to buy US stocks in Canada, consider the following factors when comparing your options.
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.
Some platforms may require you to pay a monthly fee in order to keep your account running or to access certain features.
International market access
Some platforms offer access to a few key international markets while others let you buy and sell shares on a much larger number of exchanges. If you want to trade on more than just US and Canadian exchanges, check the fine print to find out which exchanges you can access worldwide.
Ease of use
Check some reviews from other customers, or check out online tutorials if available, to get a feel for how easy a platform will be to use. Is it fast, simple and convenient to execute a trade and monitor market performance?
Market research and advice
Find out whether the broker offers stock research and market analysis to help inform your trading decisions. Does it make it easy to keep up to date with the latest market news? Are there stock recommendations provided?
Check how up to date the market data offered by each platform is — being able to make trades based on current information is critical.
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?
Look for online educational resources that will teach you how to use the platform, how the stock market works, and how to invest in international stocks. These include webinars, video tutorials and how-to guides.
If you want to be able to trade on the go, look for a stock trading platform with a user-friendly mobile app. Read customer reviews to gauge its ease of use, security and trading functionality.
Don’t forget to find out how you can access customer support if you have a problem, such as phone, live chat and email. Will support be available during US market hours?
You can find out more about the key factors to consider when choosing a brokerage platform in our guide to how to compare online stock trading platforms.
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.
Step 2: Open a trading account
Once you’ve chosen a stock trading platform, it’s time to sign up for an account. You’ll need to be 18 years or older and have a Canadian residential address.
You can apply online by providing:
- Your name and date of birth
- Your address and contact details
- Your Social Insurance Number (SIN)
- Proof of ID
You’ll also need to link your bank account to your stock trading account.
Step 3: Fund your account
Now that your application has been approved and your account is open, you can deposit money into your trading account. Transfer methods vary between brokers, so you may be able to pay via debit card, bank transfer, wire transfer, bill payment, or pre-authorized deposit. Depending on the payment method you choose, it may take a few days for your funds to arrive.
Don’t forget that you’ll also need to cover currency conversion costs when you deposit Canadian dollars. Your CAD will need to be converted to USD before you can trade, so make sure you’re aware of the exchange rate and any conversion fees that apply.
Step 4: Buy US stocks
When you’re ready to start buying US stocks, log in to your account via the broker’s online portal or mobile app. You can then search for the US stock or ETF you want to invest in, select the amount of shares you want to purchase and place a buy order.
If the broker offers educational resources to help you learn how to use the platform or place trades, be sure to take advantage of them.
Why invest in US stocks from Canada?
Now that you know how to buy US stocks in Canada, you’re probably wondering why it’s worth investing in the US market. But there are many reasons for Canadian investors to own stocks listed in the U.S.
Historically greater returns from buying US stocks
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 boast a much 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 by buying US stocks in Canada
Investing in different exchanges, markets and industries diversifies your holdings and mitigates risk.
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.
What is the best way to buy US stocks in Canada?
There are several options to consider when deciding how to buy US stocks in Canada. But the best way to buy US stocks from Canada will depend on your investment knowledge and goals.
For example, if you’re a first-time investor looking to build wealth at a steady pace, the best option for you may be to invest in exchange-traded funds (ETFs). These ETFs offer a safe, easy and cost-effective way to gain exposure to US stocks, and they’re simple to trade from a Canadian brokerage account.
In fact, you don’t even need to trade on US markets to invest in US stocks. There are hundreds of ETFs listed on the Toronto Stock Exchange that track the performance of US stocks — one popular example is the BMO S&P 500 Index ETF, which aims to replicate the performance of the S&P 500 index. You can find out more about ETFs in our comprehensive guide.
But if you want to pick and choose which stocks to invest in, or actively manage your stock portfolio, you’ll need to open an international trading account. There are thousands of US stocks and ETFs to invest in, and this allows you to pick the stocks you think have a bright future.
Canadian depositary receipts: An alternative way to invest in US stocks in Canada
Canadian Depositary Receipts (CDRs) are traded on the NEO Exchange and can be bought and sold with Canadian dollars, but they represent shares in companies from around the world. They allow fractional share ownership and provide protection against exchange rate fluctuations, and there are CDRs for major US companies like Amazon, Apple, Netflix, and more.
CDRs are offered by CIBC and can be traded just like stocks through online brokers. There are no management fees, but there is a currency hedge fee of up to 0.60%. You’re also entitled to receive dividends if the company you invest in pays them, but they won’t qualify for the dividend tax credit.
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:
- Interactive Brokers
- Scotia iTRADE
- Qtrade Direct Investing
- CIBC Investor’s Edge
- TD Easy Trade
- RBC Direct Investing
- Qtrade Direct Investing
Pros and cons of buying US stocks in Canada
- 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.
- 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 finding yourself on the wrong side of the Canada Revenue Agency (CRA).
Do I have to pay tax on US stocks?
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. However, withholding tax will generally not apply if you hold US stocks or ETFs in a Registered Retirement Saving Plan (RRSP) or Registered Retirement Income Fund (RRIF).
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. And if you sell a US stock or ETF for a capital gain, you’ll pay tax to the CRA rather than the IRS. You’ll need to report capital gains and dividend income in Canadian dollars.
Finally, unlike trading Canadian-listed stocks, you’ll be on the hook for exchange fees. Many brokerages also charge a currency conversion fee on top of that. Make sure to factor the exchange rate into your investments when buying US stocks from Canada.
How to hold US stocks in TFSA
Can you buy US stocks in a TFSA? Yes.
A tax-free savings account allows you to invest up to $6,500 per year and not pay tax on your capital gains or dividends. Permitted TFSA investments not only include cash, bonds, mutual funds, and stocks and ETFs that are listed on a designated stock exchange.
This means you can use your TFSA to invest in US stocks and ETFs listed on exchanges like the New York Stock Exchange and the NASDAQ. This makes a TFSA well worth considering when deciding how to buy US stocks in Canada.
Depending on your TFSA provider, you may be able to hold US-dollar and Canadian dollar investments in the one account, or you may need a separate TFSA for USD investments.
However, take note that buying US stocks in a TFSA won’t mean that your investment income is completely tax-free. Any dividends earned on US stocks held in a TFSA are subject to a 15% withholding tax.
Canadians consider stocks a smart investment option in 2023
According to results from the Finder: Consumer Sentiment Tracker Q1 (CSTQ1), more than a third (36.18%) of Canadians considered equities to be a smart investment in the first quarter of 2023. This dropped only slightly in the second quarter of 2023 to 27%, according to the Finder: Consumer Sentiment Tracker Q2 (CSTQ2).
Men preferred stocks as an investment option, with 41% convinced that the beginning of 2023 was a “good time to invest in stocks,” compared to 32% of female investors.(1)
Age also had an impact on an investor’s confidence in stocks as an investment opportunity. The youngest generation, Gen Z (investors up to the age of 24) had the most confidence in stocks as a good investment opportunity in the first quarter of 2023 with 53% believing “now is a good time to invest in stocks,” compared to 42% of millennials, 31% of Gen X and 19% of baby boomers.
In general, almost a third of Canadian investors (31%) held stocks outside of a registered account, like a retirement savings fund (RRSP) or Tax-Free Savings Fund Account (TFSA) and almost three-quarters (72%) bought or sold stock through an online stock platform or app. This seems logical, given that 29% of respondents in the CSTQ2 stated they had never worked with and had no plans to use the services of a financial advisor.(2)
How to buy US stocks in 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, fees and how to buy US stocks in Canada in a way that suits your investing strategy. 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
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