Most investment platforms in Canada provide access to major US exchanges like the NYSE and Nasdaq, where you can buy stocks in companies like Meta (Facebook), Netflix and Tesla. Fees typically range from $0 to $10 per trade, not counting any applicable foreign exchange fees.
Not all Canadian trading apps offer access to US stocks, so you’ll need to carefully compare brokers. Here’s how to buy US stocks in Canada.
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.
When finding the best platform to buy US stocks in Canada, consider the following factors.
You may be charged a trading commission plus a foreign exchange (FX) fee when trading US stocks. Some platforms may require you to pay a monthly fee in order to keep your account running or to access certain features.
Commissions might be higher for trading foreign stocks and may be charged as a percentage or fixed amount. You may want to look for brokers that offer USD accounts, so you don’t pay a conversion fee every time you trade.
A few Canadian platforms like Interactive Brokers make it easy to trade stocks on markets outside the US and Canada. 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.
Check customer reviews and promotional videos 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?
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 each platform’s market data is. Accessing the most current information can be critical when making investment decisions.
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?
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.
Once you’ve chosen a stock trading platform, it’s time to sign up for an account. You’ll need to be at least the age of majority in your province or territory (18 or 19 years old) and have a Canadian residential address.
You can apply online by providing:
Fill out a W-8BEN form to confirm you’re not a US tax resident and avoid being double taxed in Canada and the US. Most platforms and apps let you fill out a W-8BEN form online. You’ll also need to link your bank account to your stock trading account.
Once your account is open, you can deposit money into it. Available transfer methods may include debit, bank transfer, wire transfer, or bill payment. Funds may arrive within a few days, depending on the payment method you choose.
Don’t forget to factor in currency conversion costs when depositing Canadian dollars, which will need to be converted to USD before you can trade. Be aware of the exchange rate and any conversion fees that apply.
When you’re ready to buy US stocks, log in to your online account and search for the US stock or ETF you want to invest in. Select the number of shares you want to purchase, and place a buy order.
Use your platform’s education resources to learn how to trade and hone in on smart investments.
Now that you know how to buy US stocks in Canada, you’re probably wondering why it’s worth investing in the US market. Here are some of the reasons.
The US economy is one of the most powerful in the world. In the last decade, Wall Street’s S&P 500 index has delivered an average return of 10.77%. Over the same time period, Canada’s similar index, the S&P/TSX Composite, has returned 4.10%.
Many more companies trade on US exchanges than Canadian exchanges. The NYSE and Nasdaq are the two largest stock exchanges in the world in terms of market capitalization, offering a number of lucrative investment opportunities.
Many of the world’s biggest global growth companies, such as Facebook (Meta), Amazon, Apple, Netflix and Google (collectively known as the FAANG stocks) are listed in the US.
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.
One of the biggest advantages of investing in American stocks over Canadian stocks is that you can access a much larger market with more investment choices. This is great for diversifying your portfolio and increasing the liquidity of your investments—with more investors and publicly traded companies across a wide variety of sectors and industries, it’s not difficult to buy and sell assets.
That being said, you don’t have to choose between Canadian and US stocks. Consider investing in both. Holding assets in different markets lets you take advantage of economic spikes in multiple regions and minimize losses if one market periodically outperforms the other.
There are two key fees you need to consider when investing in US stocks from Canada:
The best way to buy US stocks from Canada depends on your investment knowledge and goals.
For example, if you’re a first-time investor looking to steadily grow your wealth, you may want to invest in exchange-traded funds (ETFs). ETFs offer a relatively safe, easy and cost-effective way to buy into a variety of US stocks.
Did you know you don’t need to trade on US markets to invest in US stocks? There are hundreds of ETFs listed on the Toronto Stock Exchange that track US stocks. One example is the BMO S&P 500 Index ETF, which aims to replicate the performance of the S&P 500 index.
But if you prefer to personally curate and manage your own investment portfolio, you can buy stocks in individual companies.
Canadian Depositary Receipts (CDRs) represent shares in companies from around the world and are traded in Canadian dollars on the NEO Exchange. Buying CDRs allows you to bypass the risk of exchange rate fluctuations while owning fractional shares in international companies.
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 ongoing management fees, and each CDR costs just $20.
If the companies you invest in pay dividends, you’ll receive payouts, but these won’t qualify for the dividend tax credit.
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:
Regular trading hours for major US stock exchanges like the New York Stock Exchange (NYSE) and Nasdaq are Monday to Friday from 9:30am to 4pm (Eastern time).
If you aren’t available to trade during these times, you have two options. Some brokers let you place limit orders on US stocks, which means your trades will be automatically executed when specific stocks hit the purchase price you specify.
Some brokers also support after-hours trading, so you can place trades before and after US stock markets hours. When the market opens, your orders are executed.
Investing in an area, industry or country which you know little about is always risky. When buying American stocks in Canada, you may not have the same knowledge and expertise. So, it pays to make sure you know what you’re getting into.
Additionally, you don’t want to make any mistakes when declaring income and capital gains on your tax return. Find out how stock investments are taxed in Canada to avoid finding yourself on the wrong side of the CRA.
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.
Can you buy US stocks in a TFSA? Yes.
A tax-free savings account allows you to invest up to $7,000 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.
According to results from the Finder: Consumer Sentiment Survey 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 Survey 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)
Investing in US stocks from Canada is a solid way to diversify your portfolio and gain exposure to US markets. Most Canadian platforms let you invest in US stocks, but foreign exchange fees may apply. As with any investment, you could gain or lose money, so do your research before buying in.
Finder’s unique algorithm found the 20 best TSX stocks to buy right now.
Read more…
These are the 20 best US stocks to buy right now, trading on the Nasdaq and NYSE.
Read more…
Get familiar with Canada’s largest stock exchange and find out how to buy TSX stocks quickly online.
Read more…
Steps to owning and managing Yoshitsu Co. stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing Cerberus Cyber Sentinel stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing Fresh Vine Wine, Inc stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing DGX with 24-hour and historical pricing before you buy.
Everything we know about the Nuvectis Pharma IPO plus information on how to buy in.
Steps to owning and managing BuzzFeed, Inc stocks, with 24-hour and historical pricing before you buy.
These are the best renewable energy stocks to buy now in Canada.
A failed SPAC deal pulled the plug on this vertical farming company’s plans to go public. But you can buy stock in other sustainable farming companies.
Everything we know about the Reddit IPO plus information on how to buy in.
Find out how to invest in the S&P 500 in Canada—one of the world’s most popular stock indices—to diversify your portfolio.