Advice

Thinking of Buying US Stocks in Canada? I know a Better Way!

AI Generated image — A Canadian buying stocks from the Nasdaq

After moving to Canada, one of the initial challenges I faced was buying stocks listed on the US market. Although all Canadian brokers permit purchasing US stocks, factors like foreign exchange rates and USD fluctuations can impact your returns. After some research, I discovered CDR’s, which eliminate the need for currency conversions and let investors concentrate solely on a company’s performance.

What are CDRs (Canadian Depositary Receipts)

Think of CDRs as a way to buy top global companies on a Canadian exchange. A Canadian exchange buys a volume of global stocks and lists them for retail investors like us to purchase. CDRs allow you to buy stocks in fractions, with the CDR ratios specified by the issuer.

Benefits

1. CDRs have built-in currency hedging, enabling investors to buy shares of a company and focus on its performance instead of worrying about currency fluctuations.
2. CDRs are as easy to buy and sell as regular stocks in the market.
3. CDRs are liquid, and a narrow bid and ask spread range indicates the liquidity of a stock, providing a good idea of its marketability.
4. CDRs mirror the performance of the underlying stocks, whether in gains or losses…