What to Watch for When Transferring a Stock to the US Dollar Side of an InvestorLine Account

First I set up a US dollar ledger or journal for my InvestorLine RRSP account. Then I transferred some shares of TD that I already owned from the Canadian dollar side of the account to the US dollar side. I forgot to watch out for one detail before I did this transfer though.

Receiving Dividend Payments in US Dollars within a BMO InvestorLine RRSP US Dollar Sub Account

I asked a BMO InvestorLine agent to move 100 TD shares from my Canadian dollar RRSP account to my US dollar sub-account. They journaled the shares over, as requested, on July 11.

I felt rather smug about that because they pay a dividend on July 31 and I wanted to see how that would work. For instance, what exchange rate and fee would I have to pay to receive the dividend in US dollars?

Watch Your Dividend Dates Before Requesting a CAD to USD Transfer

Unfortunately, I forgot the dividend PAYMENT date is not the important one. It’s the dividend RECORD date I should have tried to beat.

TD declared the July 31 dividend to be payable to shareholders on record on July 9. On July 9, I still held the shares in the Canadian dollar side of my account.

What Happens to a Dividend Payment In This Situation?

I don’t actually know how this will play out. I guess on July 31 I will find out. Actually it will be August 1, as InvestorLine does not pay dividends till one day later, then backdates the transaction. So I will report my findings in August.

I still have TD shares in my Canadian dollar account. I also now have TD shares in my US dollar account. The dividend could

  • Be paid for all of the TD shares in CAD to the cash account in the Canadian ledger; or
  • Be paid for the Canadian-held TD shares in CAD to the cash account in the Canadian ledger, and be paid for the US-held TD shares in CAD to the cash account in the US ledger but be converted to USD after applying an exchange rate and a foreign currency exchange fee.

I already had been puzzled about exactly what they would do for the dividend payable on the shares held in the US ledger:

  • would they pay the dividend in CAD and only apply the exchange rate; or
  • would they pay the dividend in CAD and apply both the exchange rate and a foreign currency exchange fee; or
  • would they pay the dividend is USD at an exchange rate set by TD.

That puzzle will not be solved until Hallowe’en!

Why Transfer TD Anyway?

Some of you may be wondering why I moved TD in the first place. It’s just that I bought it during the recent dip and I’ll be selling it soon to crystallize the capital gain. Then I’ll want to re-invest the money, preferably in a US stock. This was an easy way to move the value to the US side to have it ready to sell when I find something I want to buy.

The Moral of the Story

Be smarter than me. (I know that’s not much of a challenge!)

If you are transferring shares from your Canadian Dollar account to your US Dollar account, try to do it before the date of record. And I guess if you’re transferring them the other way, also keep an eye on the Record date.

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Stocks are Falling: Buy, Buy, Buy!

Oh I love to see these sudden market drops! There really are no words for the feeling of joyful glee with which I rush to put in my orders. Buy! Buy! Buy! TD is on sale! BMO is reduced! BCE is at a discount! ENB is marked down! Time to dig the annual RRSP and TFSA money out from under the mattress, dust it off, and spend, spend, spend!

Photo of Indigo Bunting Bet Crooks

How to Deal with Markets that Just Keep Falling

The trick is once you buy DON’T look at the market for a few days. You should pick a price you think is reasonable to pay, buy if you get a chance at that price, and then get back to work making money in other ways that don’t involve the stock market.

The market may well continue to plummet AFTER you fork over your hard won cash. It’s kind of sad to realize you could have bought at an even lower price. So don’t look! Once you’ve invested, it’s done. Go away and let the market bubble along without you.

Best of all, get outside and do something real. Play softball. Take a bike ride. Wing a Frisbee for a dog. Swim across a bay. Not only will all those things remind you that money is abstract and you could actually live reasonably well with less of it, these activities will also improve your health. If you drop dead from inactivity caused by staring at your computer screen all day, every day, what good was saving and investing?

Even if Market Values Collapse Often Dividends Don’t

You’ll notice that the stocks I’m chanting about are all blue chip, large cap Canadian stocks. They’re companies I would feel comfortable holding for 3-10 years or longer providing they don’t get into any significant shenanigans during that term. I’m not buying them expecting to make a killing of a capital gain. On the contrary I’m buying them primarily as income stocks. They pay a steady comfortable dividend of between 4-6% at these discounted prices. That’s what I’m primarily after. If there is a long-term capital gain: bonus!

Don’t Invest Everything in Stocks

Everyone says this. I’m one of the few that does this. I don’t have all of our money in stocks. In fact, I don’t even have most of our money in stocks. We sleep well through all the market gyrations because we have investments that are not in the market at all.
I recommend the same.

Have a sturdy solid base of money that is not in the market. Yes, it is not earning much interest. Yes, it may be losing value against inflation. Tough, isn’t it? I figure I can earn enough off the portion that is in the market to cover inflation. If I’m wrong, I’ll just have to cry myself to sleep as I live off my 6-figure cash assets. Something tells me I’ll survive. I actually like beans.

Investing Can Be Fun!

Take some joy in your investments. Everyone seems so depressed all the time. Why? It’s only money! Ask anyone in a palliative care facility if they wish they had agonized more over every financial decision. I guarantee they will look at you blankly. Make the best investment decision you can for today, then get out there and Live! Love! Prosper! Those Vulcans know a thing or two.

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Are you enjoying the current market swoop? Have you taken a refreshing plunge into the market and risen up from the swirling wild waters with a pearl? Please share your experiences with a comment.