Holding USD In My Questrade RRSP and TFSA

Investing in USD can save you a ton of money in currency conversion fees when you think about how much it costs to convert dividend income and new stock purchases back and forth over your investing lifetime. Questrade RRSPs and TFSAs allow you hold both USD and CAD in your portfolio - and they do this for no added fees. (Each account is still $0).

Questrade was the first online discount brokerage to allow investors to hold USD in a registered account.

Questrade RESP and Family RESP Accounts

If you have children and you think they might one day attend post-secondary schooling of ANY KIND (it does NOT have to be university) then you are throwing away free money by not opening a Questrade RESP account. Given how quickly post-secondary education costs are rising (2.5x-3x the rate of general inflation) can you afford to throw away free money?

Here’s how to get $10,000 in free money from our government.

Setup a FREE Questrade RESP account and deposit $208.34 into it every month. Collect the free $500 Canada Education Savings Grant (CESG) each year, up to a lifetime limit of $7,200. Invest the money in a conservative all-in-one ETF or even just a basic Canadian bond ETF. The interest/investment return you will make on your own money that you put it is nice - but you know what’s nicer? The $2,500-$3,000 return that you make on someone else’s money! (Especially when that someone else is the government!)

If your income is below $42,000 then there are some extra incentives for you.

The CESG cash, plus your investment returns within the Questrade RESP account will be taxed as income in the hands of the student. This means that it’s almost always tax-free because of the large amount of tax credits and deductions that students enjoy. Your original cash can be withdrawn tax-free as you already paid tax on it before investing it.

If you have more than one child, you can combine their contribution room into one big easy-to-manage Questrade Family RESP account (which is also free to open with no annual fees). The advantage to these accounts is that you can handle the withdrawals amongst your children in whatever way is convenient for you.

What If My Child Doesn’t Go to University? Do I Lose My Questrade RESP Money?

Here are the main points to think about if you’re worried about “wasting” RESP contributions:

1) The Questrade RESP account can be active for up to 35 years and you can use the RESP money for a HUGE variety of post-secondary studies. Everything from massage therapy to airplane mechanic courses can be covered. This combination means that it’s VERY likely your child will be able to use the RESP help at some point.

2) If you haven’t maxed out the CESG or contribution room for Child 2, you can simply take Child 1’s RESP money and use it for Child 2 within your Questrade Family RESP account.

3) If you have no children that ever attend any sort of post-secondary education, you can roll $50,000 into your RRSP (assuming you have the contribution room) and all you would lose is the free CESG money, and the investment earnings on the government’s cash.

4) You can withdraw the money you originally contributed tax-free without any penalties.

5) If you withdraw the investment returns that you made on your money, you will be taxed as if you earned the money as income, plus an additional 20% penalty. (This is a very unlikely scenario.)

Questrade Margin and Non-Registered Account

First of all - kudos to you for maxing out your Questrade RRSP and TFSA accounts! If you haven’t done that yet, you can probably keep life simple and skip this part of our Questrade review.

Once you have contributed the maximum amount to your RRSP and TFSA accounts, and (if you’ve got children) the Questrade Family RESP is on autopilot, your next step becomes a good news - bad news situation.

The good news is that you are in great financial shape, and there are options available for continued investing.

The bad news is that there is no more space under your tax-sheltered registered account umbrella. From here on out, you will be investing in the rain, and the tax man will get his chunk.

So, while there are semi-exotic accounts one could open if they want to exchange foreign currency or invest within a corporation, the option most people will opt for is a Questrade Margin Account.

The Questrade Margin Account is a fancy name for a basic non-registered account, with the added feature of being able to borrow money from Questrade and invest that money alongside your own. When you borrow money to invest it, this is called “investing on the margin”.

Now, I don’t recommend investing on the margin unless you really really know what you’re doing, and even then it often isn’t a good idea. The main takeaway from this though, should be that YOU DO NOT HAVE TO BORROW MONEY to invest within a Questrade Margin Account. Most everyday investors in Canada will be best served by using this account to invest in Canadian-dividend payers (my Smith Maneuver account for example) or other Canada-based ETFs.

You can however, put almost any kind of investment in a Questrade Margin account. Here’s a few more quick Questrade review facts about the non-registered option:

You can invest in short-selling (watch the Big Short to have Margot Robbie in a bathtub telling you what this means)

There are no contribution limits to worry about like there are with the Questrade RRSP, TFSA, and RESP accounts.

Investment returns inside an unregistered account are still treated much nicer than income you make from a job. Capital gains and dividends are eligible for special tax treatment in Canada.

There are no taxes to worry about upon withdrawal like there are in a RRSP.

You can engage in complex options trading (again, not my thing).

Questrade Margin accounts are governed by margin falls. This part is important: If you borrow money from Questrade, and the investment drops below the margin requirement, Questrade will essentially demand that you pay them their money back. If you don’t immediately pay them back, Questrade can sell your investments and take the money in lieu of your payment.

Overall, using the Questrade Margin Account as a basic non-registered account is a great option. Getting into the more exotic options like leveraged options trading is not my cup of tea.