A couple of years ago, I used to have a TFSA account as part of my BMO Investor Line account. Every year I was able to move an additional $5,000 to my TFSA account. For those who do not know, a TFSA account, which stands for Tax Free Savings Account, is an account that, as the name suggest, is free from taxation. In other words, any profits you make from a TFSA account (interest, stock trading, etc…) will not incur any federal or provincial tax. So, if you were smart and made $100,000 from that $5,000, you will not pay a penny in taxes on the $100,000 you earned.

Of course, we all know that Canadian stocks are boring compared to their US counterparts. That’s why, many Canadian investors ask the following question: “Can I purchase US stocks with a TFSA account?”

The answer is yes! You can buy US stocks with your TFSA account. There is one problem, however, is that you’ll be stuck with an unfavorable, bank-set CAD/USD exchange rate if you buy directly from your TFSA account. As such, a wiser thing to do would be to buy US stocks in USD, and then move them to your TFSA account, instead of buying US shares with CAD directly from your TFSA account (since the bank will need to convert your money to USD before selling you those shares). This way, you will be avoiding the exchange rate when converting from CAD to USD.

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