I have received a couple of emails that the process of opening a new TD Mutual fund account in order to buy the e-Series index funds described in this post is not very clear. I regret that I did not do a better job of explaining and hope to make the process clearer in this post. As an aside, I would like to point out that apart from being a shareholder in TD Bank, I have no specific financial interest in writing this post.
It is very easy to open a TD e-Series Funds Account if you are opening a RSP or Investment account. You simply print out this application form and follow the instructions in the form.
However, opening a RESP account is a little bit more complicated [Note: You'll need a SIN number for your child for opening a RESP account] because you have to first open a TD Mutual Funds RESP account and then apply to convert it into a TD e-Series Funds account. You can open a TD Mutual Funds RESP account either in person at your nearest branch or by mail. Since e-Series funds are only available online, you would need to park your initial contribution in the TD Money Market fund.
Once you receive notification that your TD Mutual Funds RESP account is open, you simply apply to have your account converted into a TD e-Series Funds Account. After your e-Series Funds Account is open, you can switch out of the money market fund and invest in a diversified portfolio of funds that reflect your asset allocation.
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33 responses so far ↓
1 MillionDollarJourney // Nov 5, 2007 at 11:03 pm
CC, what kind of fees are involved with the TD RESP account?
2 Canadian Capitalist // Nov 5, 2007 at 11:24 pm
There are no fees other than the low MER for the e-Series funds.
3 DJ // Nov 6, 2007 at 12:05 am
Definitely easier than it sounds to make the conversion to eFunds.
4 FourPillars // Nov 6, 2007 at 12:11 am
Excellent post - I’m going to plagiarize as much as I can for my resp series.
5 Jason // Nov 6, 2007 at 1:37 am
Have just been getting into investing, and using TD by default (as that is where I already banked), everything has been very easy and quick by going to see them in person.
After 2 visits with the same person, I have a bit of a relationship and any questions I have, or changes I need made are done pretty quick.
It sure beat filling out forms and mailing them - but I live close to a branch which helps.
6 FourPillars // Nov 6, 2007 at 8:07 am
CC - You might want to mention that a SIN is necessary to set up an resp account.
7 Ahmed // Nov 6, 2007 at 10:28 am
CC, are the TD e-Series funds only available to TD customers? How are they different from the I series?
Note: I have a Scotia account and (it looks like) I can only buy the I-series.
Thanks,
Ahmed
8 Canadian Capitalist // Nov 6, 2007 at 11:40 am
Ahmed: You can only buy e-Series funds online via the TD Bank website or through TD Waterhouse. It is not available through other discount brokers. If you are not a TD Bank customer, you can still apply for a e-Series funds account. The only catch is you will be issued a TD Bank card for online access. I have all my checking at Royal but still found it worthwhile to open a e-Series account.
9 Canadian Capitalist // Nov 6, 2007 at 11:41 am
Mike: I’ll update with a link to an earlier post on getting a SIN card. Thanks for pointing it out.
10 Traciatim // Nov 6, 2007 at 12:53 pm
Ahmed, I’m with CC. My regular bank is with CIBC but I went to TD (in to a branch) to set up a mutual fund account and the pre-authed monthly payment. Make this in to any old fund you want (usually the money market) that doesn’t have early withdraw fees. Then when you get your online access card and web access set up you can log in and move your money at will between the funds over to any of the e-series funds.
11 Stefan // Nov 6, 2007 at 11:34 pm
Hi,
For those eligible for the CLB grant suplement (Canada Learning Bond), please run as fast as you can from any TD mutual fund-based account enabled for RESP. I had very bad experiences with them. The only CLB-eligible RESP account they could open for me/wife was a deposit account (something like GIA or a GIC).
TD mutual fund accounts and TD e-funds accounts that are not elible for RESP! TD was lazy enough to register as “promoter” with HRSDC.
I had to move the account to Altamira, which was able to “port” RESP to them, including the CLB portion of it. Altamira’s index funds are not bad at all, just a little bit higher MERs (0.5%)
12 Stefan // Nov 6, 2007 at 11:40 pm
Sorry, I forgot to put a not between “enough to” and “register as promoter with HRSDC”.
13 Canadian Capitalist // Nov 7, 2007 at 8:18 am
Stefan: Thanks for the heads up. It really sucks that TD’s RESP doesn’t accept CLB payments. I’m glad that you found an alternative with Altamira.
14 Traciatim // Nov 7, 2007 at 10:46 am
Keep in mind that the CLB restriction would only be a problem with families who’s total income is below 37K or so. This should not be a concern for families above this level as they would no longer be eligible anyway. I wonder if TD looked at other RESP providers and found that lower income families may not have a high enrollment percentage in to RESPs so it wasn’t worth it for them to set up.
Anyone know of any stats that show enrollment percent in RESPs by median family income levels? That would be interesting information to see.
15 Canadian Capitalist // Nov 7, 2007 at 11:33 am
Tim: We’re not eligible for the CLB payments and we get the CES grants into the TD RESP account just fine. It’s good to know that this is a problem with TD’s RESP.
16 Neil F // Nov 7, 2007 at 3:41 pm
I believe there is a fee for RESP at TD; $50/year for accounts <$25k.
http://www.tdwaterhouse.ca/services/respfeatures.jsp
If you are at a broker that does not charge a fee, and you have less than 25k, you might be surprised at how much more expensive the $50 fee/e-funds combination is compared to some low MER index funds (<1%) at a broker that does not charge a fee. I was.
17 Todd // Nov 7, 2007 at 6:30 pm
Neil F, which brokers have low MER index funds that don’t charge a fee? I’m looking to open an RESP for my newborn.
18 Canadian Capitalist // Nov 7, 2007 at 8:07 pm
Neil: The RESP account described here is a TD Mutual Funds Account, not a TD Waterhouse account. So, there is no annual RESP administration fee. I personally have this account for our boys and haven’t paid a dime in fees for over 2 years.
Todd: Unless you qualify for the Canada Learning Bond, which is a problem with TD Mutual Funds RESP account according to Stefan, you would probably be happy with TD e-Series Funds.
19 Neil F // Nov 8, 2007 at 6:25 pm
Oh, pardon me…and thanks for the clarification. I guess I need to take another look again.
20 Carnival of Personal Finance Hosting and More.. | Million Dollar Journey // Nov 10, 2007 at 3:31 am
[...] Canadian Capitalist shows us how to open an RESP account with a TD e-Series Account (low MER index funds). [...]
21 sam // Nov 11, 2007 at 12:00 pm
hi,
in TD e funds RESP….you not only lose CLB…but also the additional CESG…
additional CESG is good for families who make upto
$70,000(approx)..
i am not sure why TD mutual funds do not give us 1)additinal CESG & 2) CLB…a pity otherwise MER for TD efunds are a treat….& there are no set up fess…no loads..
in Altamira..is there are any set up fees or any entry & exit sales load..
http://www.tdcanadatrust.com/resp/resp_choices.jsp
22 sam // Nov 21, 2007 at 6:12 pm
hi Stefan,
thanks for your info…
is there any entry/exit load on altamira funds…..
TD e funds do not have antry & exit loads…
thanks
23 RESP - How To Get Started // Nov 23, 2007 at 6:02 am
[...] This post describes the exact procedure to get this set up. Basically you open up a TD mutual funds resp account and then apply to convert it to a TD e-Series account and then makes your purchases. Here is another post on getting started and please check out my asset allocation post on this subject. This post contains a sample RESP portfolio using the e-Series funds and includes the exact fund names as well. Thanks to the Canadian Capitalist for doing all the leg work on the TD accounts. [...]
24 ING Direct’s Low-Cost Mutual Funds // Jan 15, 2008 at 8:01 pm
[...] the MER at 1% is a bit steep and you can construct the same portfolio with TD e-Series Mutual Index Funds for less than half the cost, ING’s mutual funds are even cheaper than TD Bank’s indexed portfolios. It is hard not [...]
25 Reader Question on US Dollar Dividends in a RRSP // Jan 20, 2008 at 8:00 pm
[...] the effects of the ability to DRIP back the dividends versus buying a low MER fund (such as the TD e-Series Funds). I like Vanguard ETFs (e.g. VWO) but unfortunately the only ETF that TD Waterhouse appears to [...]
26 moneygardener // Feb 3, 2008 at 3:58 pm
CC,
I wanted to let you know that I really appreciate your informative posts on what you did for your kids RESP’s. I am going to do the same thing (TD efunds) for my son, who is currently about 3 weeks old.
..MG
27 Cookie // Feb 9, 2008 at 9:17 pm
May I recover the additional CESG (from previous years) that I lost using TD efunds RESP?
thanks!
28 Glen // Feb 27, 2008 at 12:13 pm
Many thanks for the insights on setting up an TD e-series RESP. I just had this done for our son, and it wasn’t too hard to establish if you clearly explain to the bank rep what you want to do (just use the outline described above).
I was fed up with getting solicited from the trust companies and their vague details (hint: *avoid* the ‘free’ hospital baby photo kiosks, a.k.a. a lead generation tool for trust companies), and I’m happy to now be in control of my family RESP…
Thanks!
29 Dan // Mar 18, 2008 at 10:07 am
Why would you lose your CESG using an efund if it is set up inside a self direct RESP?
30 Traciatim // Mar 18, 2008 at 11:41 am
Dan, The TD E-Funds account does not support the additional CESG which is either
1) 20% of the first $500 deposited ($0 - $100 per year) for families with incomes less than 32K or so
2) 10% of the first $500 deposited ($0 - $50 per year) for families with incomes between 32K and 76K or so
(I don’t have the exact numbers for incomes)
Thus, by using TD you are missing out on somewhere between $0 and $100 bucks per year. In my case since I pay more than $500 and my families income would make us eligible for the 10% match I’m missing out on $50 bucks a year of additional CESG. (Not the 20% CESG, just the 50 additional)
In the grand scheme I find it a small price to pay for the ultra-low MER’s of the E-Fund account with no additional fees. If enough people e-mail them about it I’m sure they would start using it.
31 waqar // Mar 27, 2008 at 1:29 pm
HI Good people
I want to ask about the Royal bank Target eduaction series funds. They have sevral depending on age on the participants (2020, 2025). The MERs are adjustable and they start high (1.9%) as the funds start off by investing in more managed portfolio funds with agressive investments and then slowing go lower (1.8 % or lower) etc because the balance shifts more to bonds and other lower risk investments as the maturity dates. They do the automatic and gradual switching.managment of account to make sure the growth and risks are managed properly according to the maturity date of the fund.
what’s your take on that.
Thx
32 Traciatim // Mar 27, 2008 at 2:18 pm
Hey Waqar, it looks to me like they are a very expensive way to auto-balance your portfolio as you get closer to the ‘big day’ that your kids go off to school.
You can do the same thing for around 0.5% with TD, just by adjusting to their bond index as you get closer to the big day. Why pay the extra 1.25% for nothing?
33 Sylvester // Apr 13, 2008 at 11:37 pm
I have tried since Dec 2007 to get an RESP efund account thru TD. Finally got one after numerous emails, phone calls, forms etc. Never did get the CESG ($500). Spent what seems like the better part of my life corresponding with TD and the RESP wing of our efficient government. Finally pulled the plug yesterday after receiving yet another letter from TD asking to phone them re missing information. Went thru this same scenario several times before - they suggested phoning a branch of Rev Canada again. I finally wised up and asked them to mail me out a cheque (It’s been over 3 months so I expect and was told there would be no charges/penalties, but I don’t really trust a word they say anymore). This truly was the hardest $500 in my life (CESG amount) that I didn’t earn - and I have worked worked some pretty crappy jobs. Can’t make another 2007 contribution, but am truly relieved to be out from under TD and have my evenings (and days) back (no more emails, phone calls, snail mails, checking account amounts to see if the CESG has finally been deposited, filling out/refilling out RESP forms and account selections, risk analysis, tracking down and pulling forms out of files to phone TD). I would not (try to) buy another RESP thru TD if they were the only bank/financial institution in Canada.
Glad To Be Free Again…
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