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moneysense.ca, 5/11/07
Investing in TD e-Series Funds for Your RESP
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.
moneysense.ca, 5/11/07
CC, what kind of fees are involved with the TD RESP account?
There are no fees other than the low MER for the e-Series funds.
Definitely easier than it sounds to make the conversion to eFunds.
Excellent post – I’m going to plagiarize as much as I can for my resp series.
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.
CC – You might want to mention that a SIN is necessary to set up an resp account.
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
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.
Mike: I’ll update with a link to an earlier post on getting a SIN card. Thanks for pointing it out.
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.
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%)
Sorry, I forgot to put a not between “enough to” and “register as promoter with HRSDC”.
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.
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.
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.
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.
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.
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.
Oh, pardon me…and thanks for the clarification. I guess I need to take another look again.
[...] Canadian Capitalist shows us how to open an RESP account with a TD e-Series Account (low MER index funds). [...]
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
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
[...] 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. [...]
[...] 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 [...]
[...] 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 [...]
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
May I recover the additional CESG (from previous years) that I lost using TD efunds RESP?
thanks!
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!
Why would you lose your CESG using an efund if it is set up inside a self direct RESP?
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.
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
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?
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…
[...] a TD e-Series/e-Funds RESP account as it seems to be a popular choice for low cost index funds. Canadian Capitalist has already written about this topic, and pretty much sums up what is required. I will include a [...]
For those in Alberta, the TD Mutual fund RESP account is not eligible for the AB centennial RESP grants either. The TDCT accounts are, but only allow GICs to be purchased.
[...] Canadian Capitalist talked about using the TD E-Series Mutual Funds in your RESPs, that I really need to look [...]
[...] Tweedledum: they can walk down the street to a TD Canada Trust branch and open a RESP account and invest in TD e-Series mutual funds for a total cost of less than 0.5%. Now, that is more than three times [...]
My RESP experience.
http://canadianinvestmentjourney.blogspot.com/2008/12/resp-on-td-e-series-mutual-fund.html
I know people have confirmed that a non-TD account can be linked to TD’s e-series account to make purchases. I want to link more than 1 (ie CIBC and RBC chq accounts) to TD e-series, is it possible?
Having just had a son close to 1.5 months ago, I am buckling down and choosing my RESP provider for the next 20 or so years. My top 2 picks were TD and RBC. Although TD does indeed have lower MER’s with its E-Series funds, upon closer examination, RBC’s index funds for Canadian Equity and Bond have consistently higher returns over YTD, 1 yr, 3 yr, 5 yr, and earlier. This is hard to explain given these funds are all supposed to track the same indexes. Having been a loyal RBC client since birth, in Quebec, I will still with RBC for the RESP’s. As a sidenote, I will offer this information, the Quebec Incentive Education plan which is equal to half of the CESG, meaning 10% of member contributions will apply to both RBC and TD plans when it materializes. RBC gave me the assurance that the provincial grants would be retroactive to Jan 1, 2008 (must confirm) however growth-free. In case anyone wants to verify my info : Bond : TDB909 vs. RBF563
and Canadian Equity : TDB900 vs. RBF556. Comments…
[...] Tim managed to jump through the hoops to set up a TD Bank e-Series Funds RESP account for this two children and has the following question: My plan is to invest approx $100 to each of the 2 plans every two [...]
[...] Jan. 2006 = 59.27; Jan. 2007 = 71.48 TD e-Series International Index ($CAD) Jan. 2006 = $11.30; Jan. 2007 = $13.76 1 $US to $CDN Jan. 2006 = 1.1629; Jan. 2007 = [...]
[...] Canadian Capitallist寫過的Investing in TD e-Series Funds for Your RESP [...]
I set up a TD RESP online (and by mail) a few years ago, now I cannot find a link to do it, the website says you have to go to the branch. I do not want the big song and dance from some TD rep, has anyone recently set up a a TD RESP online or by mail???
@Spudman: For all the RESPs I’ve set up, I just visited the local branch and asked them to make the TD Money Market Fund as the default. I don’t think you can do RESP applications online and I am not familiar with mailing in the application.
Thanks CC, with my current TD RESP (opened 2006), I printed off an application from their website, which was lengthy and then printed off the conversion to e-fund form and sent it all in at once. A week later I got a call from TD and all was set up! I guess now they want you to go to the branch to get the up sell. I also do not have a TD bank account, my investment to the RESP comes from my RBC account. I’m sure they do not like that. I will go to the branch tomorrow. Cheers.
I’m still a minor but will be an adult in a year and few so how can i start a savings bond or Stock Mutual Fund.
So for every place i ask they i say i need an adult to initiate the accounts
TD Money Market Fund = TD Premium Money Market Fund?
TDB165 at .32% MER (for now)?
Nothing to indicate other fees would apply.
Just want to be sure as whenever a company adds Premium to the name, the fees go up!
@Scott: Premium refers to the fact that the fund requires a minimum investment of $100,000. I believe the MER has always been lower for the fund but for $100,000 minimum investment, it’d better be!
Thanks CC.
A follow-up. TD has several series for the Canadian Money Market fund. I Series, A Series, F Series, etc.
Only the I series has no front load / back load fees.
For example:
TD Canadian Money Market – I
Initial Sales Fees – 0%
Deferred Sales Fees – 0%
Mgmt. Fee – .75%
MER – .76%
TD Canadian Money Market – A
Initial Sales Fees – 5%
Deferred Sales Fees – 5%
Mgmt. Fee – 1%
MER – .80%
How can I be sure to get signed up for the I series when (or if) I go to TD? I was hoping to do this by mail, but they now seem quite adamant that you come in to setup an RESP.
@Scott: I believe TD Mutual Funds sold directly to the public are I-Series funds. I’ve purchased the Money Market Fund in my TD RESP account for many years now. There were no sales commissions involved. Also the money market funds do not have the minimum holding period applicable to other TD funds.
http://www.tdcanadatrust.com/mutualfunds/prices.jsp
Confirmed from TD:
Dear Scott,
Thank you for your email. You will purchase the Investor Series through our retail branches.
[...] own TD e-Series funds in our kids’ RESP accounts because, as I noted in earlier posts, these mutual funds are ideal for relatively smaller portfolios. However, I’ve never paid much attention to the tracking error of e-Series funds even though [...]
[...] own TD e-Series funds in our kids’ RESP accounts because, as I noted in earlier posts, these mutual funds are ideal for relatively smaller portfolios. However, I’ve never paid much attention to the tracking error of e-Series funds even though [...]