Investing in TD e-Series Funds for Your RESP
NB: This post was originally published on Nov. 5, 2007. It was extensively edited and updated on Nov. 15, 2012.
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 I have no specific financial interest in writing this post.
Before you begin…
You can open up a Registered Education Savings Plan (RESP) only after you apply for and receive a Social Insurance Number (SIN) card for your child. You can apply for a SIN card at any Service Canada location. Also, you should be aware that a TD Mutual Funds RESP account may not be suitable for everyone because this account is only set up to receive the basic Canada Education Savings Grant (CESG). If your child is eligible for additional CESG, then you may want to explore other options.
Apply for a TD Mutual Funds RESP Account
However, opening a TD e-Series RESP account is a slightly more complicated two-step process. First, you have to open a TD Mutual Funds RESP account. You can do so by making an appointment with an advisor at a nearest TD Canada Trust Branch or by mail. You do not have to be a current customer of TD Canada Trust to open a TD Mutual Fund RESP Account. The RESP account will be set up to pull funds from your existing chequing account even if you hold it at a different bank. When you go in to meet a TD Advisor, you’ll need your child’s SIN card and a void cheque for the account from which contributions will be made. If you are making an initial contribution when opening a RESP account for your child, you’ll need to park it in the TD Money Market Fund because e-Series funds are only available online, not through a branch.
Convert RESP account to a TD e-Series Account
After you receive paperwork in the mail that your TD RESP mutual fund account is open, you need to apply to convert it into a TD e-Series Funds account. When the account is successfully converted to an e-Series account, login into EasyWeb with your TD Canada Access card and switch out of the money market fund and invest in a diversified portfolio of e-Series funds according to your asset allocation.
Making future contributions
The next time you want to make a RESP contribution, just click the “Purchase Mutual Funds” link in EasyWeb, select the fund you want to invest in and the amount and click the confirm button. A contribution will be made by pulling it out of the chequing account you provided with your initial application.
The Canada Education Savings Grant (CESG) will be paid directly into your child’s RESP account. In my experience, the CESG payments appear at the end of the month after which the contribution was made. Example: You made a contribution to your child’s CESG on Jan. 15. The CESG will be paid into the RESP account by the end of February. If you had waited until the end of January, the CESG payments might be delayed until March. If you opted to park your CESG payments in the TD Money Market Fund, do not forget to switch into other funds based on your asset allocation.