This article has 39 comments

  1. I’m already leaning towards the ING cash/GIC TFSA for a few reasons. The first few years you can only add $5k per year (indexed to inflation) so this is right around my already established savings account. I’m a big fan of avoiding fees and until I was 4-5 years into maxing out my TFSA contributions I likely wouldn’t look to invest into mutual funds or stocks with it until fees were negated.

    I have to be honest – I really don’t like the idea of charging a withdrawal fee period! I think if a bank wants your business (in this environment) they have to be flexible in costs in order to attract long-term business.

  2. Can I use federal bailout money to cover the fees?

  3. I am wondering if it is a good idea for people to wait until February or March 2009 to open a TSFA account. By that time, all the different TSFA options will come out and one can compare between different options. At this point, we have a glimpse of different things that are offered or might be offered and there is simply not enough information to make a sound decision.

  4. Canadian Capitalist

    Brad: I dislike withdrawal fees as well but I think it may be the norm now that we are getting a first glance at what self-directed TFSA fees are going to look like.

    Eric: Unfortunately, the little guys like us get squat (no surprise).

    EconStudent: I think we’ll have a good idea about TFSAs well before Jan 2009. The financial institutions are probably working over time getting ready for launch. But, I’d be very surprised if the other banks don’t have similar fees as BMO. So, in a sense, we can already be reasonably sure of how the TFSA landscape will look like.

  5. CC, Good posts on TFSA, Thank you.

  6. Has IB offered any TFSA accounts yet?

  7. Like most of the other posters here, I took up ING on their offer. As CC pointed out, the first few years will really be tiddly-winks… Under a hundred dollars or so of tax savings for 2009… But a decade or so from now, the TFSA could start to save you a serious bundle on tax!

    To Econstudent, since you don’t get a tax deduction for a TFSA, the main benefit of the TFSA is the accumulated interest (or dividends or whatever). As a result, it would be better for you to start contributing early for a TFSA so that the money can grow tax-free, as opposed to an RRSP where you contribute last-minute just to grab the tax deduction on your personal income taxes. While some may argue the same thing about an RRSP, the growth of the savings in an RRSP is tax-deferred, so it will be fully taxable when you take it out later on in life.

    It is always good to diversify your holdings, even if it is a GIC because CDIC only insures $100K per person per institution. Make sure in the future that your balance doesn’t go above that $100K mark!

  8. Canadian Capitalist

    Abe: IB doesn’t seem to offer RRSPs, so it is unlikely they will offer TFSAs.

    Phil: Good point about not exceeding CDIC limits. This might be especially relevant to investors with conservative portfolios who hold a lot of assets in fixed income.

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  10. Could one purchase a US Corporate bond – some of the yields on some solid companies are great

  11. Longtime fan of CC’s, first time posting. Thought those of you with TD Waterhouse might be interested in their response to my question on TFSA annual fees — looks like there won’t be one, but I guess we’ll have to wait to the 24th for other fee structure details (e.g. withdrawal/etc).


    My question:

    “I am interested in pre-registering for a TFSA on November 24, 2008, as suggested by the recent message “FYI: Get Ready for Tax Free Savings!” via the Important Messages section of my existing TD Waterhouse account’s WebBroker interface. What annual fee(s) are applicable to TD Waterhouse’s implementation of this registered account? I am unable to locate this information on the http://www.tdwaterhouse.ca website at this time.”

    Their answer:

    “Thank you for your e-mail. There will be no fees associated with opening and maintain a new Tax Free Savings Account. Unfortunately, this information has not yet been posted on our website however, we expect it to be posted in the next week to 10 days. If you like, we can arrange for a representative in your area to assist you with the account opening. Please advise if you would like us to arrange this.”

  12. Hopefully when Questrade offers TFSAs they won’t have any fees like all of their other investment accounts.

  13. Canadian Capitalist

    Perplext: Thanks for posting about TFSA from TDW. It is encouraging that TDW isn’t planning on an admin fee and hopefully the other discount brokers will follow suit. It would be interesting to see if they have withdrawal fees when they officially make an announcement.

  14. Perplext: This is excellent news. I want to start off with the TD e series and after a few years, buy some equities directly. TD Waterhouse TFSA is the perfect fit for me. I heard great things about TD’s banking services, since I am with another bank right now.

    CC: You should definitely blog on TD Waterhouse TFSA once it comes out.

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  16. Perplext,

    You had a lot more luck than I did getting info from TD. I called the banking portion, and the rep thought there would be a savings account and a mutual fund account but had no detail. I asked about GICs specifically but she had no answers. She transferred me over to Waterhouse and the rep there knew nothing. Absolutely nothing. Both gave me a bit of govt info, nothing I hadn’t seen here. I thought they’d be a bit more aggressive with these things, unless they’re having a hard time figuring out what to do account wise.

  17. CC: No, thank YOU, for your posts on… well, everything. I’ve wondered sometimes if even you know the extent to which you’ve helped all of us lowly retail investors with this website and its DIY/Canadian perspective. :)

    Econ: Re “I want to start off with the TD e series and after a few years, buy some equities directly” — if you’re doing only eSeries mfs, you may not need a TDW account at all, if speculation about a mutual funds account on their TD branchland (i.e. non-brokerage) side is correct. I mention this only b/c I’ve seen a few people sign up for TDW SDRSPs — paying the accompanying 25/100 annual fees — only to realise afterwards that they’d only wanted to hold TD mfs anyways, and could have just taken the no-fee TD mf accounts until they’d built to the 25k level.

    Al: Re luck getting info, it may have just been a matter of when you asked. One thing I forgot to note in my prev post is that the message came from an “Investment Representative, e-Client Services, TD Waterhouse Canada Inc.” on Nov 18, the day that I saw the TFSA marketing message in my TDW account. So I’d suspect that they briefed their CSRs prior to that note going out, based on expected questions from clients in response. Re aggressive, I think the issue is that no FI has been sure what the competition is going to do, and so they’ve been playing it close to their chests. For example, HSBC’s TFSA “information” page (I’m using the term loosely) is still soliciting client interest using, of all things, a webform. ;)

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  21. Thank you for bringing this important information on the TFSA to Canadians!

    Unfortunately, there is simply not enough information being distributed to the banks and to the account managers who seem to be unsure of fee structures and GIC/Mutual fund availability. Thank you for showing us the options and admin structures that we should be looking out for.

    The admin taxes are a just another way for the financial instituitions to legally hold their hand out. Thankfully, armed with the proper information such as found on this site, the smart Canadian DIY investor actually stands a chance to avoid over-paying.

  22. FWIW, I started into the process of opening a TDW TFSA, and was informed that there is in fact a fee… $50.

  23. I too was doing some research on the TFSAs. TDW is charging a $50 fee but it will be waived in two circumstances. Similar to the $9.99 commission rule, if you have $100,000 in assets the $50 fee will be waived. The other way it can be waived is by having a fully electronic account…meaning no paper statements, confirmations or tax documents.

    PC Financial is offering a free TFSA with the same interest rate as their high interest savings account if you maintain a balance of $1000…3.75% at the moment. I like this option because I can easily transfer the money in to my chequing account if I need the money. However, you are limited on the return side.

  24. Anon/Cogsy: The TDW info has been out since Nov 24 (they were kind enough to rollout their details on time, as they’d said they would). Having said, I spent 20 minutes explaining the preregistration procedure to the counter staff at the TDCT branch when I went in to preregister. You read that right — I stood there explaining THEIR prereg process to THEM, because they hadn’t heard a thing about it (no fault of the line staff, you can’t blame people for managers’ mistakes).

    In fact, they tried to tell me first that there was no such thing as preregistration, then they tried to tell me to come back in January, and then they tried to send me to the TDW branch down the street. So don’t be surprised if you encounter similar issues — just bring a printout of the TFSA prereg notification and ask the staff to mail your NAAF to account services at TDW.

    TDW TFSA fee structure below, in case anyone is still wondering. No response yet from TD Investment Services yet on fee structure for a TDCT mf-only TFSA.
    —–

    As Cogsy notes, the $50 annual admin fee is waived as long as:
    - you register for eServices, or
    - you have TDW household assets of at least $100,000.

    Other fees on TDW TFSA:
    * Withdrawal Fee: first withdrawal each year is free, $25 per withdrawal afterwards.
    * Complete Account Termination/Transfer: $125
    * Partial Transfer (per asset, to a maximum of $125): $25
    * Swap Fee: $45.

  25. Perplext: Thanks for the information and confirmation.

    I did access TFSA form on TD Waterhouse website, but I have still a few questions.

    Under what circumstances would I be approved for option trading? The reason why I want to have option trading is that I know that I would like to use it in the future and it would be additional hassle to add the option trading to any brokerage account.

    I do not have a TD Chequing account or Saving account. Do I need to open a TD Student Chequing account and link the TD Student Chequing to TDW TSFA for monetary deposit?

    Thanks for all your help, Perplext.

  26. Canadian Capitalist

    EconStudent: We bank with RBC and have no accounts with TD Bank. I used to have investment and RSP accounts with TDW and it’s really simple to deposit money into your TDW account: Just write out a cheque to TDW and walk into any TD Bank branch and they’ll be able to deposit money into any of your TDW account. Typically, the money used to appear in the TDW account the very next day. When the TFSA is available, there is no reason why you wouldn’t be able to do the same thing.

  27. CC, I bank with PC Financial and I have added my TDW account as a bill payment. I simply pay a bill like I would any other and the money is usually there within 48 hours. This works great for me and saves the trip to the branch.

  28. CC, cogsy: Thanks for the info. How do I withdraw money from a TDW account without a TD Bank account if things deem necessary?

  29. Canadian Capitalist

    EconStudent: I have no idea because I’ve never withdrawn money from TDW. A quick call and they should be able to explain how to withdraw money out of your account.

  30. cogsy: how did you add a TDW account as a bill payment in PC Financial, what was the exact wording of the bill account name, I can’t seem to find an option for TDW?

  31. To be honest with you until TD e-series funds can be kept inside a TD e-series mutual funds TFSA I think that ING DIRECT Streetwise Fund is one of the best options around.
    Sadly enough it is not yet offered in Quebec as I asked. So for starters I parked the 5k in their savings account and later on in the year I can switch in case it becomes available. The ING DIRECT Streetwise Balanced Growth Class I think provides you with a nice asset allocation for the long term (more or less like CC’s mini portfolio done with td e-series) and with a MER of 1% for all the fund is a good deal for people with low balances like all of us will be in the first 8-10 years in this product, assuming you put 5K per year in.

  32. Just curious as to what everyone thinks is a better idea. Use your $5000 TSFA account to invest in a mutual fund, or high interest savings account. No interest income and capital gains income are taxed different, right?
    I would think for long term non registered investments the TSFA would be ideal.

  33. is there a good webstie that tells us the best tfsa mutual funds available in the market?

  34. I just got my new TD Waterhouse “Commission Schedule and Statement of Disclosure of Rates and Fees” and only just noticed (as above) that TDW will waive the $50 TFSA admin fee if household assets exceed $100K. My wife and I qualified for that waiving, but TDW had charged each of our accounts (5 months ago) when we opened the accounts.

    SO — it seems that TD *does* *not* in any way automatically “household” your accounts to qualify for waiving of such fees! If you do not call TDW and instruct them to reverse the fee because you qualify with sufficient household assets, then you will, BY DEFAULT, be paying these admin fees even if your assets qualify you to avoid them altogether. It’s a shady practice, requiring customers to call in to get a fee rebated that should never have been charged in the first place.

    It’s not as if TDW doesn’t have address or SIN information that let them see our accounts are all related! So, caveat emptor: If you deal with TD Waterhouse, make sure you aren’t paying admin fees that you are rightfully entitled to have waived.

    Meanwhile, I’m glad I read the fee schedule, glad I found this page, and glad I just got back $105 for 5 minutes on the phone with TDW!

  35. Hi,

    TD e-Series mutual fund seems to be not covered by CDIC.
    Should that be a concern ?

    Thanks.

  36. RatRace,

    http://www.cdic.ca/e/coveredornot/coveredornot.html

    Mutual funds are listed as not covered by the CDIC. This would be the same for all mutual funds. If you want an account with CDIC protection you will need to choose from their list of eligible institutions and accounts.

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  38. Looking at the Income Tax Guide, can the Administration Fees on a TFSA may be deducted as a Carrying Charge?

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