Canadian Personal Finance Blog

Thanks to TD’s new stance on using TD E-series Index Funds in TD Mutual Funds account, it is goodbye. I still have two accounts open, and they are both going to move somewhere else.

Estimated reading time: 2 minutes

A while ago, I received a cryptic letter about “changes to my TD Mutual Fund Account.” I could only find out by going into the bank and talking to a TD investing person. Through some “internet research,” I suspected it had to do with TD E-series Index funds. This research included:

• Those accounts only hold E-series funds in them.
• Boomer and Echo wrote something on line suspecting this
• Maybe I saw something on Facebook?

My suspicions were confirmed. I spoke to a rep with whom I had to reschedule my appointment. She confirmed with me the E-series Index Funds would no longer be “tradeable” in these accounts. This means:

1. I could not buy any more of the TD E-series Index Funds in those accounts
2. I cannot re-balance those accounts, by moving between these funds
3. It would not be possible to do this at the Bank or Online either. Why online it is removed is bewildering.

So now I am moving my two accounts to TD Directline. I have had TD Mutual Fund accounts (and CT Mutual Fund accounts) for more than 27 years. Maybe I should have done this sooner.

TD E-series Done?

No, I can continue to buy them in my TD Directline accounts. There have always been issues dealing with E-series funds in my TD Mutual Fund Accounts. The Bank investment advisors make little or nothing from them, so there was little motivation to help.

I have also read about other, even lower MER ETFs (e.g. HXT, VCN, ZCN, XIC). I can also use them in a TD Directline account.

Other TD E-series Funds Stories

• Risk Profiles and Rejected Orders one of the many times my Risk Profile with TD Mutual Funds stopped me. I will not miss these, at all.
• Reversing Mutual Fund Purchases , no, really, this happened a bunch of times. Why didn’t I leave then?
• TD E-Series RESP Beartrap where I learned taking E-series funds out of an RESP is not simple.
• “I’m an indexer. I don’t care what the indexes did today!” , the reason why I use the E-series funds.
• My Four Best Investments these were all in TD Mutual Fund accounts, using E-series funds.
• What is Couch Potato Investing? an introduction to why I don’t buy individual stocks (any more).

When your kids are younger, you worry about spending too much on their backpacks or maybe another outfit for the start of school (this is a good thing, controlling spending early on is a good thing for the kids too, because it sets their expectations to the right level as well). Still, the expenses become much more interesting as they get older, and they can balloon to enormous levels.

After driving up and down the 401 countless times, seeing, Vans, SUVs, and even Micras stuffed to the gills with furniture, computers, and clothes, it says loudly that once your kids get to University, back to school can take an exponential jump in your budget. I am not saying that this is a necessity, just that it can happen with over-zealous parents who want to give their kids the best.

The point of University is to learn, and one of the things that kids need to learn is how to cultivate and develop their own Inner Frugality. If you buy your kids $3000 worth of furniture for their apartment, they are effectively living YOUR lifestyle (i.e. it’s just like home), whereas maybe they should be learning to live a frugal lifestyle instead? At University, I had a treasure trove of old, used and scrounged furniture, and I loved it. No, my living room was not something out of “Better Homes,” but it was mine (mostly my parents gave me an old dresser), and that is (I think) one of those things a kid in post-secondary education (or one that has just moved out) needs, that sense of self.

Teach your kids to live within their own means when they spread their wings and leave the nest, and that may be the most important thing they learn.

Other Back to School Thoughts?

• The Business of University Fees talks about how you should look very closely at all the fees you child might pay at school. Many of these fees are refundable, think about doing that.
• Back To School and RESP Time this is when to think about it. If your kids aren’t at University, do they have an RESP?
• High Tech Hand Me Downs & Back to School another area of spending. Are you buying new computers or handing them down?
• Back to School Monetary Nightmare can happen. If you haven’t saved for it September can be a painful month.

For those that have not followed me since 2005, allow me to say, I told them so. Back in 2009, I warned Inflation was coming with all this stimulation, and here it comes (in 2021).

OK, so I am very much the Blogger who Cried Wolf on Inflation. I am not even sure this is going to be the beginning of an Inflationary spiral.

Stats Canada thinks:

The Consumer Price Index (CPI) rose 4.1% on a year-over-year basis in August, the fastest pace since March 2003, up from a 3.7% gain in July. The increase in prices mainly stems from an accumulation of recent price pressures and from lower price levels in 2020. Excluding gasoline, the CPI rose 3.2% year over year.

From Stats Canada Consumer Price Index, August 2021

This is the highest rate since before I started commenting in 2005? Something to note folks. Governments can’t keep printing money with impunity.

Gasoline is a major driver right now as can be seen when it is taken out of the calculations. Prices are rising, and you have Governments pumping money into the situation. What happens when that money stops? The other issue is you have a reticent workforce, who doesn’t really want to go back to their crappy jobs. Not a recipe for economic greatness.

What does the Bank of Canada think about this? Actually using their calculations we are only a little bit above their goals?

Source(s):Table 18-10-0256-01.

Additional Reads From Stats Canada

• The Consumer Price Index and COVID-19: A One-Year Retrospective a useful read to get some perspective on the possible whiplash inflation that may come from all the stimulation forced into the economy.

Previous Rants About Inflation

• I talked about this in April of 2021, didn’t think it was going to get this bad, this fast.
• Inflation at 2011 levels ? OK, so I have even written this title before? Yes, I need more imagination.
• Bank in 2017 Inflation Still Under 2 Pct (for now) so things were OK back then too.
  • Low CPI Means No More Interest Hikes ?
  • Gasoline Pushed Inflation to 2.1 %
  • Energy Up 4.0 % for 2016
• Previously I have written a lot about inflation, here is a small taste. Note the snappy titles.
  • The year was 2016
    • Shocking Electricity Price in August (CPI Canada)
    • Electricity Prices Continue to Sizzle in July
    • Zap! Electricity Prices Pushes Inflation in June
    • Expensive Food and Shelter in April in Canada
    • Good Food Still Is Not Cheap in Canada (Inflation for March)
    • Food Prices Continue to Rise for February
    • Veggies up 18.2 pct in Canada 
  • Now for 2015
    • Food Prices up 4.1% For 2015 in Canada
    • Gas Prices Drive Down Inflation in December to 1.5%
    • Lower Prices in January in Canada, Pull the Other Leg
    • Expensive Food in Canada in March
    • Prices up 0.8% in April or More Fun with Numbers
    • Inflation at 0.9% for May (maybe)

And that is just scratching the surface.

So in an article from May 2005, I described how I allocate my 3 daughters their weekly allowances.

The simple explanation is that I took advantage of the free transfers between accounts that I had signing authority to transfer the money directly to their accounts. At the time, this was new and exciting. This can be done now using Interac transfers, so your kids don’t even need to be at the same bank.

What I have learned now from running this experiment for over an extended period:

Advantages:

1. I don’t forget to give them their allowances, which was the major problem I had.
2. The girls learn how direct withdrawal works
3. Some fiscal concepts like saving become obvious, which is good. I can also transfer baby sitting payments to my oldest, easily as well.
4. They are using their money to buy things like gifts for friends and their own clothes, which was not the plan, but I applaud every time they do it.

Disadvantages

1. Kids don’t see the money, so forget that they have it.
2. They have not picked up the “checking your monthly balance statements” the way I hoped, they rely on me telling them how much money they have.
3. Money seems to be invisible to at least one of the children.
4. The cafeteria at the high school takes direct withdrawal, so they use their allowances to buy lunch a little too often (IMHO).

All in all, I think the experiment is working. I need to sit down with the girls and discuss a few of the finer points I’d like to see, but I think it is working.

I am now searching for any other interesting experiments like this to teach my kids more about money. No, I am not giving them access to their RESPs. That is not going to happen until they need it!

Addendum Allowances

I have restarted this with my son. I am not sure how it will work with him, but the methodology is still sound. He still is working on what money really means, but he is slowly learning.