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TD Mutual Funds to Directline?

The journey from TD Mutual Funds to TD DirectLine has proven a winding and lengthy one. In Adieu TD Mutual Funds, I outlined how it all started.

Thanks to changes to the TD Mutual Fund Account for my son’s RESP, we will be moving it to TD Directline. The changes meant we would be unable to use the TD E-series Index Funds unless we moved the account. I also grew weary of the clashes over Investing Risk Profiles.

This moving of accounts is not possible online. We had to make an appointment with a TD Branch nearby. The meeting went, interestingly.

Meeting

The meeting was with a TD Investment Rep, my wife and myself. My wife needed to be there because we held the RESP for our son. It all started well, and we proceeded to traverse the myriad of online forms to open a new Directline RESP and then transfer the TD Mutual Funds content into the same account. Every step was online, and I should have been able to do it myself if I had access to the system.

My wife and I each already have DirectLine accounts. We were looking to add this account to one of those accounts. The Rep said the account needed to be added to my wife’s account. I had no issue with that advice.

The process of setting up the account meandered along. We filled in the information for my wife, and at the end of the questioning, an odd form came up. The paper stated that it was about to open a new account for my wife. This seemed strange since we had already told the system that she had an account. The same thing happened while collecting my data, and again, a new account was mentioned.

The meeting concluded with the process partially complete. The transfer still had to be processed. More forms needed to be signed, so we made another appointment to come in and complete the move of securities.

TD Directline Still Waiting

This meeting took place in October, it is now three months later, and the RESP account has not moved. I followed up with the branch, and they dutifully told me they would “check in to it.” Nothing came of these inquiries.

While I waited, I moved another account from a TD Mutual Fund position to a TD Directline Account. I solely held that account, and the move took three days. I went in and dealt with the same young lady, and it all went, except I ended up with a new Account and a New Directline access as well.

Too Many TD Directline Acccesses

I called TD Directline to consolidate the three login accesses that ended up being created by these processes. At this juncture, things got more interesting.

The representative managed to consolidate all of these accounts until one online login. One login makes life simpler for me. The Rep also inquired about the RESP transfer. It was delayed due to incorrectly done forms at the branch. He called the branch and may have cleared up things, but I am still waiting. The RESP still sits in a TD Mutual Account and remains transferred to the new Directline RESP account.

Keep Calm but Follow Up

That is what I continue to do. I will check in the new year what is happening with my son’s RESP. Given he turns 17 in a few months, I don’t have much more time to put money into it.

Other TD E-series Funds Stories

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Adieu TD Mutual Fund Account

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:

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

Questrade

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RESP: Free Money Folks

Found this classic from many years back (2006). Added a bit of spit and polish and updated the data as well. To get more information and more about how I used the RESP Program, see my RESP page.

For those of you who don’t know about the RESP program (and are Canadian of course) you need to learn about it. It is for folks with kids under the ages of 17. This program is free money from the government for your kids to go to post secondary training program. It is not just University programs, college programs and post secondary technical programs also fit into this. As always, do the research about the programs covered.

The CESG

For up to $2500 you put in every year the government will kick in a percentage of their own depending on how much money you make in the year:

  • If your family income is greater than $98,040 or so, you get a 20% one time kick in from the government. This means if you put in $2500, it turns into $500.00 within 3 months
  • If you make less than $98,040, there is even up to $550 to be had in CESG (Canada Education Savings Grant)
  • If you make less than $49,020, there is $600 available

The maximum CESG for each individual in the plan is $7200.

The Canada Learning Bond (CLB)

…provides an additional incentive of up to $2,000 to help modest-income families start saving early for their child’s education after high school (post-secondary education)

Canada Learning Bond (CLB)

The CLB is available for children from low-income families born in 2004 or later and provide an initial $500 for the first year the child is eligible, up to age 15, plus $100 for each additional year of eligibility, up to 15 years for a maximum of $2,000.

RESP is After Tax Money

So the catch is that an RESP is not like an RRSP, in that the money put in is treated as after tax money. You don’t get to write it off your taxes, like an RRSP. Your kids also have to go into a recognized post secondary training program, or you lose the one time grants as well. However, these things are TRANSFERABLE to other children and even spouses, but they do have a set time period as well (but don’t take my word on this, READ first).

On the positive side, the program pays out in your child’s hands, so taxed at a lower rate (hopefully). The kids pay tax on any growth in the fund, the grants and the bonds added.

Go To a Bank and Open an RESP ?

Bank RESPs, will mean you put your money in Bank Mutual Funds exclusively. I did this, with Canada Trust, in 1992, but I wasn’t as sophisticated back then. My CT Mutual Funds, turned into TD I-Series Funds. These funds have MER’s of around 2%, yearly. I then learned about the TD E-series funds from the Canadian Capitalist. I transferred to those funds, and set up a good portfolio for each RESP.

You might do better setting up an RESP with TD Direct Line, Questrade or similar trading sites. You can then purchase whatever Index Fund or ETF you wish.

Even More on RESPs

Remember I have an entire page dedicated to the Registered Education Savings Plan.

Yeh, That is me, talking about RESPs and Free Money

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When to Put Money in RRSP

I have developed a relatively straightforward heuristic for figuring out your RRSP.

heu·ris·tic adjective
enabling a person to discover or learn something for themselves.”a “hands-on” or interactive heuristic approach to learning”

Google Dictionary description

It is a simple trickle-down or waterfall decision tree. I often get asked this question or see it float by on other sites.

Personal Finance Waterfall

Where to Put Money Heuristic (not just RRSP)

  1. Pay off debt , it has the highest guaranteed pay back today.

    I mean all debt except perhaps your mortgage. A mortgage is your biggest debt, so my view is investing elsewhere, and not paying down your mortgage is a mistake. I have been told my opinion is very “old fashioned”.
    • This lowers your risk in life and gives you choices.
  2. Put money in your TFSA.

    My opinion is that this is a good place to put your money. How you invest it, is up to you. It should be within your Risk tolerances. Whether you want to buy stocks, Index Funds, ETFs or mutual funds is up to you. Do this in a trading account. In a trading account you can buy all those savings vehicles. In a Mutual Fund account, you usually can only buy Bank or Insurance company (read high MER) funds.

    TFSA until you reach your limit. You find that in your My CRA Account (limit as of start of current year).
  3. Do you have Kids? If you do, maybe it is time to think about an RESP? This could be, before (2). The Registered Education Savings Plan will help your child’s future. You may decide you don’t want to do this, so you could skip this step.
  4. Do you have a disabled loved one? Before step (1) you might want to think about an RDSP. A Registered Disability Savings Plan will help their future a great deal.
  5. Time to use your RRSP. It will lower your tax levels, so you should reinvest the money you get back into the RRSP, until you have no RRSP limit left.

    Sometimes you can’t use your RRSP, if you are lucky enough to have a Pension. This is a tragedy of riches, so don’t complain to your friends about it, or they might kick you in the shins.
  6. You have reached savings nirvana. If you are at this point where:
    • All your debt is paid off
    • Your TFSA limit is reached
    • Your RRSP is full
      You are now at the Zen level of life.

You have choices that most folks don’t have at this point in your life. Your Risk level should be pretty low. Your stress level (due to money) should be non-existent.

This is your goal. Being out of debt with money in the bank means you are financially in the right place. You can do what you want.

Am I Done ?

If you somehow get back into debt, restart the process. You did it once. You can do it again. Maybe create (say after step (1)) an Emergency Fund if something terrible happens.

Is this easy? No, however, it is a good heuristic.

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RESP Only For the Rich ?

TL: DR: Rich folk use RESPs much more than the poor, counter to whom it was supposed to help.

Estimated reading time: 3 minutes

Stats Canada came out with a very telling survey titled, Why are Lower-income Parents Less Likely to Open an RESP Account? by Aneta Bonikowska and Marc Frenette. The findings are worrisome in that it points to the fact that the RESP seems to be a program used mainly by the wealthy(er) parents.

A telling quote from the Executive summary.

The results suggest that differences in wealth remain the single most important factor behind the gap in RESP participation by family income, even after accounting for differences in parental education and literacy, numeracy and financial literacy.

Why are Lower-income Parents Less Likely to Open an RESP Account? The Roles of Literacy, Education and Wealth

Many lower-income families are unaware that it can grow with the Canada Learning Bond even if they put no money into the program. The CLB can add up to almost $2000 (over the life of the RESP).

They claim that this is a Financial Literacy issue is a bit of a stretch, but possible. I think it is that Lower Income families are not aware of the CLB and other benefits (which I suppose is Financial Literacy). My guess is tellers at banks will not offer to set up an RESP for a “No Star” customer. The Up-Sell would be reserved for “good” customers.

A Graphic from Stats Canada Report about RESP and Lower Income Families
A Graphic from Stats Canada Report about RESP and Lower-Income Families

Conclusion

I guess the question is simple if Canadian Parents are barely making ends meet, will they put money aside for their kids’ post-secondary education? This report concludes, No.

I think I agree, but I’d like to know how to change that.

Ways to Fix This?

  1. Banks need to market this program to lower income families, and point out that there is Free money to be had. The Canada Learning Bond is that free money. I really doubt many banks will do this, unless they could make money doing it.
  2. Expand the Canada Learning Bond, so that there is more money for lower income families.
  3. Maybe a Government run RESP program, that is set up for lower income families?

Read more about RESPs. Click Here! The page is being revamped, so come back soon.

More on Canada Learning Bond

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