# Couch Potato for RRSP/TFSA Using TD E-Series with Money Market to Dollar Cost Average



## NDU (Jan 8, 2010)

Hello

I have the following e-series funds in the TD Mutual Funds RSP Account with $1500 deposited in Dec 2009

20% CDN Bond
20% CDN Index Equity
30% US Index Equity
30% INTL Index Equity

I just opened up a TD Mutual Funds TFSA Account and did the same split with $1000 in Jan 2010

Now in the RRSP I plan to put $12000 (to max out my RRSP Limit this year of $13500) into a TD Money Market Fund and using dollar cost average, switch $1000 each month from the Money Market to buy the allocated e-series mentioned above (Starting End of Jan, so by Dec 2010, I have fully switched all Money Market funds to the e-seris)

For the TFSA I plan to put in $750 each month from my TD GIA Savings account starting End of Jan so that by Dec 2010 I will have maxed out my TFSA contribution.

Is there any fees associated with the Money Market beside the high MER%? What kind of fees should I expect at the end of the year since I put in $12000 and will be switching out $1000 each month.

I wanted to do this because I want to claim the full $13500 RRSP contribution for the 2009 Tax Season and this was the best way in my mind because there was no where else to park my claimed contribution and be able to buy e-series when I wanted to using dollar cost average.

Maybe someone has a better plan and can adjust/comment my process?
If anyone did something similar, would you please share your process?

Thanks


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## chilly (Apr 3, 2009)

Why do you want to switch only $1000 per month from your money market fund to the eSeries funds? Since you're depositing the $12000 right away, if I were you I would make the money work for you right away and switch the entire $12000 from the money market into the eSeries right away.

Sorry - I should have read the rest of your post before starting my reply. You want to dollar cost average in your RRSP. That's fair. But by doing what you're planning, you would lose out on the reinvested dividends from the eSeries funds.


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## ssimps (Dec 8, 2009)

chilly said:


> Why do you want to switch only $1000 per month from your money market fund to the eSeries funds? Since you're depositing the $12000 right away, if I were you I would make the money work for you right away and switch the entire $12000 from the money market into the eSeries right away.
> 
> Sorry - I should have read the rest of your post before starting my reply. You want to dollar cost average in your RRSP. That's fair. But by doing what you're planning, you would lose out on the reinvested dividends from the eSeries funds.


Agree, for existing $ if you are just switching funds to lower MERs but similar balance, just do it.

If it is new money, i would cost average since i think the potential downside over the next year if more than the potential upside for index type funds.


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## NDU (Jan 8, 2010)

it is new money being put into the rrsp

but i thought i would park the $12000 into money market and use DCA over 12 months switch $1000 each month into the e-series

i know i would lose out on dividends but if i just buy all $12000 into e-series im not sure if the dividends portion outweight the DCA advantage of [email protected] and [email protected]

so far both of you are saying just dump them into e-series and not worry what the price of each units are right now...cause the dividends reinvested would outweigh the DCA strategy....correct?

One more thing, is it correct/better to have the same split in both TFSA and RRSP account for the e-series funds....or should I do full equities in TFSA because of the tax free component for the higher potential earnings....

I feel like I'm duplicating my portfolio just in different accounts and not sure if its the best thing to do...


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## iherald (Apr 18, 2009)

NDU said:


> it is new money being put into the rrsp
> 
> but i thought i would park the $12000 into money market and use DCA over 12 months switch $1000 each month into the e-series
> 
> ...


I have money in an account that I've wanted to put into the market for a while. I've been slowly buying, each time it's been higher, but hindsight is 20/20. I'd slowly put it in the market.


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## ssimps (Dec 8, 2009)

NDU said:


> so far both of you are saying just dump them into e-series and not worry what the price of each units are right now...cause the dividends reinvested would outweigh the DCA strategy....correct?


No, I am saying for new $ I would suggest staggering it in, like maybe 1K a month as you suggest. 

If markets go down, you will likely be ahead because of DCA, if markets go up, you would have been better putting it all in at once. I'm no fortune teller, but like I said, I think it is more likely for markets to go down in 2010 than go up. So thus stagger is a better 'bet'. Just my 2 cents worth.

I once dumped a lot of cash (I mean a lot) into the markets all at once (literally in one day) based on a former advisers advise that I was 'missing out' having a lot of money in ING savings account and 'anytime was a good time to get into the markets'. Turns out that day was close to the market high in 2008 and it only reached that high for a couple of days never again before a big downhill ride. 

Since that lesson I have never:

a) dumped everything into anything in one day, even if I am buying a single stock or ETF I stagger, but maybe over a shorter time period than months. 

b) listened to 'paid' financial advice when the adviser is working for a bank. Bank employed adviser == conflict of interest to me.


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## NDU (Jan 8, 2010)

so iherald with a DCA approach you bought higher each time with less shares?

and even though this is what happened with you, you'd still DCA instead of all in at once right?


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## NDU (Jan 8, 2010)

ssimps said:


> No, I am saying for new $ I would suggest staggering it in, like maybe 1K a month as you suggest.


is parking $12000 into money market considered new money because i need to buy rrsp for my tax deduction for 2009?


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## ssimps (Dec 8, 2009)

NDU said:


> so iherald with a DCA approach you bought higher each time with less shares?
> 
> and even though this is what happened with you, you'd still DCA instead of all in at once right?


I think regardless of what happened for one instance, the advantage of DCA is that you have a chance of buying lower should things go down. If you buy all at once, you have placed all your $ on one bet. Yes, sometimes you may loose, but sometimes you will win. Given the current market conditions and the economic situation, I would place by bet on winning more than loosing in 2010 if you DCA. 

That's how I see it this week and what do I know anyhow.


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## ssimps (Dec 8, 2009)

NDU said:


> is parking $12000 into money market considered new money because i need to buy rrsp for my tax deduction for 2009?


Not sure what you mean. If you need to put 12K into RRSP and what it to be safe and be sure you do not loose principal, then go something like the 12 month Ally 1.75% cashable GIC or their 2% savings account, assuming the have RRSP versions, which I do not know that they do. 

My understanding is that a money market fund will make you about nothing these days, so may as well have it in an RRSP saving account or short term cashable GIC making 1 - 2 %. Maybe I am wrong about that.


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## OhGreatGuru (May 24, 2009)

_Is there any fees associated with the Money Market beside the high MER%? What kind of fees should I expect at the end of the year since I put in $12000 and will be switching out $1000 each month._

Making regular monthly withdrawals from a bank money market fund as you propose should not incur any additional fees. Just make sure you can "switch investments" from the MM fund to the e-Funds on line. I don't see see why you shouldn't be able to, but don't have direct experience with TD.


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## NDU (Jan 8, 2010)

ssimps said:


> Not sure what you mean. If you need to put 12K into RRSP and what it to be safe and be sure you do not loose principal, then go something like the 12 month Ally 1.75% cashable GIC or their 2% savings account, assuming the have RRSP versions, which I do not know that they do.
> 
> My understanding is that a money market fund will make you about nothing these days, so may as well have it in an RRSP saving account or short term cashable GIC making 1 - 2 %. Maybe I am wrong about that.


i guess i wanted to know if the TD money market is the safest place to park $12k while I DCA $1k each month to e-series cause i know i can swap the funds with no fees except the MER calculated on the money market

if i put into a TD RRSP GIC 30 Day the interest is nothing and im not sure i can swap it to e-series

if i put into a TD RRSP SAVINGS account, I'm not sure if I can take out $1000 each month to DCA? I dont want to withdrawl it as it'll go against income but swap from savings to the e-series. they dont really tell you what the interest rates are in a RRSP savings account on TD website.


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## OhGreatGuru (May 24, 2009)

_One more thing, is it correct/better to have the same split in both TFSA and RRSP account for the e-series funds....or should I do full equities in TFSA because of the tax free component for the higher potential earnings....

I feel like I'm duplicating my portfolio just in different accounts and not sure if its the best thing to do..._

There are other threads that say you should look at your overall investments and not be concerned about maintaining a specific asset allocation in each portfolio. But in this instance I think you may want to look at them separately, because the RRSP and TFSA may have different objectives in terms of time horizon and likelihood of early withdrawals. You are proposing an identical allocation in each one at present. You need to ask yourself if this appropriate to the intended use of each portfolio, and will it always be that way?


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