# A year into solid job - Investing questions.



## festa_freak (Mar 2, 2013)

Hello fellow Canadians,

I would firstly like to say hi and thank you for the other threads on this forum that have helped me learn a little bit about investing and being financially intelligent. I am 27 years old and single with no house. For the time being I am a trainee at work and am moved around the province every year or so. My plan is to save up for a down payment and beat the bank somewhat that way and also use my other money to start up a small portfolio for making my money do better than what high interest accounts get me. I basically want my money to work along side me!

I am a saver at heart. I worked a few years out of high school while figuring out my life and was able to pay myself through debt free (but living at home, which I'm fine with).

As the title says, I have finished college (no student loans yippee!) and have now been working for a local power utility for a little over a year. Here is how my finances stand right now:

TFSA PC interest tax free account: Maxed
RRSP at local credit union: ~1150. Basically a GIC. Was put in years ago at 4% and it just matured last year but the 10% tax forced me to put it back in for another term. This will sit there for quite a while JUST beating inflation.

I am now at the point in my life where I want to start investing in some more serious things besides RRSP's. A note: from talking to guys at work, our pension is going to be large enough that I may have trouble actually using my RRSP when I retire. My monthly income will be too high to benefit from the old age reasons to have an rrsp. At tax season last year I had planned on putting 2-3000 in rrsp's to bring me under the lower tax bracket but overtime and other earnings have brought that rrsp total to near 6000. I don't really want to put that much into rrsp's.

Sooo... I'm thinking of getting non-registered investments which I will pay tax on now but at least I know I can use it how I like. I have been reading the book (highlighter in hand) "The intelligent investor" and it has shown me a few things, most I have heard before, but it's good to read it for myself. I think I am more of a defensive investor who would rather sit back and only slightly manage my investments. 

A year ago I was investigating mutual fund options through an older family friend. He sells life insurance primarily but was going to help me with mutual funds. The company was CI Investments and the mutual fund we figured best was the portfolio series Balanced fund. I was leafing through the prospectus and other info and the % costs seemed way too high, and this was before I started investigating on this forum and reading books. I am glad I didn't go through with that.

So I have a few very pointed questions. If you need additional info about my situation I will try to help. I'm thinking of starting with around $3000 for now and trying to diversify it in different investments GIC's, stocks (of some kind, etf, mutual) and gold or other similar thing

1) I have heard a lot of good things about the TD e-series etf and wondered what you thought of those for a guy in my situation. 

2) How would a I go about buying gold? I see gold funds out there but what if I wanted something I knew I could go grab from the bank (a few coins or something).

3) If I wanted to buy a certain stock in some company (for the speculative part of me - very low % of portfolio) how would I do this? Let's say, buy some stock in a company that interests me or something like that.

I know I will come up with other questions in the next couple days. The main thing is these ETFs. How do they exactly work? Do I need to trade them or do they just go on by themselves? Do they need babysitting is what I guess I'm asking. I'm fine with shuffling every quarter year but I don't want to have to follow stocks and such closely, at least not yet. I think I should get a GIC ladder going though, mine only has one rung.


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## SpIcEz (Jan 8, 2013)

I'm also a begining investor, I have found the Canadian Couche Potato to be very good for beginner information. http://canadiancouchpotato.com/

Also I already did my banking with TD so I decided to open a TD Waterhouse account to do all the trading, buying of funds, etc... myself.

Looking at your post, I'm curious when you say your TFSA is maxed out, do you mean you have 25500$ in your TFSA??


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## J Watts (Jul 19, 2012)

I'm in the process of converting my expensive Scotiabank mutual funds into TD e-Series funds and I've been more than happy with the costs saved and the growth seen to-date. I've been following "Option 2" and don't have any complaints: http://canadiancouchpotato.com/model-portfolios/.


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## festa_freak (Mar 2, 2013)

Yes, my tfsa is completely maxed out at 25500. 

I have read some of that couch potato site. It was quite helpful. I guess as I get deeper, I can then see what is working or not.


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## Celso (Jun 5, 2012)

I used to have an assortment of Mutual Funds with TD and decided to go the Couch Potato route. I decided to switch over to the e-series funds and like J Watts i am also following the "Option 2". 
To date i´m happy with the results. My costs are down and the returns to date are an improvement over the high MER funds.


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## the-royal-mail (Dec 11, 2009)

I feel it's far more important to first save up for your various rainy day savings tiers, before getting into investing. While you seem to have done your homework on the world of investing, I still feel it's more important to use this time to save up cash in various accounts before worrying about investing. Having cash on hand protects you from job loss, unemployment, moving, disability and various other real life risks. Learn now to save for these things in cash accounts like TFSA, non-reg and worry about investing later. Save the money first before investing. When you have a pot of money (4th tier) saved, then start to look around to see what your best options would be. But that's years away. Saving a proper emergency fund structure takes a long time and is time well spent.


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## festa_freak (Mar 2, 2013)

I have very good job security. The only guys who get fired are borderline criminals or do absolutely nothing. 

I feel I have a good cushion of savings. I was saving prior to college. 

Another thing I was wanting to ask. Real estate. The real estate in canada seems to be strong and if prices tank, at least I have something I can touch and feel (rental house etc.). I see that there are real estate funds (I shares REIT fund). The returns on these have that too good to be true look to them. It would o Lu be a small part of my portfolio. What do you think about real estate from a fund perspective. Is buying property in town better than a fund such as this?


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## peterk (May 16, 2010)

TRM. He said he's already got a maxed cash TFSA. That should be sufficient for 1-2 years of emergency expenses (i.e rent and groceries)

Festa, it sounds like there's a couple things you might not be aware of:

Your pension certainly will affect how much you can contribute to your RRSPs, and give you a decent income in retirement. But even IF you are in a higher tax bracket during retirement than you are now, you still will likely be taxed far less overall by using your RRSP, as the contributions will grow tax-free for the next 30 years before you withdraw.

You can deposit to a RRSP now, not claim it against your income, and save the claim for a future year when you're in a higher tax bracket.

"At tax season last year I had planned on putting 2-3000 in rrsp's to bring me under the lower tax bracket but overtime and other earnings have brought that rrsp total to near 6000. I don't really want to put that much into rrsp's."

This sentence is leading me to believe that you may not quite understand the marginal tax rates. Just because you're 6000 into the higher bracket doesn't mean you NEED to contribute 6000 to the RRSP account. It is ONLY that 6000 that is being taxed at the higher rate (not your whole income) so using the 2-3000 that you earmarked for RRSPs will be just as benefitial and get you the exact same tax refund whether your're 3000 or 6000 into the higher tax bracket.

Welcome to the forum!


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## the-royal-mail (Dec 11, 2009)

Good point, peterk. Except we don't know if that money is earmarked for "investing" as he has not stated if the money will remain segregated for emergency fund purposes. Need to hear from the OP on this but for a lot of people $25K may not be a sufficient emergency fund.

My point is these funds need to be aside from the funds used for investing.


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## Cal (Jun 17, 2009)

I would rethink the use of your TFSA. It is a money making machine that can be used to shelter tax dollars. Keep the cash that gets taxed at a low rate, outside of your TFSA, and use the TFSA to do your investing. You may as well pay tax on the crappy HISA rate.


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## festa_freak (Mar 2, 2013)

That I did not know Peterk, about taxing only the amount above the tax bracket. I thought if you were above the bracket, everything was taxed as such. Thanks.

I had only heard in the past month that you can actually use the TSFA for other purposes than only saving. I don't think they want us to know! My plan was to leave the 25500 alone and use other savings for my investment purposes. I would earmark approximately $3000 initially to go into various options like etf/gic/work bonds and other things. Need to research those bonds more. (whether to get through work or TD)
I know there are some weird rules regarding the TFSA in that I don't think you can withdraw money from the TFSA and replace it in the same year. They only consider the amounts you deposit and in that regard it would look like you deposited too much and would tax you. 

I think it would be very wise to utilize the TFSA in this way. How would I go about doing that? If I transferred all TFSA into a savings account (from Presidents Choice TFSA to PC HISA) and then used the TFSA for all my investing, how would that work? What if I want etfs at TD but want GICs at a credit union and perhaps a gold coin or two at yet another financial institution? Is it possible to split up my TFSA room (much like rrsp room) and utilize it across multiple accounts?

I am still using my tuition rebates and donations from church and other charities to help come tax time. 

I thank you for your time and helping me wrap my head around all this new stuff. I have an appointment at a TD bank to set up an account on Friday. I am very cynical of 'financial advisors' because I think they are actually salesmen/women. Hope this nails down some more issues for you guys to aid me!

Edit: Going through the couch potato site more and I've stumbled across a page that asks "ETFs or Index funds?" This article says that ETFs aren't really worth it if you have a balance less than $50 000. Is this true? 
Now I'm getting all confused. This 'option 2' on the couch potato site seems like a good solution and is what I was kind of looking into prior to creating this thread. Are these actually index funds instead of Exchange Traded Funds? I do in fact want to contribute on an ongoing basis throughout the months to these funds as a new budgeting scheme and don't want to be charged every time I add funds to an ETF. Gah! Looking at too many websites!


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## Four Pillars (Apr 5, 2009)

festa_freak said:


> Gah! Looking at too many websites!


You need to take more time to learn about TFSA and investing. Do that first, figure out your goals and what you want to do and then start executing. Don't worry if it take months or longer.


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## Eclectic12 (Oct 20, 2010)

festa_freak said:


> I had only heard in the past month that you can actually use the TSFA for other purposes than only saving. I don't think they want us to know! ...
> 
> I know there are some weird rules regarding the TFSA in that I don't think you can withdraw money from the TFSA and replace it in the same year.


Both these comments support Four Pillars suggestion to spend time learning first.

Unless your only source of info about the TFSA has been your local bank plus flyers, there's a lot of articles in the newspaper and the web highlighting that like an RRSP, a TFSA can hold a range of investments. So it would seem less of "them that don't want you to know" and more of needing more knowledge and/or more sources of info.

The TFSA actually considers deposits and withdrawals - it just that the withdrawal does not become additional contribution room until the following year. If you search CMF, there been several posts explaining the TFSA or here's a web link.
http://www.moneysmartsblog.com/tfsa-rules-contribution-limits/




festa_freak said:


> I think it would be very wise to utilize the TFSA in this way. How would I go about doing that?


Same as setting up an RRSP that allows a range of investments such as stocks, bonds, GICs, ETFs, MFs etc. - research what the different financial institutions offer and what costs are involved. Once you have that info, match it up with what investments you are interested in. Once you've decided on the account or accounts, open them up and you are off to the races.

http://www.milliondollarjourney.com/review-canadian-discount-brokerages.htm
http://www.moneysmartsblog.com/canadian-online-discount-stock-brokerage-comparison/

Here is some info on the steps for buying ETFs, MFs or stock to give you an idea:
http://www.moneysmartsblog.com/how-to-buy-an-etf-or-stock-using-a-canadian-discount-brokerage/




festa_freak said:


> Is it possible to split up my TFSA room (much like rrsp room) and utilize it across multiple accounts?


Yes ... same as RRSPs.



> _You can have more than one TFSA open, but you cannot contribute more than $5,500 annually, plus any unused contribution room from previous years._


http://www.fcac-acfc.gc.ca/eng/resources/publications/savinvest/tstaxfree-eng.asp




festa_freak said:


> Edit: Going through the couch potato site more and I've stumbled across a page that asks "ETFs or Index funds?" This article says that ETFs aren't really worth it if you have a balance less than $50 000. Is this true?
> 
> Now I'm getting all confused. ... I do in fact want to contribute on an ongoing basis throughout the months to these funds as a new budgeting scheme and don't want to be charged every time I add funds to an ETF. Gah! Looking at too many websites!


The $50K bit I believe is trying to highlight that if your broker charges a commission for each ETF purchase and/or you are contributing smaller amounts - the commissions for each purchase will be expensive compared to something like a TD eSeries index fund that does not charge commission and allows smaller amounts.

Or I hear that Questrade does not charge for ETF purchases.


If you are getting confused - remember to take your time to learn. Usually making a mistake from lack of understanding or info is usually more expensive than taking the time to learn/understand.


Cheers


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## peterk (May 16, 2010)

Yes, you can hold your tfsa at multiple banks/accounts, but the limit is still a total of the sum. But, as you point out, you can only deposit if you have room, and you don't. Your best bet is to keep the tfsa as is until december then empty it, leaving you with your full limit to use in an investing account next for 2014.

I would also cancel the bank appointment, unless you are 100% certain of the purpose of the visit and what you require of the bank. Those bank ladies can literally smell confusion, and will pounce, selling you a mutual fund with a 2.6% fee in the process. Don't go in seeking advice our guidance, it will only lead to a world of hurt.

ETFs vs index funds: "index ETFs" are low cost investment vehicles that follow whatever index you invest in. If you keep it simple and only follow the primary stock or bond markets, the fees are low, about 0.2%. "Index Funds" are mutual funds (provided by the bank) that follow an index in the same manner as index ETFs. The fees are usually about 0.7%. These "index funds" are the banks answer to index ETFs, that have significantly been cutting into the bank's traditional clientele of mutual fund purchaser (the ones that pay 2.6%).

The only advantage of the bank's index funds is that there is no transaction fee when you purchase more units (through you regular monthly/weekly investments) This is why some people feel they are more appropriate for investing "if you have a balance less than $50 000" like you mentioned above.


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## arrow1963 (Nov 22, 2011)

My initial reaction to your post, which was mentioned above, was the bit about 'getting under the tax bracket'. Please confirm that you understand the difference between average tax rates and marginal tax rates, and how they change when tax brackets change.

Secondly, I could see either index funds or ETFs working for you, depending on some more details in your situation:

Pro-Index funds:
- less micromanagement
- you might want to invest a small amount, or remain balanced between fund classes at all times
- if you think you're going to want to buy a house with any money you save, you might be investing and then selling within a couple of years. Transaction costs will be more significant if your timeframe is shorter.

Pro-ETF:
- Your account is small-ish now, but not really small (if you invest in your TFSA). If you save in index funds, and this is long-term money, you might want to switch over in a couple of years.
- You've also said that you're a saver who is living at home. Your monthly cashflow might be big enough to justify ETF purchases.

How I manage buying ETFs with a small account. First, pick the online broker that works best for you. Figure out what your trading commissions will be, and decide what your minimum purchase size is (in order to justify the commissions). I hate to pay commissions, and find the buying process results in a little bit of micromanagement, so I don't make any purchases of <$5000. If you have purchases which are free or $10, anything down to $1000 could be a reasonable size.

Now, save your money. When your investment savings reach your minimum purchase size, buy shares of 1 ETF. If you like the Canadian Couch potato portfolios (which I do), I'd work towards building your model portfolio at a certain size. Buy 'chunks' of the ETFs that you need 1 at a time, and don't worry too much about your allocation being out of whack until you reach a reasonable portfolio size. If you only have $10,000 invested, and you're saving $1,000/month, the return on your money really doesn't matter, and all asset allocation decisions are imperfect. Don't sell anything to 'rebalance', just add your new money to whatever fund or asset class is trailing the others.

The important thing is finding a lifestyle that you're comfortable with, saving regularly, and keeping your transaction costs down when your account size is small. Don't let (theoretically) perfect be the enemy of the good.


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## Pickering (Jun 24, 2011)

I like Arrow's advice.
You seem to have a lot more going for you that people like me ( suspect many others ) in that you are becoming knowledgeable in investing at a young age.
You have time on your side - do not worry about taxes years down the road - gov't will change the rules upteen times.
Like you, I saved and did all the right things but to me, investing was about the big win. Kept looking for that stock at $ 10 hoping to sell it at $ 30. Just spun my wheels for 10 - 15 years.
You seem to asking all the right questions, my advice is to not let things get too complicated. Compound interest is your friend and buddy. He will take care of you. To me, he is the essence of the Couch Potato.
Get yourself invested, continue to save and re-invest your distributions/ dividends. You will retire a very wealthy man and I suspect one that will not care about his tax bracket.


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## Eclectic12 (Oct 20, 2010)

arrow1963 said:


> ... Secondly, I could see either index funds or ETFs working for you, depending on some more details in your situation ... [ save until minimum ETF purchase size to minimise commissions, use targeted ETF buy instead of rebalance ... ]
> 
> The important thing is finding a lifestyle that you're comfortable with, saving regularly, and keeping your transaction costs down when your account size is small. Don't let (theoretically) perfect be the enemy of the good.


Both good ideas and points.


Just to add another option - some have posted that they use a blend of index funds and ETFs. The index funds are a starting point until there is enough saved up to convert to the ETF as a reasonable transaction price.

They first setup something like a TD eSeries account. This allows smaller amounts to go into the index desired from what the fund family offers, without commissions.

They also setup a brokerage account so that when over time, the index fund(s) has enough in it to make an ETF purchase, the funds are transferred "in-kind" (i.e. as funds, not sold for cash) to the brokerage account. They can then be sold likely commission free and the ETFs are bought in amounts that minimise the transaction costs.


It's more work than sticking to the index fund or going with only ETFS but if one doesn't like the brokers that offer commission free ETFs, it is another possibility.

Cheers


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## festa_freak (Mar 2, 2013)

Thanks for all the suggestions. I took the advice and cancelled my appointment for today. Things were moving too fast and I was starting to feel the pressure. I won't be without my mistakes initially no doubt, but as I've read in the book I'm reading, it's best to make mistakes when I'm young and with small amounts of money so I can learn and correct my actions in the future when more money is at stake and I have less money to recover.

I'm fortunate that I have a good pension plan waiting for me when my magic 80 occurs so all this investing is basically to just be ahead of the pitiful amount my savings account is making.

Let's say I invested $1000 in three of the e-series accounts and started my GIC ladder with another $1000. The e-series accounts would get 100-200 a month automatically. I would love to have my investments in TFSA, so I would withdraw what I need to from my TFSA (probably all of it) to give myself more room to put proper investments in it. I would do this in December. Or, perhaps use the additional $5500 room next year, but of course the government may not raise the cap. Don't know why they would do that though :/

I really feel I should start investing soon. Around this time last year I was checking things out a bit and then it kind of got put on the back burner. I don't want to let that happen another year! I think I am more determined this time though.

Anyways, just wanted to give an update and say thanks for helping a bloke like me figure things out.


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## none (Jan 15, 2013)

instead of a gic ladder why not just get this for now:

https://www.tdassetmanagement.com/C...nds/Funds/p_FundCard.asp?FID=4817&PID=10&SI=4


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## festa_freak (Mar 2, 2013)

Hello again. After a few weeks of reading and learning. I think I am ready to take the plunge and put ~$4000 into TD e-series funds. I am going to loosely follow the couch potato model 2. It seems to be a good balance of different options. I will put 1750 into the TD Canadian Bond Index – e (TDB909) and 750 into the rest. I will adjust monthly additions as I go, I'm thinking 100$ in each of the three and maybe 150 or so in the other one for now. I am thinking of opening a non-registered account and moving the funds into a TFSA in the new year. 

Do you think this is a good start? Others have stated in this thread that option 2 is a great beginning option. These were the funds I was looking at prior to finding the model portfolio. all the portfolio did was give me a basic allocation percentage. I would have just put an equal amount in the funds if it were up to me but with the bond fund's past performance it seems a pretty safe fund to have more money in.

Another question. Perhaps I should ask the bank though, but can I actually convert the non-registered account into a TFSA? I know there is a redemption fee of 2% if I take the money out before 90 days. It really makes a lot of sense to me to have investments in a TFSA for now while my investments are small and easily fit in the TFSA room.


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## arrow1963 (Nov 22, 2011)

festa_freak said:


> Another question. Perhaps I should ask the bank though, but can I actually convert the non-registered account into a TFSA? I know there is a redemption fee of 2% if I take the money out before 90 days. It really makes a lot of sense to me to have investments in a TFSA for now while my investments are small and easily fit in the TFSA room.


Wait 3 months, or ask nicely and see what they'll do for you? Seems like the type of thing that might depend greatly on who is on the other end of the phone, considering that you're keeping your money with the same institution.


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## festa_freak (Mar 2, 2013)

arrow1963 said:


> Wait 3 months, or ask nicely and see what they'll do for you? Seems like the type of thing that might depend greatly on who is on the other end of the phone, considering that you're keeping your money with the same institution.


Why do you say wait three months? It would be good to have it in writing too. I've been burned before by an employee (not at a bank or financial institution) saying something that wasn't 'policy' just to get a sale. 

Oh, nevermind. wait 90 days you mean :stupid: I thought you meant wait 90 days to open an account and start putting money in. Gotcha!


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## festa_freak (Mar 2, 2013)

So I opened a TD every day savings account today and it was configured to be the chequing account as per this very helpful thread: http://canadianmoneyforum.com/showt...small-investor?p=164992&viewfull=1#post164992

I have a few questions about how to set up the e-series account. So let's say I go with my original investment amount, $4000, do I need to have this in my TD account prior to sending in the application form?

Also, if I have 4 e-series funds are they directly linked to my TD account or does the money kind of disappear into other holding accounts of the e-series funds? Just wondering how it all works.

My plan is to every month take out cash from PC financial and directly deposit that into TD account. I will be setting up per-authorized purchases into the e-series funds, just having the money sitting in my TD account will allow this to happen correct? I've just never done this kind of online banking before, I'm sure it's very simple, I just want to know how it all works.


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## Spudd (Oct 11, 2011)

You don't need to have the money in there to set up the account, I don't think. Once the e-series account is set up, you'll see it in your Easyweb list of accounts, and you can transfer funds into it. I don't remember exactly how it works, to be honest (I switched away from having this type of setup about a year ago). I know that if you click on the investing account, you can then switch things around from fund to fund easily. 

The pre-authorized purchases should work exactly as you say.


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## J Watts (Jul 19, 2012)

festa_freak said:


> So let's say I go with my original investment amount, $4000, do I need to have this in my TD account prior to sending in the application form?


If you want to have e-Series you'll need to have the savings account opened and *converted* before there's money in any mutual funds. One requirement of the conversion is a blank cheque for your external bank account; once it's converted you'll select "Purchase mutual funds" on TD Easy Web, which will withdraw the money from your external account (usually within 3 business days).



> Also, if I have 4 e-series funds are they directly linked to my TD account or does the money kind of disappear into other holding accounts of the e-series funds? Just wondering how it all works.


You'll see the breakdown of the e-Series holdings of each fund, the number of shares, etc.


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## festa_freak (Mar 2, 2013)

J Watts said:


> If you want to have e-Series you'll need to have the savings account opened and *converted* before there's money in any mutual funds. One requirement of the conversion is a blank cheque for your external bank account; once it's converted you'll select "Purchase mutual funds" on TD Easy Web, which will withdraw the money from your external account (usually within 3 business days).


By external account do you mean my PC financial account? TD would just charge it like a purchase instead of a transfer? The reason I ask all this is the application has provisions for a lump sum payment at time of conversion to e-series and I can also set up the pre-authorized payments on that application too. I am just unsure how it all worked. Thanks for shedding a little bit of light on it.


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## J Watts (Jul 19, 2012)

festa_freak said:


> By external account do you mean my PC financial account? TD would just charge it like a purchase instead of a transfer? The reason I ask all this is the application has provisions for a lump sum payment at time of conversion to e-series and I can also set up the pre-authorized payments on that application too. I am just unsure how it all worked. Thanks for shedding a little bit of light on it.


Right, external = any non-TD account. Give them a void cheque and they will set up your automatic withdrawals to be deducted from that account.


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## festa_freak (Mar 2, 2013)

Oh ok. That makes it a lot easier. I thought I had to load up the TD account with X amount of dollars every month and then it would automatically take those and place them in the e-series stuff! Thanks for the clarification.


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## festa_freak (Mar 2, 2013)

Hello, another question. Filling out the application for e-series account and I came across this "Please note that investors cannot change the fund selection or the percentage of the portfolio each fund represents." I see that some of you have to periodically re-shuffle your portfolios and couch potato said it too. Sometimes reshuffling the account to keep as close to your investment goals as possible. for instance, if your bonds portion starts to creep up to 50% of the fund, re-allocate ~3% to each of the other funds to keep it near 40-20-20-20.

By what this says, I cannot change my % investments. What if I learn more in the future or am open to more risk than I am now? I may want to re-shuffle my portfolio in the e-series account. Or is it just the initial set up of the account I cannot change and after this set-up phase I can do what I want with my funds?


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## J Watts (Jul 19, 2012)

festa_freak said:


> Hello, another question. Filling out the application for e-series account and I came across this "Please note that investors cannot change the fund selection or the percentage of the portfolio each fund represents." I see that some of you have to periodically re-shuffle your portfolios and couch potato said it too. Sometimes reshuffling the account to keep as close to your investment goals as possible. for instance, if your bonds portion starts to creep up to 50% of the fund, re-allocate ~3% to each of the other funds to keep it near 40-20-20-20.
> 
> By what this says, I cannot change my % investments. What if I learn more in the future or am open to more risk than I am now? I may want to re-shuffle my portfolio in the e-series account. Or is it just the initial set up of the account I cannot change and after this set-up phase I can do what I want with my funds?


You can sell any/all of your e-Series mutual funds 30 days after purchase without penalty. What the quoted text means is that the index fund is the index fund: you can't change the fund itself to hold more of one stock and less of another.


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## festa_freak (Mar 2, 2013)

Thought I'd give an update on what I have done and what I am now learning.

I opened a TD mutual fund account with the e-series index fund in it. Everything went very smoothly. The first week I gained $50 but this week it has dropped back down a little. It's exciting watching it. 

I've continued reading books and talking with a guy at work who is a financial advisor to about 80 people at our corporation (mostly young guys like me). I haven't given him any money for his insight but he seems eager to talk with me and give me suggestions. Last week he said gold and silver were dropping quite heavily so I started looking into that.

I don't really want to own physical gold, I'd rather own shares in a bullion fund. I have looked into it for quite a few hours this week. A couple suggestions he gave were the Sprott gold bullion fund, dynamic funds gold fund and some other mutual fund. The mer and other fees are near 4% on most of these which seems quite crazy to me. I looked into doing the ishares cgl (i think) but that is ETF stuff. 
In the end, I figured I was moving too quickly and decided not to get gold at this time. 

What I plan to do is pick a few stocks I would pick now and follow them for a couple months and try to see what happens and mark in a journal when I would have sold and see if that is a good decision. By heart I am a very buy-and-hold kind of investor, so maybe direct stocks aren't for me.

So, for now, I think the e-series funds are the best thing for now.

Oh also! I've been reading about bonds and perhaps it wasn't wise to put the majority of my money (40%) into the canadian bond e-series fund. I've read that bond interest is inversly proportional to the interest of the economy. Is this correct? Can anyone explain in laymans terms what this means to someone like me?


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## jumbalaya (Jan 17, 2013)

yeah, you're buying bonds at the wrong time (not that it matters if you buy and hold for a long time, though). everyone thinks interest rates have nowhere else to go but up, so your bonds will be delivering less interest.

think of it this way... why would anyone buy bonds if the interest rate at the bank is higher? so bonds become worthless when the bank interest rate is high.


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## none (Jan 15, 2013)

You are not necessarily buying bonds at the wrong time. The future is uncertain. Canadian real estate will crash, it will tank the economy thus keeping interest rates low. Although the government wants to 'cool off' (aka tank) residential real estate to get money out of sitting in mortgages and instead pushing the economy, this can be done by other means than raising interest rates (it seems to be occurring already). Many suggest that Canada is poised for some hard times ahead meaning that interest rates will stay low for a while yet. Also, if interest rates do rise bonds will likely not decline all that much.

Read more here: http://canadiancouchpotato.com/2012/07/03/how-will-rising-rates-affect-bonds/


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