# TD Mutual Funds TFSA or TD Direct Investing TFSA



## Kher-Spade (Oct 6, 2016)

Hello ladies and gentlemen. As some of you may have seen from my other thread that I am a newbie to the Canadian investment market and I am looking for ways to make some passive investments.

My wife and I want to open a TFSA account since I have some ceiling there, and so does my wife (who has a much higher ceiling than I do). We currently bank with TD and we came across the above 2 accounts where we can park some spare money to watch it grow while we pay no taxes.

Do you guys recommend any of the TD TFSA accounts? Do they charge exorbitant fees? I have been reading up on various threads and I saw some other providers mentioned like Mawer, Vanguard, and Steadyhand. Are any of those any good? 

The MFs or Stocks we are mostly interested to buy are:

Energy
Healthcare
Science and Technology
IT
Utilities
Consumer Staples
Industrial
Materials
Telecommunication Services

I don't know if any TFSA provider have Index or Mutual Funds designed just around the above industries? But anyway I am just throwing out my preferences which may be a complete bunch of rubbish. But like they say no question is a dumb question :highly_amused:


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## AltaRed (Jun 8, 2009)

Within the TD system, I understand there are 3 ways to purchase products with them...within a TFSA.

1. Buying the regular TD mutual funds with MERs in the 1-3% range. These can be bought via TD branch representatives or in a brokerage account with TDDi. These type of mutual funds are 'highest' cost products because each of the mutual funds is 'actively managed' by a money manager who has to be paid plus trailer fees paid to the issuer. These kinds of products are losing favour because few money managers can actively manage their funds well enough to overcome the steep MERs

2. A self-directed TD e-series mutual fund account that consists only of passively managed index (in this case e-series) mutual funds. These funds can only be purchased via online accounts, either directly with TD or within a TD Direct Investing account. The MERs are some of the lowest in the business because there is no money manger involved and few other expenses. These funds are some of the most popular with savvy investors who want to keep most of their money. These index funds are based on geographic regions or asset type, i.e. Canadian equity, US equity, Canadian bond, etc. In other words, they mirror the broad market indices. 

3. Buying products via a self-directed TD Direct Investing account where you can buy the TD e-series index funds above, or any other product you may want to buy... from ETFs on the stock market, to individual stocks, etc. It is the vehicle that ultimately allows the most flexibility.

A young, novice investor should be sticking with passive, broad based investment products like TD e-series index mutual funds, or broad market ETFs that are purchased on the stock market. Avoid the temptation to try and pick individual stocks.. Read up on the Canadian Couch Potato website and/or at Finiki at www.finiki.org for investing basics.


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## Kher-Spade (Oct 6, 2016)

AltaRed said:


> Within the TD system, I understand there are 3 ways to purchase products with them...within a TFSA.
> 
> 1. Buying the regular TD mutual funds with MERs in the 1-3% range. These can be bought via TD branch representatives or in a brokerage account with TDDi. These type of mutual funds are 'highest' cost products because each of the mutual funds is 'actively managed' by a money manager who has to be paid plus trailer fees paid to the issuer. These kinds of products are losing favour because few money managers can actively manage their funds well enough to overcome the steep MERs
> 
> ...


Thank you so much AltaRed. Do you know that particular TFSA account that gives access to the e-Series MFs? I have seen this board talking a lot about the e-Series so there must be something attractive about them worth taking a look.


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## AltaRed (Jun 8, 2009)

Here's a link that may be helpful if you already bank with TD http://youngandthrifty.ca/how-to-apply-for-a-td-e-series-fund/ skip to step 4 and proceed from there. Note that you said you want a TFSA account to be sure to open a TFSA account when you select account type.

Or this link may be better http://www.urbandepartures.com/how-to-open-a-td-e-series-account/ Note that like I said above, there are 2 ways to buy e-series funds... either through TD itself or TD Direct Investing. Personally I would go with TD Direct Investing, open a TFSA account with them and the world is your oyster allowing you to branch out to a wide variety of investment products.

You can own just about anything in a TFSA account with TDDI including e-series mutual funds. The e-series mutual funds are attractive because they are passive investments... investing in broad markets as a whole giving you global diversification with 3-4 funds, at lower MERs than any competitive alternatives, and no cost (commissions) to buy or sell. There is nothing not to like for a newbie investor.

Added: Once you have your TFSA account opened and funded with cash (direct transfer from your TD bank account), you need to spend some time deciding what asset allocation you want, and why. Hence why I suggest you spend some time on the Couch Potato site and/or Finiki above. You need to know which of the TD e-series funds you want to buy and why.


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## Kher-Spade (Oct 6, 2016)

AltaRed said:


> Here's a link that may be helpful if you already bank with TD http://youngandthrifty.ca/how-to-apply-for-a-td-e-series-fund/ skip to step 4 and proceed from there. Note that you said you want a TFSA account to be sure to open a TFSA account when you select account type.
> 
> Or this link may be better http://www.urbandepartures.com/how-to-open-a-td-e-series-account/ Note that like I said above, there are 2 ways to buy e-series funds... either through TD itself or TD Direct Investing. Personally I would go with TD Direct Investing, open a TFSA account with them and the world is your oyster allowing you to branch out to a wide variety of investment products.
> 
> ...


Thank you so much for the helpful links. They explain how you can have a TFSA account converted into an e-Series (although the second link suggests to open a Mutual Fund account, not TDDI).


Do you have any experience with Mawer, Vanguard, or Steadyhand? Or do you recommend any other providers that offer diverse products for lower fees?


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## AltaRed (Jun 8, 2009)

Kher-Spade said:


> Thank you so much for the helpful links. They explain how you can have a TFSA account converted into an e-Series (although the second link suggests to open a Mutual Fund account, not TDDI).
> 
> 
> Do you have any experience with Mawer, Vanguard, or Steadyhand? Or do you recommend any other providers that offer diverse products for lower fees?


You don't "convert" a TFSA account into an e-series account. You open a TFSA account, populate it with cash and buy e-series funds into it. You can start with a TFSA mutual fund account that contains conventional TD mutual funds and then switch to e-series mufual funds, but why do it that way if you will ultimately have a TFSA account at TDDI? Open a TFSA account at TDDI to start with.

Mawer is a solid low cost money manager and they have some good mutual funds, but they won't take you on as a direct client unless you have considerable capital (which you don't). The way to do it in your case would be to open a TFSA account at TDDI and buy Mawer funs in it. Same with Vanguard ETFs that are NOT mutual funds. These are 'stock's that are purchased on the stock market. You cannot buy Vanguard mutual funds in Canada. 

I also don't believe you have enough capital to go to Steadyhand either at this point. They are essentially portfolio managers (like Mawer) who manage your money for a fee, e.g. 1% of AUM (Assets Under Management).

At this point, I see enough confusion in your posts that you need to stop for awhile and learn about TFSA accounts, about asset allocation, about products (mutual funds, ETFs, etc) before making a move. Do some reading as I have suggested.


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## like_to_retire (Oct 9, 2016)

I read that you can now buy/sell TD e-series index funds inside RBC-DI accounts?

Is that true?

These have long been quite exclusive to TDDI customers only.

ltr


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> Kher-Spade said:
> 
> 
> > ... They explain how you can have a TFSA account converted into an e-Series (although the second link suggests to open a Mutual Fund account, not TDDI) ...
> ...


Your link, other links and TD's Help article mention converting a TD regular MF account to an eSeries one. 


> Option B: Open and Convert a TD Mutual Fund Account


http://www.urbandepartures.com/how-to-open-a-td-e-series-account/



> By opening a TD mutual funds account and converting it to an e-Series funds.


https://www.savvynewcanadians.com/open-td-e-series-funds-account/

http://www.tdcanadatrust.com/products-services/investing/mutual-funds/help-acct.jsp


Of course where one knows one wants a TD eSeries MF account, opening one directly seems more efficient.




AltaRed said:


> ... You open a TFSA account, populate it with cash and buy e-series funds into it.


AFAICT, only where one opens a TDDI TFSA account or a TD eSeries MF account can it work this way.
A regular TD MF account has been posted to not allow buying eSeries funds, triggering the need to covert the account type. 





AltaRed said:


> ... You can start with a TFSA mutual fund account that contains conventional TD mutual funds and then switch to e-series mufual funds ...


And others have posted that their branch only understood how to create a regular TD MF account that can't buy eSeries. They went with option B from your link, where the branch created the regular TD MF account and before putting cash in or buying regular TD MFs, the form to convert to an eSeries account was presented.

IOW, cash and/or conventional TD MFs are not required so no switching needs to take place.




AltaRed said:


> ... but why do it that way if you will ultimately have a TFSA account at TDDI?


You don't end up with a TDDI TFSA that can buy eSeries funds as well as other investments but a TD eSeries MF account that can only buy eSeries funds, when a conversion had been done.

To end up with a TDDI TFSA, one needs to open a TDDI TFSA.




AltaRed said:


> ... Open a TFSA account at TDDI to start with.


Some do ... and some open TD eSeries MF accounts to build enough value so that they can avoid or reduce fees for other investments at TDDI.




AltaRed said:


> ... At this point, I see enough confusion in your posts that you need to stop for awhile and learn about TFSA accounts, about asset allocation, about products (mutual funds, ETFs, etc) before making a move. Do some reading as I have suggested.


All good suggestions ... though if you don't believe conversion of an account to an eSeries account is ever needed, one wonders why you provided a link that says conversion is one path to an account being able to buy eSeries MFs.


Cheers


*PS*
FWIF ... it is the combination of account type and what is allowed to be purchased that seems to be a part of the confusion. Lots of people talk about their TFSA when what they really means their "deposit savings TFSA".


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## Eclectic12 (Oct 20, 2010)

Kher-Spade said:


> ... They explain how you can have a TFSA account converted into an e-Series (although the second link suggests to open a Mutual Fund account, not TDDI).


Not sure it really matters anymore for TFSAs with the way fees have changed but the Canadian Coach Potatoe Model Portfolios suggest that the amount of money you have will push you to the MF account or TDDI.
See the "Option 2: TD eSeries Funds" section at https://canadiancouchpotato.com/model-portfolios/

Back in the day, I delayed opening the brokerage account until I had enough spread across all accounts to avoid the higher fees or drop some fees completely (ex. annual RRSP fee).


Cheers


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## AltaRed (Jun 8, 2009)

Thnaks for responding to my 2016 post, but it may be a bit late.


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## Eclectic12 (Oct 20, 2010)

LoL ... I suspect you are right.

Not the first and probably not the last time I miss the date of the post. :rolleyes2:


Cheers


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## AltaRed (Jun 8, 2009)

Been there myself!


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## like_to_retire (Oct 9, 2016)

AltaReds 2016 post is probably more interesting, but I'm still confused after reading that you can now buy/sell TD e-series index funds inside RBC-DI accounts? It was posted on Reddit, so maybe it's crazy talk.

I always felt the exclusive nature of only being able to purchase these if you had a TD account a bit of a mistake on TD's part. 

I think TD would sell a lot more if they opened their trading to other brokers. The e-series is quite popular with people who want to buy a small amount every month (for example) for no charge (since it's a mutual fund), and then once the amount is large enough, they can buy that same ETF Index and pay the trading fee. It's a good tactic.

I guess we could find out if it's true by having an RBC-DI customer get a quote on the symbol TDB900, TDB902, TDB909, TDB911, and see if it appears you can purchase these.

ltr


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## Eclectic12 (Oct 20, 2010)

Hmmm ... where did you read that eSeries was available through RBC?

The link in post # 7 (that I skipped earlier) talks about online buying through EasyWeb, which as I understand it is TD bank.
Everything else I have read says either a TD eSeries MF account is needed or a TDDI brokerage account.


I don't have access to a RBC-DI account so I can't directly try it.


Cheers


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## like_to_retire (Oct 9, 2016)

Eclectic12 said:


> Hmmm ... where did you read that eSeries was available through RBC?


I read it on REDDIT. Who knows if i t's true or not. I read a lot of wacky stuff there.

Whether it's true or not, I have no idea. It just re-kindled my thoughts that TD should do just that.

I have no dog in the race as I am a TD customer.

Of course, any RBC-DI customer could find out quite quickly.

ltr


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## Flugzeug (Aug 15, 2018)

Hey guys, for anyone wondering, I just checked on RBC DI and it does have the option to buy/sell TD e-series. 

Cheers.


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## like_to_retire (Oct 9, 2016)

Flugzeug said:


> Hey guys, for anyone wondering, I just checked on RBC DI and it does have the option to buy/sell TD e-series.


Interesting. 

So I would guess that the other brokerages (scotia, BMO, etc.) would also have that ability now to buy/sell TD e-series.

ltr


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## Beaver101 (Nov 14, 2011)

^ Interesting indeed ... agree it's worth checking this out with the other brokerages. Glad I read this old-age post...lol. :encouragement:


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## AltaRed (Jun 8, 2009)

Beaver101 said:


> ^ Interesting indeed ... agree it's worth checking this out with the other brokerages. Glad I read this old-age post...lol. :encouragement:


I just entered TDB902 in both the Scotia iTrade and BMO Investorline mutual fund order box and it came up in the preview screen. That does not guarantee though that either of the brokerages would allow a transaction to complete. I would suggest those with a specific interest in trying to complete a TD e-series order with non-TD brokerages, to verify the possibility via Secure Messages to the organization.

Non-TD brokerages may require the investor to hold any such mutual funds a minimum of 90 days to avoid either a brokerage charge (to get the trailer fee) or 30 days to avoid a TD mutual fund charge for frequent trading.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> I just entered TDB902 in both the Scotia iTrade and BMO Investorline mutual fund order box and it came up in the preview screen. That does not guarantee though that either of the brokerages would allow a transaction to complete. I would suggest those with a specific interest in trying to complete a TD e-series order with non-TD brokerages, to verify the possibility via Secure Messages to the organization.


Yeah, my original awareness of this was from a Reddit post.

The poster claimed they received a letter from RBC saying their I series funds were being converted to the previously unavailable TD e-series. 

_"I was stashing small dividends and cash contributions in some lower MER TD mutual funds (I series) between ETF buys and re-balancing to save on commissions while still keeping cash invested (this being in my RBC DI accounts).
I received a letter a month or so ago that these were being converted to TD e-Series mutual funds (previously only available to TD accounts, as far as I knew).
Sure enough, these mutual funds moved over to e-Series a week or so ago and I see I can now buy/sell TD e-series inside my RBC DI accounts"._

The TD e-series funds can save someone considerable MER fees, so for those that are using monthly deposits into high MER mutual funds, these would help a lot I would think, from both low MER and from no commission until they built up enough to dump into an ETF Index fund with its trading fees.

ltr


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