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How to open up a TD e-series account

I almost never write “how to” posts, but after posting about my investment portfolio last week, I’ve had a lot of people e-mail me to ask about the procedure for signing up for the TD e-series mutual funds.

I started investing in TD Canada Trust e-series mutual funds over six years ago, and have been a satisfied customer for most of that time. The e-series index funds are a popular choice because they are a simple way to invest, and have among the lowest Management Expense Ratios (MERs) for mutual funds in Canada. However, the downside is that there is virtually no customer service available for these products.

From my own experience, TD Canada Trust really doesn’t make it easy or straight-forward for investors to purchase or cash out these funds. I’ve blogged about my frustrations before. But since the e-series funds aren’t actively managed, as an investor, you have to manage your own account online. So if you don’t know exactly what to expect, you might get frustrated.

However, the hilarious thing is, you can’t actually open an e-series account online. Aaaaand you can’t open one up at a TD Canada Trust branch either. Instead, you have to fill out a form and mail it in. The same thing goes for cashing out your funds – you can’t redeem your money at a branch or online – it all has to be done manually by filling out a form. This barrier and lack of customer service can make it frustrating for investors.

Here is what I’ve learned about the TD e-series mutual funds:

Open up a standard TD Mutual Fund account
Whether it’s a TFSA, RRSP, or non-registered account, you will be able to open this up at any TD Canada Trust branch. To make it less confusing, don’t tell the representative that you’re going to be converting it into an e-series account. Just open up a regular TD mutual funds account. Make sure you get your account number (you’ll need it to fill out your paperwork) as well as an online banking login number.

You will have to make an initial deposit to open up your account. I’m not actually sure if you *have* to, but I was forced to when I recently went in to open up a TFSA mutual fund account. I told the representative that I didn’t want to deposit any money into the account. But since he said I had to, I told him to transfer the minimum $25 deposit from my chequing account as a one-time transaction.

The representative you meet with will take you step-by-step through a required Investor Profile questionnaire to determine your risk-tolerance level. They will then most likely try to sell you into a mutual fund with a high MER (he tried to sell me into the Comfort Portfolio series). However, it will be easiest to deposit your money in a simple “placeholder” money market fund until you get your paperwork in order and set up with the e-series account.

Convert your account
Now that you’re set up with a mutual fund account, before you are allowed to purchase the e-series index funds, you will have to fill out a consent form, along with an application form (which will include your pre-authorized purchase plan information), and mail it in. You will not be able to fax it in, or return it to a branch.

It takes probably about 1-2 weeks for them to process your paperwork after they receive it. But you’ll have to log onto the TD Canada Trust website to see if your account has been converted over to e-series. I’ve heard of some people getting confirmation e-mails, but I never got one. So just check online every couple of days after you send off your application form.

Cashing out your e-series index funds
Because the e-series funds are self-directed, you will receive virtually no customer service support. In fact, TD Canada Trust mutual fund representatives do not have the capabilities within their computer system to make any sort of e-series transaction for you – whether it’s buying, selling, or trading.

The easiest way to take money out of your e-series account – whether it’s for the Life-Long Learning Plan (LLP) or Home Buyer’s Plan (HBP) – is to switch the amount you want to withdraw over to a non-e-series product, such as the money market fund. I learned this the hard way. Once it is in a regular mutual fund, any mutual fund representative will be able to help you fill out the appropriate paperwork to get funds out of your account.

For more information, you can check out the TD Canada Trust website where they have compiled a somewhat useful database of information on the TD e-series funds.

Does anyone else have any TD e-series mutual fund tips?

Rebalancing my investment portfolio

Now that I’ve had a few days to go over the recommendations put forth by the financial advisor, I can share with you what he has told me about my investment portfolio. Please read my previous post, “Financial advisors: do you have one?” or my two posts on Moneyville about my experience with my financial advisor: “Why I decided I needed a financial advisor” and “How I heading for Freedom 55.”

First, here’s a background of what I’m invested in:

Holdings in TD Mutual Funds (mostly e-series): CDN Money Market, Canadian Index-e, U.S. Index-e, European Index-e, Japanese Index-e, CDN Bond Index-e, International Index-e, TD Dividend Growth.

  • Asset allocation
    • 91.7% stocks
    • 2.7% bonds
    • 5.6% cash
  • Geographic allocation
    • 51.6% Canada
    • 24% U.S.
    • 24.4% International

I learned that while my geographic allocation is good, my asset allocation is too risky. The financial advisor recommended rebalancing to 70% stocks and 30% bond funds, and advised that my portfolio is over-diversified. For example, the allocations contained in both the European and Japanese index-e funds are contained within the International index-e fund.

He also called me out on investing in the Dividend Growth fund, which is boasting a lame 2.03% MER. :) I always meant to take care of that, but you know. Things happen. That was the original fund I held when I first opened up my mutual funds and hadn’t yet invested in the e-series funds. And as for the CDN Money Market fund, that was a left-over “placeholder” fund for when I was taking out my money for the Home Buyer’s Plan. I meant to re-distribute back into the e-series funds, but had problems because my investor profile wasn’t in sync with what I wanted to invest in. Then I got frustrated, and just left it.

The financial advisor told me that I should simply my portfolio from 8 mutual funds down to just 4, and suggested this allocation:

  • 20% Canadian Index-e
  • 25% U.S. Index-e
  • 25% International Index-e
  • 30% CDN Bond Index-e

Based on my $80,000 projected income this year, I’m saving 13% of my gross annual income into my Retirement Portfolio (which is around $400 bi-weekly broken down into $300 RRSP/$100 TFSA). The financial advisor told me that if I really want to retire by the age of 55, I will probably need to start saving more aggressively. He suggested I might need to go higher than 20% of my gross annual income. I already knew I wasn’t saving enough, but hearing it from somebody else is still a little disheartening. I’m already almost 30 (maybe), and my goal retirement age is only 25 years away.

As soon as I max out my Emergency Fund at $10,000 (I’m at around $7,000 right now), I will funnel that cash ($100 bi-weekly) into my Retirement Portfolio. That will bring me to around 16%, which isn’t ideal, but it’s a good first step. Once I’m there, I’ll figure out my next move.

Financial advisors: do you have one?

Most of you know that I really want to figure out what I should do about my (lack of an) investment strategy. It’s been really bothering me over the last 6 months. In fact, a goal of mine for November was to read 10 articles about investing. Well, I figured I’d be reading about mutual funds, ETFs, stocks, and some sort of basic strategy. But instead, I found myself researching investment advisors.

I personally think an investment advisor is the best way for me to go. I decided to look into a “fee-only” advisor, because I’m confident that – once given a plan – I can execute it myself. And, because I have a small portfolio that doesn’t need constant managing by a professional. Fee-only advisors are expensive though. Through my research, I saw them charge anywhere from $100-500 per session. To get an analysis of your entire financial well-being, as well as a strategy for the future? Even though it might seem expensive, I feel like it’s completely worth it.

Even though, up until recently, I didn’t believe in paying someone for financial advice. I figured I was young enough to do it on my own through trial and error, and besides, I had the basics down. I knew I was invested in the right mutual funds, and I had a basic understanding of what I needed to do. But as I creep closer to 30, I realize that I need a professional to help me. Nobody has ever seen my investments before. I need validation and a plan.

Now this is what I call perfect timing: earlier this month, my editor at the Toronto Star asked if I wanted to be the Moneyville guinea pig and get some complimentary advice from a fee-only financial advisor. I said yes, of course. And I’m excited to share what I’m learning with all of you soon.

Have you ever considered hiring a financial advisor?

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