TD RESP e-fund fees

10688 Views 14 Replies 8 Participants Last post by BOB, Sep 20, 2009

Stompie79

Discussion Starter · Aug 21, 2009

Hi All

New to the forum after stumbling upon Canadian Capitalist and Million Dollar Journey blogs. Ideal timing as their is some much to read and learn but I also have the realities of a six month old taking much of my time. It's a good job she's cute.

Anyway my wife and I had recently signed up to a group RESP provider as initially I had thought it was how things were done, being relatively new to Canada. I find big prospectuses and lots of terms and conditions a little concerning and again had little time and less inclination to read through ever detail. I decided to google what I could and now I'm here. I'm thinking of moving to a TD e-fund and when I cancelled the group plan (within 60 day so hopefully I won't get stung) the rep and I talked a bit about bank RESPs.
The only fees I had picked up about with the e-fund series is the low MER but I also had TER and possible termination fees throw in from the rep.

Is there a TER fee on the e-funds? I tried searching for info but didn't find any. It leads me to think their aren't any but thought I'd ask to be sure.

I understand that I only have to keep the money in the funds 90 days before withdrawing it to avoid any fees. Would that fee be classed as a termination fee? The rep mentioned that you usually had to have your money in a mutual fund for 4 years to avoid these.

Any other thoughts or comments please. I was planning to get the branch part of the e-fund done soon so I could do to get this cleared up.

Thanks

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CanadianCapitalist

· #2 · Aug 21, 2009

Stompie79 said:
Hi All

New to the forum after stumbling upon Canadian Capitalist and Million Dollar Journey blogs. Ideal timing as their is some much to read and learn but I also have the realities of a six month old taking much of my time. It's a good job she's cute.

Anyway my wife and I had recently signed up to a group RESP provider as initially I had thought it was how things were done, being relatively new to Canada. I find big prospectuses and lots of terms and conditions a little concerning and again had little time and less inclination to read through ever detail. I decided to google what I could and now I'm here. I'm thinking of moving to a TD e-fund and when I cancelled the group plan (within 60 day so hopefully I won't get stung) the rep and I talked a bit about bank RESPs.
The only fees I had picked up about with the e-fund series is the low MER but I also had TER and possible termination fees throw in from the rep.

Is there a TER fee on the e-funds? I tried searching for info but didn't find any. It leads me to think their aren't any but thought I'd ask to be sure.

I understand that I only have to keep the money in the funds 90 days before withdrawing it to avoid any fees. Would that fee be classed as a termination fee? The rep mentioned that you usually had to have your money in a mutual fund for 4 years to avoid these.

Any other thoughts or comments please. I was planning to get the branch part of the e-fund done soon so I could do to get this cleared up.

Thanks

He might be talking about some mutual funds which are sold with deferred sales commissions -- you have to hold the fund for a certain number of years to avoid them. But these charges are called DSC, not TER.

TER usually refers to Total Expense Ratio -- the sum of MER and trading commissions. With index funds, TER is typically extremely low. That's the beauty really of these funds -- a very low total cost of ownership.

I personally own e-Series funds and I can assure you that apart from the 90 day holding rule, there are no other fees or commissions. It is self-interest of course but I find it ironic that a salesperson selling such a fee-laden product is concerned about the fees that others charge!

moneygardener

· #3 · Aug 22, 2009

Following CC's lead, I too have my son's RESP with TD e-funds. The online interface is awesome and very nice for montly contributions. We have another child on the way and I'll open up another account there.

pablito

· #4 · Aug 23, 2009

Stompie79: The only "termination" fee not explicitly mentioned so far is to transfer the plan to another institution if you decide to do that. I think TD charges in the area of $125. From my research, this looks to be pretty standard and you can't really get away from it.

moneygardener: I find it interesting that you specifically praise their interface. I find it quite lacking in many respects. For my kids' RESPs, I've been trying value averaging so I have to manually make my purchases periodically in order to apply my calculations. I find it far too easy to make a mistake in making transfers between funds. I find I have to double even triple check fields to avoid making a mistake.

One of my gripes is that I've found that it always defaults to the same account (I have 2, one per child) even if the last transactions were not for that account. My other big annoyance is that once you register a transaction, there is no record that it exists... or at least none that I've found. I would at least expect there to be some "Pending transactions" list some place where you could monitor the progress of things until they actually perform the trade, etc. the next day.

Despite these shortcomings, I have no intention of moving out of the eFunds. The fees are good! In fact, I wish they'd introduce more funds... emerging markets for example.

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Stompie79

Discussion Starter · #5 · Aug 24, 2009

Thanks for the information.
Now that's all cleared up I've been in and opened the mutual fund. The conversion paperwork is submitted so now I'm just waiting.

Thanks again.

bean438

· #6 · Aug 25, 2009

Can you add cash bi weekly into the efund account and then make a purchase or do you have to purchase funds right away?

If you purchase monthly and make a withdrawl do you pay the penalty on the last 3 mos worth, or on the total value?

I am also wondering about distriutions. Do they auto reinvest or sit as cash until you make a purchase?

CanadianCapitalist

· #7 · Aug 26, 2009

pablito said:
I find it interesting that you specifically praise their interface. I find it quite lacking in many respects. For my kids' RESPs, I've been trying value averaging so I have to manually make my purchases periodically in order to apply my calculations. I find it far too easy to make a mistake in making transfers between funds. I find I have to double even triple check fields to avoid making a mistake.

One of my gripes is that I've found that it always defaults to the same account (I have 2, one per child) even if the last transactions were not for that account. My other big annoyance is that once you register a transaction, there is no record that it exists... or at least none that I've found. I would at least expect there to be some "Pending transactions" list some place where you could monitor the progress of things until they actually perform the trade, etc. the next day.

I agree with these comments. The TD e-Series fund interface is not very friendly. I almost invariably make a mistake and like pablito notes, there is no record of pending transactions. So typically, I call in to correct the mistake. Very annoying.

For investors using TD e-Series funds, make sure to print out the confirmation ticket and double check it for errors.

bean438

· #8 · Aug 26, 2009

Are there fees for transferring between e funds?

Do your cash deposits have to go directly into e funds or can you build up and then make a purchase?

What about dividends? Are they reinvested or do they sit as cash?

Spidey

· #9 · Aug 28, 2009

Are there fees for transferring between e funds? - Only if initial money was invested within 3 months. Works on a first in, first out basis. For example, if you put your first $1000 in a Canadian index fund and transfer it to a Canadian bond fund 2 months later, then you will pay a fee. However, if it is past 3 months then you can move that $1000, even if you've made recent contributions.

Do your cash deposits have to go directly into e funds or can you build up and then make a purchase? - You can hold them in cash.

What about dividends? Are they reinvested or do they sit as cash? - Your choice. You will be prompted for your preference when you purchase the fund.

bean438

· #10 · Aug 28, 2009

Thanks Spidey. I am surprised they charge to transfer between funds.
Mind you, one could simply adjust monthly contributions to reflect desired %.
I am thinking a sleepy portfolio for next years TFSA.

Question for all sleepyheads:

Do you accumulate cash and then cut up the pie to desired , or do you adjust monthly to keep desired %?

Same question for distributions, reinvest and adjust monthly purchase or take cash and then park it?

CanadianCapitalist

· #11 · Aug 28, 2009

bean438 said:
Are there fees for transferring between e funds?

Do your cash deposits have to go directly into e funds or can you build up and then make a purchase?

What about dividends? Are they reinvested or do they sit as cash?

You are allowed to accumulate money in a TD Money Market Fund and switch to the other TD e-Series funds anytime without penalty. The 90-day rule does not apply to the money market fund.

This is how I invest. Buy $x of the money market fund. $x is pulled out of the checking account and treated as a contribution in registered accounts.

Later, I switch $x into the e-Series funds I want to purchase.

Dividends are automatically reinvested.

CanadianCapitalist

· #12 · Aug 28, 2009

bean438 said:
Thanks Spidey. I am surprised they charge to transfer between funds.
Mind you, one could simply adjust monthly contributions to reflect desired %.
I am thinking a sleepy portfolio for next years TFSA.

Question for all sleepyheads:

Do you accumulate cash and then cut up the pie to desired , or do you adjust monthly to keep desired %?

Same question for distributions, reinvest and adjust monthly purchase or take cash and then park it?

I suppose you are asking how often should portfolio be rebalanced to the desired allocation. I don't do it often. I rebalance when the percentages are off by more than 5%. Mostly rebalancing is done annually when making contributions.

Check out the blog for discussions on this topic.

Rickson9

· #13 · Aug 29, 2009

bean438 said:
Question for all sleepyheads:

Do you accumulate cash and then cut up the pie to desired , or do you adjust monthly to keep desired %?

Same question for distributions, reinvest and adjust monthly purchase or take cash and then park it?

My wife and I don't rebalance anything. We have stock and real estate investments. It is only by coincidence that our stock and real estate portfolios are similar in value.

Once an investment purchased, we just tuck it away; we don't sell. Compounding is a godsend.

bean438

· #14 · Aug 29, 2009

If I were to use e funds I think I would rebalance every 2 weeks when I contribute (assuming contributions were at least 25 per fund to satisfy the minimum purchase)

I found an excellent spreadsheet (I think it was here?) That tells you right down to the penny how much to invest in each fund to keep everything in line.

BOB

· #15 · Sep 20, 2009

hi,

does the 3 months withdrawal penalty apply only to funds invested or also to the dividend reinvestment.

example i invest $10,000 on Jan1

automatic dividend reinvestment $400 on Sep1

i have 2 scenarios

1)i withdraw $10,200 on Oct 10..

2) i withdraw $5,000

how does the withdrawal penalty work..

would dividend reinvestment also be considered a fresh investment

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