In previous posts I’ve talked about the differences between investing in TD e-Series funds through a TD Mutual Fund account and a TD Direct Investment account. Both are good options, and many start with the simpler path of investing through a TD Mutual Fund account. Eventually, this may not meet your needs anymore, and you’ll need to move from investing through TD Mutual Funds to TD Direct Investment.
Recap: TD Mutual Fund Account vs TD Direct Investment Account
To make sure we are all on the same page, let’s quickly go over the 2 ways you can invest in TD e-Series funds.
TD Mutual Fund Account
The TD Mutual Fund account allows you to buy TD e-Series funds your regular online banking portal (TD EasyWeb). But first, you will need to setup a mutual fund account that has been converted to an e-Series account for this option to be available online. Using a TD Mutual Fund account is typically the cheapest and simplest way to invest in TD e-Series Index Funds.
Fees: There are no fee’s for buying and selling TD e-Series funds through this account, nor are there any fees for the account itself. You can make as many mutual fund trades as you like for no commission, which makes this a good option for those who want to contribute monthly to their portfolio.
TD Direct Investing Account
You can also purchase e-Series funds through a TD Direct Investing account. It is TD’s online investment brokerage that you can use to trade in markets across North America, and buy stocks, options, ETF’s and mutual funds, including the TD e-Series Index Funds. TD Direct Investing is a more robust system that provides more information, and allows you to do more than purchase and sell mutual funds.
Fees: There are no trade commission fees when buying TD e-Series index funds through TD Direct Investing. However, there is a quarterly maintenance fee of $25 ($100 per year). You can have these fees waived by investing more than $15,000 or by setting up an automatic monthly investment deposit of at least $100.
Why I decided to switch
Up until recently, I had all of my TFSA and RRSP investments in TD e-Series funds through my TD Mutual Fund accounts. I did all of my day-to-day banking through TD and I liked that it was simple, free, and easy to make regular and irregular additions to my investments
That changed through when I switched my day-today banking needs from TD to Tangerine. While you can setup an authorized pre-payment plan to make contributions to your TD Mutual Fund account from a bank account outside of TD, there isn’t an easy way to make contributions on your own schedule or of varying amounts. They have to be the same amount every time and at the same time of the month. Since I like to make additional contributions whenever I have some extra money lying around, this wasn’t going to work for me.
I still liked the TD e-Series funds as a better investment option than the ones that Tangerine offered, and I didn’t want to switch. The answer – a TD Direct Investment Account.
You are able to contribute to your TFSA and RRSP in your TD Direct Investment account by making a bill payment from another institution. This means that whenever I want to add money to my investments, I just make a bill payment to my TD Waterhouse payee, and a few days later, the money shows up and I can buy additional shares. Easy and flexible.
So I switched my investment method from TD Mutual Fund accounts to TD Direct Investment accounts to stay invested in my TD e-Series funds.
How to move from TD Mutual Funds to TD Direct Investment
To make the switch, you’ll need to physically go to the bank.
1. Call ahead and make an appointment
You never know how busy the bank will be. I suggest calling ahead and making an appointment instead of just dropping by. Mention that you want to open a TD Direct Investment account.
2. Bring a void cheque
Bring a cheque from the bank you want to withdraw investment funds to. While you really shouldn’t be thinking of cashing in investments, it’s good to know that you can. The rep will be able to use this as your default withdrawal account – when you cash in funds from your TD Direct Investment account, this is where it will go. Yes, it can be a different bank than TD.
3. Ask to open a TFSA and/or RRSP account
Tell the TD Direct Investment rep that you want to open up a TFSA and/or RRSP account with TD Direct Investing and that you want to transfer the funds from your current TD Mutual Fund accounts to the new TD Direct Investment Account. Tell them you want the funds to transfer directly, you want the same funds you currently have, but in your new TD Direct Investment account.
4. Don’t be bullied or swayed
The rep may have questions about your investment decisions or try to sway you to a different investment – don’t let yourself be bullied! You can answer honestly: you like the low fee’s and the personal management of the TD e-Series funds. They shouldn’t push too hard.
5. Sign papers
You’ll have to sign the papers they provide you, these will be the papers that they mail off to open your new TD Direct Investment account. I know it’s hard, but I suggest at least skimming them, if not fully reading them.
6. Wait a week or 2 for your new account
As with other things to do with TD e-Series, it takes a week or 2 for your new TD Direct Investment accounts to open. You should receive an email when the new account it open and ready. Your money WILL NOT have been transferred yet, so don’t fret if you see 0’s!
7. Sign the transfer payments paperwork
Once the TD Direct Investment accounts have been opened, you’ll have to go back to TD in person to sign the paper work to authorize the switch in funds from your TD Mutual Fund account to your TD DI account. Your TD rep will send this in by mail, which will take another week or 2 for your funds to actually transfer.
- NOTE: Your current investments will remain invested until the switch happens, you won’t lose any investment income during this process.
8. Confirm your transfer
Once this transfer goes through, you should again receive an email from TD confirming your purchases in your new TD Direct Investment account.
- NOTE: I switched both my TFSA and RRSP at the same time, but the fund transfers went through on different schedules. Don’t fret if one transfers before the other ones does if you do both.
There you have it
You should now have your TD e-Series investments up and running in your TD DI account. You can now take advantage of the beefed up interface, add to your investments through bill payments, and have a wider array of investment options available to you.