Project Part V: How and Why I Opened a TD e-Series Fund Account

Finally, after much deliberating, lots of hoop jumping, and plenty of patience, my investment account is open.  I have decided on the TD e-Series account, which you can read about here

Basically, the account allows you to invest in a handful of index funds online rather than in the branch.  The major perk of this is that the management expense ratios (MERs) are significantly lower than the Investor Series equivalent.  The highest MER is 0.52 and in general they are about 0.50 lower than what you would otherwise be able to get.  You can read the comparisons here.  As you can see, there aren’t too many indexes to invest in - a noticeable absence is a small-cap fund - but it is a good start for a new investor.

One of the main criticisms about mutual funds is that you can purchase ETFs instead, which follow the same indexes but trade like stocks and have much lower MERs.  However, because they have to be purchased through brokers, there are other fees to consider.  In general though, it is believed that the lower MERs make up for the broker fees, making them more desirable than traditional mutual funds.

This is one of the points expressed in Rob Carrick’s Guide to Canadian Investments (which I highly recommend, by the way.  Review coming soon.) However, he goes on to say that one exception is the TD e-Series funds. Because of the extremely low MERs, the difference between them and an ETF with broker fees is minimal, and therefore it is up to the individuals’ preference.

How to open the account

The e-Series account is obviously a gem of an investment.  Unfortunately, it isn’t the easiest account to set up.  In fact, if you go in branch to set it up, most employees will not know what an e-Series fund is, and the ones that do will dismiss it as a poor choice (probably due to the fact that low MERs lead to less profits for them) and it won’t be a pleasant experience.  So after reading advice from around the internet, here is what I did.

1. Your account will have to be registered for TD Easyweb.  Go into the branch and ask to set it up, they will give you a temporary password which you will have to change in 24 hours.  It’s very easy, and easyweb is invaluable for banking convenience.
2. I set up a Mutual Fund TFSA.  This can be done in the branch, and it takes about 30 minutes.  You have to go through and answer a bunch of questions about your risk tolerance and investment expertise, which will result in them giving you a recommended mutual fund.  You should tell the agent that you simply want to open the account, and you don’t want to buy anything at this point.  After a day or two the account should show up in Easyweb.
3. You will want to visit this page, click the “Convert an Account” button, and fill out the form.  It requires an original signature, so print it out, sign it, and mail it to the required address.  After they receive the mail, it takes a few business days to go through.  You will know your account has been converted to an e-Series account when the number “2378” is before your Mutual Fund TFSA number on Easyweb.
4. When you see this number, call the TD mutual fund department and explain that you want to purchase your first e-series funds.  For some reason, I was told that you have to purchase your first funds over the phone.  After that, you can do everything online yourself.  It will take about a day to make the purchase go through.

And then you’re done! There are a lot of hoops you have to jump through, but in the end you get access to funds that will give you superior returns than the traditional Investment Fund.

Thankfully I read a lot of advice regarding setting up the account before I tried myself, and hopefully this guide will help others in the same way.