In this post, I’ll teach you how to set up a TD e-series RESP the quick and easy way.  With tuition costs soaring, it’s important that we start planning for our children’s education today, which is why I opened a TD e-series RESP.  Trying to open an e-series RESP account can be a bit tricky because you’re filling out 2 sets of paperwork: one to open an RESP and the other to apply for the e-series funds.  So I thought I’d walk you through the process that I used to quickly get it set up.

Opening an RESP account

If you looked at the TD e-series application form, you’ll notice that on the very first page, you have 3 account options (RSP, personal non-registered and joint non-registered).  Nowhere is there an RESP option or even a TFSA option for that matter.

So to avoid any problems, I just went into my TD branch and opened an RESP mutual funds account.  This involved a few things:

1. Filling out a Customer Investor Profile document,
2. Producing my child’s Birth Certificate and SIN for account registration purposes, and
3. Making an initial deposit into a mutual fund.

I just made the initial deposit to the TD Money Market Fund (TDB 164).  That way, I already had the RESP opened and now it was just a matter of applying for the e-series funds.  I will say that when I fill out the investor profile, I answer all the questions so that I achieve the “aggressive growth” profile.

I do this because if you select too conservative of profile, then you may not have the option to purchase certain funds and, in fact, a TD Investment Services (TDIS) representative may refuse to complete a purchase transaction if it does not align with your investor profile.  So be careful how you fill out the investor profile.

What are TD e-series Funds?

TD e-series funds are low-cost mutual funds that are available to customers only through online banking.  The key thing about e-series funds is that you manage them online, either through EasyWeb or email.  You cannot go to a branch and either open an e-series account or get help with one.  In fact, their consent form states that you cannot call TDIS about e-series funds unless EasyWeb is unavailable.

TD e-Series Funds Account Application

If you’ve ever looked at the TD e-series funds account application online, it can be a bit overwhelming.  It’s about 14 pages long and requires lots of documentation, filling out an investor profile etc., etc.  It can be a real nightmare to fill out and if you forget an initial here, or a signature there, the application gets returned to you and you have to correct it and resubmit it.

The great thing about my method is that if you opened the mutual fund RESP in-branch, then all you need to do is fill out and mail off an Application To Convert To A TD e-Series Funds Account form.  The form is only 2 pages long and very simple to fill out.  All you need to do is:

1. Fill out your RESP account number,
2. Fill out your TD Canada Trust Access Card number, and
3. Sign and date the form!

Too Easy!  There you have it – how to open a TD e-series RESP account.  Within about two weeks, you will notice that when you log into EasyWeb and go to “Purchase Mutual Funds,” you will have access to purchase e-series funds in addition to the regular menu of TD mutual funds.  This is also the time that you can set up a Pre-authorized Purchase Plan (PPP) to make regular, automatic contributions to your new TD e-Series Funds account!

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

In this post, I look at how to grow your net worth automatically.  It is widely acknowledged that we are our own worst enemies when it comes to saving and investing, because human behavior is not naturally inclined toward delaying our short-term wants/needs to achieve long-term goals.

One way to get around this natural tendency is to set up an automatic savings and investment plan.  These plans are a great way for people to start saving and investing their money and have played a major role in increasing my net worth over time.  In fact, I still use them and probably always will as they make saving and investing easy.

An automatic savings and investment plan is a very simple and effective strategy for saving because you don’t need to worry about budgeting and trying to save whatever is left over at the end of the month.  Had I tried to save after all of my monthly expenses were paid, I’d hardly have anything to show for it.  By setting up one of these plans, my savings amount is already factored into my monthly budget and spending habits.

Automatic savings and investment plans are great for 3 main reasons.  First, they get you into the habit of saving and investing regularly.  It is forced savings.  It is you paying yourself first because it is factored into your monthly budget.

The second reason is that, once it is set up, it is completely passive; requiring no more work on your part.  You only need to set it up once, then let time and compounding do their work.  I particularly like the idea of setting something up once and forgetting about it.  Well, I shouldn’t say that I completely forget about it because I make a habit out of revisiting my automatic savings and investment plans once a year to see if I can afford to increase my savings.

The final reason that I find automatic savings and investment plans appealing has to do with the power of small amounts.  Saving and investing small amounts regularly can add up to huge sums.  Typically, the minimum amount for these plans is $25.  That is the minimum for purchasing TD e-series funds and a variety of exchange-traded funds (ETFs) through iShares and Vanguard.  $25 is not a huge amount of money to come up with on a monthly basis so virtually everyone can take advantage of automatic savings and investment plans.

For years, I’ve purchased low-cost TD e-series mutual funds, automatically, every week in my RRSP.  It’s easy to set up and, as I mentioned above, the investment minimum is only $25.  To set it up, I went to Easyweb under the “My Links” section on the left-hand side of the screen.  I then went to “Purchase Mutual Funds.”  A new screen appears and under the “Personal Investments” section I selected “Pre-Authorized Purchase Plans.”  From there, just select the fund you want to contribute to and set the frequency of your purchase (ie. weekly, bi-weekly, monthly or annually).  You can even set it up if the money is coming from another financial institution.

In addition to automating my RRSP contributions, I recently set up automatic debits to purchase stocks in my dividend reinvestment plan (DRIP) accounts.  As soon as I found out that some of the DRIP stocks that I hold in my Computershare account offered automatic debit purchases, I signed up right away.  So far, in terms of the companies that I own, the Bank of Nova Scotia (BNS), Emera (EMA), Fortis (FTS), TransCanada (TRP) and Suncor (SU) offer that service.  I’m hoping that the Bank of Montreal (BMO) will jump on the bandwagon soon.  The automatic debit plan is hugely beneficial to anyone who owns DRIPs because it saves you the time and hassle of mailing off your cheques and trying to make the cut-off dates for your stock purchases.  So, in the end, I like it because it saves me time, money and effort.

If you are someone who is just starting to save and invest, then I would highly recommend beginning with small amounts in some type of automatic savings and investment plan.  When I first started saving and investing my money I chose TD e-series funds as I felt that they offered the best overall value.  It wasn’t hard at all to set up my investment portfolio.

I went with the Global Couch Potato Portfolio that is a 60/40 split between equities (ie. stocks, exchange-traded funds and mutual funds) and fixed-income (ie. bonds).  My 40% bond allocation was held in one fund – the TD e-series Canadian Bond Index Fund.  My equity exposure was spread out evenly over 3 other funds: TD e-series US Index Fund (20%), TD e-series International Index Fund (20%), and the TD e-series Canadian Index Fund (20%).  In fact, my RRSP portfolio has retained these exact allocations for my equity exposure.  I have though since changed the fixed income side and diversified my holdings away from just the 1 bond fund.

Automatic savings and investment plans are a powerful tool to help grow your net worth automatically.  They are easy to set up and are flexible in terms of investment amounts and frequency of contributions.  Take the time to set it up and just sit back and watch your net worth grow – automatically – over time.  It really is that simple.

If you’re interested in learning more about the role of automatic savings and investing in my own financial plan check out My Wealth Building Approach or my Net Worth Updates and other posts on Dividend Income / Monthly Highlights.

For more information on the power of automatic savings and investment plans, check out David Bach’s classic The Automatic Millionaire .