I recently posted an article introducing the TD e-Series mutual funds and how to open up an account. These are easy to understand, low cost funds that are simple and easy to manage with no trading commission. In today’s post I’ll go over how to buy and sell these funds, and explain some creative strategies for using them 🙂
For today’s example we’ll invest $500 into the e-Series fund TD European Index – e, which aims to track the MSCI Europe Index. It has an MER of 0.51% and holds about 600 companies including large multinationals like Royal Dutch Shell, HSBC, Roche Holding, and Nestle SA. Mmmm, chocolate.
I detailed 2 methods on how to set up an e-Series account in the previous post. Depending on which of those method you used the trading procedure will be slightly different.
Using TD e-Series Accounts:
If you have your e-Series account set up with TD Canada Trust you can use the following steps.
- Step 1: Log in to EasyWeb and click on the subtab “Investments” near the top. Then click on “Purchase Mutual Funds” on the left.
- Step 2: Under the Fund Category drop down menu select “Global Equity” since that’s where we’ll find our European fund 🙂
- Step 3: Under the Fund drop down menu select “TD European Index -e**“
- Step 4: Enter how much you want to buy in $. Mutual funds can be purchased in fractional units. Click the “Next” button and then “Finish” when done. The money will automatically come out of your TD bank account and into the e-Series mutual fund account. Note that the minimum purchase amount is 100$. But you can set up a pre-authorised monthly purchase plan for as low as $25.
- Step 5: Check your mutual fund account the following day and you will see your newly purchased units 🙂 To sell your e-Series funds, simply click on “Redeem Mutual Funds,” and follow the website’s instructions.
If you have a TD Waterhouse/Direct Investing account, then just log in to WebBroker, and make the purchase the same way you would for any other mutual fund.
Step 1: On the left hand side of the website interface select “Mutual Funds” under the “Order Entry” menu.
Step 2: Enter the fund symbol (eg: TDB906 in today’s example) and the amount you would like to buy.
The nice thing about trading mutual funds is that they’re very versatile. For example today’s post showed how anyone could easily invest abroad in European markets, which is important if we want to maintain a diversified portfolio, since many of those European companies held in this mutual fund are not listed on stock exchanges in Canada or the U.S.
Also, many people have their emergency funds earning almost no interest in bank accounts 🙁 So here’s the tip of the day: why not build up emergency savings using funds instead? Money market funds for example (See Step 2 on image above for where to find them) are pretty much risk free, and are great alternatives to saving accounts 😀 The TD Canadian Money Market fund has paid out an interest rate of 2.66%/year on average over the last 20 years. Or if you don’t mind a little bit of risk, you can buy a fund like the TD Comfort Conservative Income Portfolio, which has low volatility and is up 2.84% year to date so far. These kinds of low risk funds provide much better returns than savings accounts, and your money is always available so when you run into an emergency you can simply sell and redeem your funds, as long as you meet the minimum required holding period.
Personally I’m using the e-Series funds to build up an education portfolio for my future children. I typically invest in this portfolio whenever I have extra money to spare. Since e-Series funds are indexed, I can forget about the money once it’s invested, knowing that the portfolio will grow over time with the markets. I do not include the value of my e-Series mutual funds account in my monthly net worth updates. I don’t consider the money in it to be mine since I’ve earmarked the funds for my kid’s tuition, so the money technically belongs to them 😉 If for whatever reason I never have kids, I’ll donate all the money to a school or something to be used for educational purposes 😎
As you can see the e-Series funds can be a very useful investment tool for many different situations 😀
The TD money market fund your talking about is this the TDB8150? Last I checked it was only paying out 1.25% (which is still better then nothing)
The money market fund I mentioned is TDB164. secure.globeadvisor.com/gi/db/gaf.fund_pro?fundname=TD+Canadian+Money+Market Which is currently only paying an abysmal 0.38% yield. I’m glad you brought up the TDB8150. That’s a TD Investment Savings Account :D, part of a series which includes TDB8155 and TDB8159. And yup, they only pay 1.25% but still higher than the TD money market fund right now. I forgot to mention in the post that in normal economic times when interest rates are regular, money market funds usually beat savings accounts. That’s why TDB164 has a 4% annualized rate of return since inception, but the current returns for these last few years have been so low because of the slow economy. Savings account interest rates don’t change as much over time so right now it’s probably better to go with the TDB8150 like you mentioned 🙂 Personally if I were to put some money away I would go with the TD Comfort Conservative Income Portfolio. Which is a simply a conservative mutual fund. There is actually some volatility with this one and you could lose a little bit of money, but if the broad market does well, like this year then you’re also not limited to a low return.… Read more »
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