Author Topic: TD e-series, Vanguard Canada, Vanguard US... Where to start?  (Read 3557 times)

GrooveStomp

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TD e-series, Vanguard Canada, Vanguard US... Where to start?
« on: March 22, 2014, 10:33:37 PM »
I am keen to get my investments working in a low MER fund that pays well, but I'm really inexperienced at all of this.
I'm in Canada, banking with TD.  I've opened a web broker account, so I should be able to buy any funds that are available.
I've got a few big questions that need answering before I can really get rolling here, though.

Web Broker Fees
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Q: What kind of fees should I expect just for contributing to a fund?
A: $10 per interaction.

Q: How does purchasing something like a Vanguard fund differ from the TD e-series fund?
A: See below under Funds where I link to the info comparing e-series funds to ETFs.

Q: What kind of purchasing pattern should I be looking at?
A: Because the transaction is $10, it doesn't seem to be too much of a problem.  Of course, it's all relative.  Too many transactions and the $10 per transaction adds up.  If the overall purchase amount is relatively small, then $10 each time might be something to avoid.  If a purchase is made every month, then we're talking $120 yearly cost.  Does that fit into my plans?  Hmm.

Q: Is there a dollar threshhold I should use as a guide when looking to contribute? (ie., Purchase $20k worth 4 times a year?)
A: See previous answer.

Currency Exchange
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Q: If I go with a US Vanguard fund, what kind of fees should I be anticipating?
A: With a call to TD, it appears the conversion fee can be "waived"I don't actually fully understand this yet.  Subsequent reading may elucidate me.

Funds
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Q: I see that Vanguard has Canadian funds now.  That is very cool!  However, they're all very young.  Is this something I should be worried about?  They're all tracking benchmarks, so it is sufficient to look at the benchmarks to guage long-term performance?

Q: Should I consider using Canadian funds over US funds?  It would surely simplify with regards to Currency Exchange.
A: This seems very subjective.  Partially dependent on the info linked above under Currency Exchange.

Q: What about TD e-series?  They have a higher MER, but it might work out when factoring in transaction costs. (Both points above.)
A: Here is a comparison of TD e-series funds compared to ETFs. In summary for e-series funds:
  • minimum holding period
  • no commission (transaction fee)

Edit
I am doing more reading on the TD site and am finding some answers.  I'll update my post with the information I'm finding.  If I'm getting things wrong, or am misinterpreting things - please let me know!
-- Ooh, great progress!  Only one question I haven't been able to answer, and one answer that leaves me with some uncertainty.
« Last Edit: March 23, 2014, 12:48:15 AM by GrooveStomp »

daverobev

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Re: TD e-series, Vanguard Canada, Vanguard US... Where to start?
« Reply #1 on: March 23, 2014, 07:08:26 AM »
Have a read through Canadian Couch Potato. He does some good articles on when to hold US$ ETFs (when you can do the forex cheaply, and in an RRSP or unregistered), when not (smaller contributions, in a TFSA, etc).

If large $ amounts, Norbert's Gambit is your friend (TD won't tell you about it); basically buy something 'interlisted' and journal it from the TSX to the US side. Assuming they allow you to hold US$.

TD eSeries do NOT have a high MER, generally speaking; they are very good. They just look high compared with some of the US Vanguard stuff - but compared to pretty much anything else (ie any other mutual fund), they are cheap. You will save some money if you go down the ETF route, but *action* is the most important thing. Start up your contributions and keep them up.

Some ETFs to look into:

ZEA.TO for a *non-US wrapper* non-US developed market fund - it holds the shares directly, saving one lump of withholding.

IMHO if you have a brokerage account don't let them manage anything, charge anything, do anything. Just buy ETFs as and when. Ideally in (at least) $1k chunks, which is effectively a 1% front load fee. $20k? Great.

GrooveStomp

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Re: TD e-series, Vanguard Canada, Vanguard US... Where to start?
« Reply #2 on: March 23, 2014, 10:43:00 AM »
Thank you daverobev! I've got Canadian Couch Potato open in another tab here. I'll add it to my RSS feed.
I saw Norbert's Gambit mentioned in another thread last night, but was having some spotty connection issues.  I've got that opened in another tab now as well.

Prairie Stash

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Re: TD e-series, Vanguard Canada, Vanguard US... Where to start?
« Reply #3 on: March 23, 2014, 04:49:13 PM »
I wondered the same thing about vanguard canada, is it too young?
RBC opened some ETF funds in January, very similar to vanguard. I think they see competition and are getting ready. Good news for consumers. I wonder if RBC sees them as legitimate competition?

lifejoy

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Re: TD e-series, Vanguard Canada, Vanguard US... Where to start?
« Reply #4 on: March 23, 2014, 07:01:19 PM »
I wondered the same thing about vanguard canada, is it too young?
RBC opened some ETF funds in January, very similar to vanguard. I think they see competition and are getting ready. Good news for consumers. I wonder if RBC sees them as legitimate competition?

I'm with RBC and could potentially be very interested in this!! Report back if you find out neat things?

And thanks to Groovestomp for starting this thread :)

INvestinCDN

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Re: TD e-series, Vanguard Canada, Vanguard US... Where to start?
« Reply #5 on: April 12, 2014, 12:18:58 PM »
Regarding the short track record of Canadian Vanguard funds...

It is a legitimate consideration, see this article which recommends Canadian ETFs based on a variety of factors including age of fund.

I would recommend visiting the Canadian iShares site for comparison shopping. They have recently slashed the MER on their core funds, many of which have been around somewhat longer.
 

scrubbyfish

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Re: TD e-series, Vanguard Canada, Vanguard US... Where to start?
« Reply #6 on: April 12, 2014, 12:36:29 PM »
I will follow this thread, too. Still struggling to grasp.

My situation is additionally convoluted -each subsidy I may be eligible for allows me to have my savings invested in different account types, so it makes sense to move mine only after the subsidy options are narrowed down over the next couple of months. But I would love to understand things by then!