TD e-Series: A question about rebalancing

[MustachianPhD]

Hi there,

I have recently invested in the TD e-Series for my children's RESP. I have a question about rebalancing that is probably really basic, but I'd appreciate some feedback!

When rebalancing, what exactly am I rebalancing? Is it to balance out the number of units held, or the value invested (book value) or market value? I have the Cdn, U.S., Int'l and bond e-Series and plan to rebalance every once in a while (I purchase monthly).

Thanks very much for answering such a basic question!

[Kaspian]

You're trying to rebalance the current market value.  (Units held doesn't matter.)

Squawkfox has a speadsheet for doing it with the TD funds at:  http://www.squawkfox.com/2012/02/07/rebalance-portfolio/

Look under heading "Canadian Global Couch Potato (index funds)".  I'm also a TD e-Series investor.  :)

[MustachianPhD]

Thank you so much Kaspian!

[GuitarStv]

Be careful when rebalancing.  Depending on when you last contributed, you could incur a penalty since most eSeries funds need 60 days after a contribution before you can make a withdrawal.

[Kaspian]

Be careful when rebalancing.  Depending on when you last contributed, you could incur a penalty since most eSeries funds need 60 days after a contribution before you can make a withdrawal.

This is true.  But if it was an automated contribution (through "pre-authorized purchase plans") it won't count incur a penalty fee.

[GuitarStv]

Be careful when rebalancing.  Depending on when you last contributed, you could incur a penalty since most eSeries funds need 60 days after a contribution before you can make a withdrawal.

This is true.  But if it was an automated contribution (through "pre-authorized purchase plans") it won't count incur a penalty fee.

Oh, really?  I didn't know that.  This will make my next re-balancing much simpler.

[MustachianPhD]

Thanks, Kaspian. I do have a monthly PPP set up, but it goes into the TD Money Market Fund then I purchase/switch to the e-Series from that. The advisor at TD said the Cdn gov CESG grant can't go into e-Series directly. Do you know if this is correct? Would I be incurring penalties for switching from Money Market to e-Series as soon as my monthly PPP goes in? Now I am confused and wonder if I got poor advice. I find the quality of advising is pretty hit or miss at TD, and each advisor contradicts the other.

[PharmaStache]

The grant money will go into your money market account within your e-series RESP.  Then you can move it to another fund- no penalties.  If you make a deposit anytime in July (for example), the grant money will be deposited within the first few days of September.

Source: what happens in my own account

[MustachianPhD]

Thanks, PharmaStache.

[Kaspian]

Thanks, Kaspian. I do have a monthly PPP set up, but it goes into the TD Money Market Fund then I purchase/switch to the e-Series from that. The advisor at TD said the Cdn gov CESG grant can't go into e-Series directly. Do you know if this is correct? Would I be incurring penalties for switching from Money Market to e-Series as soon as my monthly PPP goes in? Now I am confused and wonder if I got poor advice. I find the quality of advising is pretty hit or miss at TD, and each advisor contradicts the other.

I agree with that--the TD advisors know almost nothing about the e-Series.  (And I wouldn't take their word for anything related to them.)  They always seem a little shocked and confused when it comes up on their screens when I have to visit for something unrelated.   (Sometimes they get stupid and pull out glossy brochures for high-MER sector funds but I quickly shut that conversation down.)

Sorry though, I don't have any RESPs (no kids)--glad PharmaStache could answer your question. 

I did get pinged for a fee once.  (Rebalanced too early after a cash buy and wasn't paying attention?)  It was a substantial amount of money I moved and think the fee was less than $4 or something.  I remember chuckling that it was so small for a screwup.  The penalty only hits against the amount you put there that was within the penalty period (most of the "Fact" documents say 60 days).  Anyway, it was nowhere near the end of the world, but not something you'd want to do too often.    It's to discourage active trading within a long-term investment account.  ...And, of course, to make the bank a few extra bucks.  Anything to make a few extra bucks.

[taylord]

You're trying to rebalance the current market value.  (Units held doesn't matter.)

Squawkfox has a speadsheet for doing it with the TD funds at:  http://www.squawkfox.com/2012/02/07/rebalance-portfolio/

Look under heading "Canadian Global Couch Potato (index funds)".  I'm also a TD e-Series investor.  :)

Thanks for the link! It's exactly the advice what I was looking for :)