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How to Build an ETF Portfolio at TD Direct Investing

So you’ve made the decision to become a DIY investor, but there’s way too much information online to wrap your head around. Not to worry – my new series of tutorials will cut through the noise and show you just what you need to know.  The first set of videos will be geared towards the novice investor who is currently investing within their RRSP, TFSA or RESP accounts.  Let’s start things off with a tutorial on How to Build an ETF Portfolio at TD Direct Investing (I’ve also included some additional commentary below).

Watch those cash balances

TD’s online platform sometimes takes a moment to update the cash balances. If you are unsure whether your previous trades are being reflected in the remaining cash balance details, review the order status screen between trades, just to ensure that your trades are being successfully filled.

Avoid the quarterly maintenance fee

For household accounts below $15,000, TD Direct Investing will waive their $25 quarterly maintenance fee if you set-up a pre-authorized contribution of at least $100 per month. This one is a no-brainer – not only does it force you to systematically save, it reduces your account fees.

For smaller accounts, use index funds

Even if you avoid the quarterly maintenance fee by setting up a monthly contribution plan, it may be less costly to invest in the TD e-Series Index Funds instead of ETFs. As a rule of thumb, if you have less than $15,000 to invest, and it will likely be a few years until you have saved up this amount, avoid ETFs.  For those investors with less than $15,000, please refer to Dan Bortolotti’s model TD e-Series Index Fund Portfolios on his Canadian Couch Potato blog.

For smaller accounts, use less ETFs

Although I’ve shown how to build a 5-ETF portfolio in my tutorial, you can get away with using just three ETFs to cut down on trading commissions. Instead of holding separate ETFs for US, international and emerging markets stocks, simply hold the iShares Core MSCI All Country World ex Canada Index ETF (XAW).


Stay tuned next week when we’ll learn How to Build an ETF Portfolio at BMO InvestorLine.


8 Responses to How to Build an ETF Portfolio at TD Direct Investing

  1. Michael James 18/10/2016 at 10:22 am #

    I didn’t do the arithmetic, but it seemed that when you got to the last trade, the remaining cash balance took into account the trading commissions. Is this right? BMO Investorline doesn’t do this. I have to keep track of the number of trades I’ve made and subtract $10 for each trade before I try to use up all the remaining cash. It’s either the next day or when the trades settle that they subtract the commissions. Has this been your experience as well?

    • Justin 18/10/2016 at 12:32 pm #

      @Michael James: The remaining cash balance for the last trade started out at $6,042.11. I then subtracted the $9.99 commission manually (which equals $6,032.12). I was able to purchase 228 shares of VAB at $26.45 per share (which totals $6,030.60). If we subtract the ETF cost of $6,030.60 from the cash balance of $6,032.12 remaining after taking into account the $9.99 commission, we end up with $1.52 (which was the final cash balance remaining after all trades have been placed).

      So it looks like TD Direct Investing is subtracting the trading commission from the cash balance post-trade, resulting in an up-to-date cash balance figure (we can look at the BMO InvestorLine numbers when I post the video next week to compare).

  2. Jason 18/10/2016 at 12:24 pm #

    For ETF purchases I just use Questrade. It is supposedly ‘free’ to purchase (but not to sell) ETFs but you will pay some minor ECN fees. I think I paid like 20 cents for a 2500 transaction, I think their commission is typically 5 bucks?

    Some brokers offer a lineup of free ETFs like Scotia iTrade as well. TD Direct Investing (I have them as well) is good for its research, design, integration with bank account, and service but 9.99 per trade (for ETFs) is cost prohibitive (I’m very cheap)…Still beats 40 a few years ago lol…

    These free ETF options can remove the minimum account size threshold to play around with ETFs…

    • Justin 18/10/2016 at 12:36 pm #

      @Jason: Questrade is definitely a popular option for smaller accounts. If your account size is over $20,000, you may want to consider National Bank Direct Brokerage (NBDB), as they no longer charge commissions on ETF purchases either:

      I’m not sure if NBDB charges additional fees for limit orders or ECN fees, but I don’t believe so – I’ll test drive their system when I implement the 6th portfolio in this series.

      • Tyler 22/10/2016 at 10:55 am #

        That’s very interesting news about NBDB, and it seems to apply to both buying and selling ETFs. If there are also no ECN fees, then this is squarely better than what others, e.g., Questrade or Virtual Brokers offer. Hopefully the other players will follow suit.

        • Justin 22/10/2016 at 4:06 pm #

          @Tyler: One additional difference is that NBDB still charges commissions on “US-listed” ETF purchases, whereas Questrade doesn’t.

  3. Jon 22/10/2016 at 1:24 pm #

    With TDDI account is the minimum of $15000 to eliminate the quarterly fee of $25 the same for registered and non registered accounts? Does the PPP of $100 a month waive the fees for both types of accounts?

    • Justin 22/10/2016 at 4:03 pm #

      @Jon: The minimum $15,000 applies to registered and non-registered accounts (but you can combine all of your household accounts to reach the $15,000) – there are also some other exceptions:

      As long as you have a minimum $100/month contribution set-up on at least one of the accounts (or the total monthly contributions across all accounts is at least $100), you shouldn’t be charged the quarterly maintenance fee.

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