Last July I opened up an RRSP eFunds account with TD. I started with the minimum $250 in each TD Canadian Index and TD Monthly Income, and I set up automatic $100 monthly withdrawals (split 45%/55%).

It worked well until I realized it doesn’t really make sense for me to have an RRSP at all since I plan on leaving Canada in approximately 3 years. So I closed the account. Upon closing they automatically deducted 10% tax since the amount was under $5,000. Luckily the interest this investment made in about 9 months covered the tax amount! So I basically got all my principal back. Of course I also have to add it to my income this year.

What’s the moral of the story? I don’t have any real advice – I sincerely believe you have a good plan. Just thought I’d let you know that I was happy with the short-term return of the eFunds and the whole experience was easy. Their customer service was good, too.

Best of luck to you 🙂

While I’m in the middle of aggressively paying off non-mortgage debt I’ve been planning an investment strategy to follow for retirement. I thought I would share with you what I had in mind.

I’m leaning towards setting up a self-directed RRSP with Credential Direct.

I then contribute 10% of my paycheque to index funds (TD e-Series Funds seem to be good) in the RRSP.

Fill out “Form T1213” to “reduce tax deductions at source” so that I don’t pay any income tax on what I contribute to my RRSP.

And lastly, every year or two I transfer money out of the Index Mutual Funds into exchange traded funds (ETFs.)

This approach has the benefit of dollar cost averaging, low MER index funds, even lower expense ETF purchased infrequently to keep the trading costs low, and is tax smart in that the government doesn’t get to hang onto income tax that I should never have paid due to the RRSP contributions.

I’m also toying around with the idea of purchasing stock with an emphasis on dividend payments as these are taxed favourably. I’d probably do this outside of my RRSP.

Whatchya think?