Tuesday, April 9, 2013

Setting Up A TFSA Trading Accountopen original article

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Recently we decided to open a self directed TFSA trading account for my wife. It was such an easy and pain-free experience that I thought it would make a great article to show people the simple process. If you’ve been following The Loonie Bin, you might have heard my many rants on how much I like holding common share dividend stocks in a TFSA trading account. It’s a great way to watch your savings grow with every dividend deposited into your account  and on top of that, it can all be withdrawn tax-free.

Make the call

It started off with a simple phone call to the closest TD branch one Saturday morning. I was planning to make the appointment later in the week but they had two openings available that afternoon. I told the assistant that my wife wanted to open a self directed TFSA trading account and the appointment was booked.

Communication is the key

Before we left for the appointment I explained to my wife what to expect and which questions to ask. Whenever I’m about to open anything that affects my money, I want to make sure all my questions are answered before I sign on the dotted line. That way there are no hidden surprises down the road, especially when they could have been prevented.


As we arrived at the bank and met with the assigned advisor, the barrage of questions were unleashed. The first questions we asked were about any possible fees. Like most people, I hate paying fees when there are other options available. We asked if there were any yearly fees, withdrawal fees, closing fees or any other fees that we should know about. The advisor told us the only fee she knew of was an early withdrawal fee. It was a $150 fee if you closed the account within three months of opening it. Since this wasn’t a concern for us we proceeded with the procedure.

30 Minutes or Less

I’d have to say the most painful part of the whole experience was when the data that the advisor entered did not save properly and it had to be entered twice. Other then that after signing a few papers we were walking out the door. The whole process would maybe take thirty minutes depending on the amount of questions you had. Now my wife has a shiny new TFSA trading account and we can’t wait to start investing with it.

 The choice is yours

I choose to keep my investments with TD Direct Investing because they offer me great service 24 hours a day, 365 days a year. If I woke up in a cold sweat at 3am and wanted to set up a DRIP for one of my stocks, I can do that. Some of you may had a bad experience with TD and choose not to deal with them and that is fine. I just really like that my TFSA can grow without any fees or charges that can really add up over time. Since I have combined assets of over $50,000 I only have to pay $9.99 per trade. If you don’t have $50,000 in assets, you still only pay $29 per trade which is not the end of the world. They key is to make as few trades as possible and to make them count.

If you are just starting out investing with a TFSA, I suggest making monthly contributions until you have a sizable amount of money to make your first investment. Paying $29 in commissions on a $5500 trade is peanuts in the big scheme of things. After a few years of investing in dividend stocks and re-investing the dividends with your yearly contributions, you’ll really start to see your TFSA grow. You can always withdraw the dividends you make without having to pay any tax on them in case of financial emergencies and re-contribute the amount you take out the following year.
Setting up a self directed TFSA trading account was as easy as easy can be. I hope my article is proof of how anyone can open and start investing with a TFSA and make the most of their savings without having to worry about tax implications. Care to share any of your TFSA stories with the rest of us?

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