Canadian Investing with Mr. Frugal Toque: Part Two

A Foreword from MMM:

toque Toque

Mr. Frugal Toque is back! After the success of his first article, people began requesting this second one almost immediately. Although it took him a while, I feel the result is very worthwhile.

My goal with sharing this Canadian information is to highlight a topic that is often overlooked: the expense ratio. Even here in the market-crazy US, people get tricked into buying front-loaded funds, back-loaded funds, actively-managed funds with multiple-percentage-point fees, whole life insurance, and other dubious investments. This persists even with Vanguard standing by to maintain the gold standard for low fees and no hype. And in other countries, fees are often even higher and awareness of their importance even lower.

As a perfect illustration, after I forced Mr. Toque to write this post for you, his research revealed that even his own retirement savings were in an overly costly fund. This new knowledge will allow him to retire earlier and wealthier. In his own words, “Duh! 0.5% of my money, here I come!

I wish the same for you, regardless of your country.

Canadian Retirement Investing with Mr. Frugal Toque – Part Deux

Previously, on Canadian Retirement Investing with Mr. Frugal Toque (see Part 1), we discussed the two major investment vehicles that are available for private individuals who do not have company or government pensions available to them.

Those were the RRSP and the TFSA. The key difference between those two vehicles is the way they are taxed. Anything you put in an RRSP doesn’t count as taxable income for that year. Instead, it gets taxed when you take it out – after it has accrued compounded investment gains without being taxed on the way. The TFSA is for after-tax income. It also grows untaxed and, furthermore, you pay no tax when you withdraw from it. But enough of the rehash, the real question is:

What To Buy Once You Have the Account

That’s not too hard a question, right? We all know that stock or bond index funds are the way to go unless you think you’re smarter than the stock market (Pro tip: you aren’t, although you can trick yourself into thinking so for surprisingly long periods of time.)

Novice Investment

When I started the investment game, I had no idea what I was doing. At the age of 21, I got a job with a salary. My father, a wise man who taught me to fear debt and spend only money that I had, instructed me to max out whatever pension contributions my company would give. At the time, Mr. Money Mustache and I worked for a Canadian company that kicked in 50 cents on the dollar up to 5% of our salaries. So we immediately set our pension contributions to 10% of our paycheques(1), randomly picked some funds based on things I’d heard about money(2), and happily took the 5% bonus.

This strategy served me well, and it would probably serve you well, too, so you shouldn’t be ashamed if you got your shit together well enough to get this far. You’d be ‘stashing 15% of your income before it even touched your bank account (automatic!) and you’d be set to retire in some 30 or 40 years. Good for you. At your next raise, you may as well raise your contribution to 13% so you’re at the legal limit (13% from you + 5% from the company = 18%).


But there is some chicanery here and you need to know about it. This game is rigged. Not quite “The Dabo table at Quark’s Bar” rigged, but so damn close you’d swear there’s a Ferengi hiding around a corner somewhere.

You see those mutual funds you’re buying? They have an MER – Management Expense Ratio. This is always shown as a percentage, and it’s the percentage of your money that someone at the bank takes in order to run the mutual fund. When I first set up an account and chose my funds, I paid no attention at all to the MER. I freely admit I didn’t know what I was doing. Once I found out, however, you can imagine my rage.

You see, the MER can run as high as 2.5%. Do you understand how bad that is?

Do you remember the 4% rule? We get that from the fact that the stock market tends to return at least 7% per year when averaged over long periods of time (like my planned 60 year retirement). We leave a generous 3% for inflation and market fluctuation and live off the 4% that’s left.

What happens if you let some jackass take 2.5%? Now you have to live off 1.5% So instead of needing $800k so you can live at $32k per year, you’re going to need to save up $2.13 million dollars.

Yeah. You mad, bro? You should be.

Intermediate Investment

So I did you some research and here’s what I came up with from the national banks in Canada. I could have made this chart larger by including every fund every bank had, but we’re principally concerned with low-cost funds that track Stock Indices and Bond Indices, so that’s what you’ll see here.

For example, from each bank I took the Stock Index fund with the broadest reach of Canadian stocks on the S&P TSX. Each of those funds has, in its definition, the words “S&P/TSX Capped Composite Index ” or something to a similar effect.

I examined the funds offered by the investing arms of the five major Canadian national banks. There are, naturally, other institutions through which you can invest and you should certainly look at your local options. This list will give you a place to start. (Please note that you should obviously consult the actual investment houses in question for their latest rates. The funds available and their MERs seem to be constantly changing and I’m totally not responsible for keeping this chart up to date).

Management Expense Ratios(3)

Fund TypeTD TrustScotiabankBank of Montreal (BMO)Royal BankCIBC
Stock Index Expense Ratio0.89%0.99%1.05%0.72%1.00%
Bond Index Expense Ratio0.83%0.84%1.59%1.22%1.25%

That’s pretty straightforward, isn’t it? If you want, you can calculate how many extra years you’re going to have work investing in a bond index fund at BMO vs one at Scotia Bank.

But even if you have a lot of your money where I have it, in Royal Bank’s Stock Index fund, you’re still losing 0.72% of your money to the MER. Instead of needing $800k to retire on, you’re still going to need $975k.

Expert Investment

Well, Canada, there are a couple more options for you, if you’re willing to put your toque on tight, ride your dogsled that extra kilometre and deal with a bit more hassle.

The first up on the menu is TD Canada Trust. This outfit offers Mutual Funds in something it calls an “e-series”. I talked to someone who uses them and determined there’s nothing tricky about investing in any of these “e-series” funds. You sign up for an RRSP or TFSA account with TD Canada Trust, select the “e-series” fund called “TD Canadian Index – e” and boom, you have a stock index tracking fund that only charges 0.33% MER. There’s also “Canadian Bond Index – e” at 0.55%

Great. I’ve now got my retirement requirement down to $872k.

And if you wanted to stop there, I wouldn’t blame you. You’re well ahead of the rest of the fools who are subscribing to any of the funds in that chart up there, and at least three wormhole jumps ahead of the idiots back in the Delta Quadrant who are taking payday loans to finance video game consoles.

But this isn’t the blog for just stopping at good enough. This is the blog where we tell you to turn off your car’s A/C and spray your face with a water bottle to save a dollar per driving hour on gasoline. So let’s talk ETFs – Exchange Traded Funds.

You can purchase ETFs on the open market, in which case you have to be careful with things like “turnover rates” which determine how often you need to pay capital gains tax on the increasing value of your funds. If, however, you purchase ETFs inside a TFSA or RRSP account, you obviously don’t have to worry about that.

The benefit of an ETF is an even lower expense ratio. Now that you can buy Vanguard funds here in Canada, there is no excuse for getting ripped off with excessive fees:
See their rates here : https://www.vanguardcanada.ca/individual/etfs/etfs.htm

MMM Note: Another benefit of looking at Vanguard ETFs is easy diversification. Putting all your investments into the relatively concentrated Canadian stock market could make for a volatile ride (Nortel and RIM shares, anyone?) In my own investments, these days I split new purchases evenly between US stocks (Vanguard’s VTSAX) and other major economies through their Total International Stock Index Fund (VTIAX). A bit of asset allocation at work here, and I also like the much higher dividend yield. Canadians might allocate to Canada, US, and International as well.

We’re looking at 0.12% to 0.15% for basic index funds. That’s great! We’re looking at getting the retirement fund down from that ridiculous $2.14M number to somewhere in the neighbourhood of $825k.

The downside to the ETF is, of course, that you need to purchase it through a brokerage, presumably at the bank where you have your direct investment RRSP or TFSA account.

As a quick aside, a standard way of investing in RRSPs in Canada is via direct deduction from your paycheque. When you set up such regular deductions, the bank is happy to waive any brokerage fees for your continuing business. So even if you’re just putting $100 in six different funds every two weeks, you’re not paying six brokerage fees. With ETFs, you are going to pay those brokerage fees, so you’re going to have to be a bit more careful with your investment schedule.

Some quick research (http://www.rbcdirectinvesting.com/commissions-fees.html) has shown that these fees are quite low in the current millennium, in the $10 range. Should you use this investment technique with every paycheque? Probably not. Even if you’re investing $600 every two weeks, a $10 brokerage fee is still 1.6% of your money. I would want to save a up a couple thousand in the account before making a purchase, so that the $10 brokerage fee is immediately cancelled out by the benefit you’re getting in lowered MER.

Update: As usual, the readers have one-upped us in the comments, and found a commission-free to buy ETFs – with Questrade – see this link for more details.



Was that as exciting to read as it was to write? I hope so. The overarching lesson here is that Canada is very friendly to all levels of investors, from the savvy MER bargain hunter to the DIY investment champion. What you do is, of course, your call based on your personal levels of confidence and the amount of time you’re willing to spend, but you at least know your basic options.


1 – Yeah, that’s how we spell it up here
2 – Well, that’s what I did. Mr. Money Mustache may have been more deliberate.
3 – President’s Choice, I’d love to include you, but I don’t know what the hell you’re doing. Your mutual funds are repackaged mixtures of CIBC’s mutual funds. A month ago, you were charging 2% or more. Now you’re down to 1.x% or so, but why won’t you let me buy straight up index funds?
4 – Royal Bank also offered an S&P TSX Capped Composite Index called the “RBC Jantzi Canadian Equity Fund” which charges 2.11%. Go ahead and compare them and see if you can tell me what you’re paying the extra 1.39% for.

Extra Information

As I said, these rates do change every now and then, so it’s not a bad idea to keep yourself informed.
Royal Bank: http://funds.rbcgam.com/investment-solutions/rbc-funds/index.html
Toronto Dominion: http://www.tdcanadatrust.com/products-services/investing/mutual-funds/td-mutual-funds.jsp#what-does-td-offer
ScotiaBank: http://www.scotiabank.com/ca/en/0,,796,00.html
BMO: http://www.etfs.bmo.com/bmo-etfs/glance?fundId=72048
CIBC: https://www.cibc.com/ca/mutual-funds/no-load-growth/can-index-fund.html
CIBC is a bit tricky here. I believe I had to click on the link to https://www.cibc.com/ca/mutual-funds/rprt-gvrnc.html and go to page 101 for the Index Fund, page 43 for the Bond Fund.

  • Rob January 21, 2014, 3:15 am

    I think the one important exception to low MER Vanguard funds or ETF’s might be DFA, Dimensional Funds, a so-called “enhanced index” vs a strictly “passive index” like Vanguard. This analysis indicates that, even after subtracting advisor and custodian fees of about 1.5%, which are, unfortunately, unavoidable in the case of DFA, the funds still outperform Vanguard, even when completing the analysis multiple ways. Here’s a longish but reasonably non-technical analysis. DFA is available in both the US and Canada, and fees are broadly similar for portfolios under $1 Mn. DFA tends to be a lot less well-known because for a long time since its inception in 1981, the funds were only available to institutional investors. Not sure how long they’ve been available to individuals now, but at the very least, worth a careful look. They’ve certainly caught my attention.


  • Dan January 31, 2014, 7:23 pm

    RBC just lowered their trading costs to $9.95 per trade but as you mentioned Questrade seems to win hands down for lowest cost

  • NimLeo February 13, 2014, 1:00 pm

    The MMM blog seems to have a great message.. came across the blog about a month or so back and have been reading all the old posts. Big fan :)

    Am from the Great White North and have been researching a bit on investments recently. Some things to share from my recent research on the topic:
    1. Canadian brokerage comparison: http://www.moneysmartsblog.com/canadian-online-discount-stock-brokerage-comparison/
    Questrade does come out on top with free ETFs and US$ RRSPs

    2. Also, with reference to the index fund investment strategy a great website is Canadian Couch Potato and the model investments therein: http://canadiancouchpotato.com/model-portfolios/

    Thanks to Mr. Frugal Toque for the two articles.

  • Skorge February 15, 2014, 5:45 am

    Fantastic info; just what I’ve been looking for. I just need a bit of help deciphering some info on TD Waterhouse’s website in reference to their TD Canadian Index e- Series Fund. Under fees and expenses they site:

    Actual Management Fee 0.30%
    Actual Mgmt. Expense Ratio (MER) 0.33%

    Are these two different things, adding up to fees of 0.63%, does anyone know? Are there other fees I should be watching out for when choosing how to invest? I know that buying these funds through an RSP eliminates taxation on gains for now. Thanks for your help.

  • Gili February 23, 2014, 5:58 pm

    The Globe and Mail runs an annual online brokerage survey. The winner in 2013 (and 2012) was Virtual Brokers. They appear to offer very low commissions as well as no commission ETF deposits, free RRSP’s (for accounts over 15k, otherwise $50) as well as free TFSA’s. I’m thinking of opening an account with them very soon.

    See the survey:

    Virtual Brokers’ fees:

  • Andrea Kovarcsik March 22, 2014, 6:22 pm

    Hi MMM, Mr. Frugal Toque and the entire Mustachian community on here! I have been reading the blog for probably over a year now, trying to soak up all the grand information and advice like a sponge. Just a few weeks ago I moved back to Toronto after living/working in Europe for almost two years (I’m now about to turn 26). After dealing with (and forgiving myself) for the ignorant and frivolous spending ways of my “early” 20s, I realized it is high time to “get my shit together” if I may use that phrase :). I have already read several of the MMM recommended books and still have many questions. But for the sake of clarity of simplicity I would like to ask Mr. Frugal Toque or any other Canadian investors one question. I am about to open an RRSP and TFSA, what I am wondering is should I invest only through the RRSP and TFSA? Because I see on the given Canadian Vanguard site that (for eg.) the FTSE Canada All Cap Index Fund is eligible through both the RRSP and TFSA:

    Mr. Frugal Toque mentioned that he is investing through RBC, and MMM mentioned that he is investing primarily through Vanguard. I’m guessing some kind of a mix is the best. Should I invest separately through the RRSP, TFSA AND Vanguard (due to it’s low fees) to achieve optimal diversification? Or stick to investing in the RRSP and TFSA?

    Thanks in advance for any advice and points in the right directon! And sorry if this is a super rookie question!

    • LoonieITGuy July 8, 2014, 1:25 pm

      A few months late, but doesn’t look like anyone answered your question.

      Unlike the US (I think, not 100% sure since I’m Canadian, but it sure looks like you can open an account with Vanguard in the US), you do not open an account with Vanguard directly.

      Instead, you need to open an account with a brokerage or online brokerage. This account can be an RRSP or TFSA. Using this account, you’d buy the Vanguard ETFs (such as the one you linked, VCN). Personally, I have a Questrade account since buying ETFs are commission free. Selling is a different matter. Only $4.95 to a maximum of $9.95.

      As for diversification, my wife and I are trying to max out our respective accounts at Questrade. My wife also has a TFSA with TD for the e-series mutual funds. This is part of our “Oh crap!” fund. No fees to sell as long as the funds weren’t purchased in the last 30 days.

      But that’s it for us. Any more accounts would be overly complicated to manage.

      Of course, once we max out our RRSPs and TFSAs, we’ll likely need to open non-registered accounts.

      If you’re talking about asset allocation, I follow the model portfolio of the Canadian Couch Potato.

      VAB – 40%
      VCN – 20%
      VUN – 20%
      XEF – 20%

      I modified that allocation so I’m less heavy on bonds (VAB) and more towards Canadian equities (VCN). Some people suggest certain ETFs belong with certain account types for tax efficiency, but it would be a pain to rebalance.

      • Andrea Kovarcsik July 28, 2014, 4:32 am

        Thank you so much Mr. LoonieITGuy! This is exactly what I was looking for. I’ve taken a look at Questrade already and discussed it with my husband. It looks great! I love the idea of managing everything ourselves.

        • LoonieITGuy July 28, 2014, 10:46 am

          You’re welcome!

          Glad to hear I helped.

  • Rhonda July 10, 2014, 5:32 pm

    Hello fellow Canucks! I invested by the suggestion of MMM readers into TANGERINE’s TFSA equity growth portfolio. So far it has worked out great for me and I can handle the 1.17% MER as it alleviates me having to re-balance every year. I’m willing to pay for that nuisance to be gone….BUT………………soon enough I will reach the $50K mark with them and from all my readings, it’s suggested that I switch to ETF’s once I save $50k in my investment account. Can anyone explain to me why?? Can’t I just leave it where it is and have great returns over time as well?
    A bit about me…I’m 43, full time career with a DBP when I retire. I have about $60K with an advisor invested in a multitude of funds……I know I know…….but I just haven’t taken it from her yet….and $25k in my Tangerine account invested in a TFSA & RSP all in equity growth.

    • LoonieITGuy July 14, 2014, 1:29 pm

      Hi Rhonda,

      Let’s assume you’re investing with Tangerine Balanced Growth Portfolio.
      That’s a portfolio containing 25% bonds, 25% Canadian equities, 25% US equities, and 25% International equities.
      If you have $50,000 in that account, you’ll be paying $535 a year in fees ($50,000 x 1.07% MER)

      If you decided to move your money to TD e-series funds, and manually allocate your money to the following funds:
      25% TD Canadian Bond Index – e (TDB909) MER 0.50%
      25% TD Canadian Index – e (TDB900) MER 0.33%
      25% TD US Index – e (TDB902) MER 0.35%
      25% TD International Index – e (TDB911) MER 0.51%
      If you have $50,000 in that account, you’ll be paying $211.50 a year in fees ($50,000 x 0.423% average MER)

      That’s a difference of $323.50!

      Instead of $50,000, if we’re talking small numbers like $5,000, that’s just a difference of $32.35. Some brokerages charge a commission to buy and sell. So saving $32.35 could be eaten up in 3 transactions. (There are no commission fees to buy and sell TD e-series funds unless you sell within the first 90 days after purchase). Which is why most people recommend Tangerine for people with little money to invest.

      However, with accounts greater than $50,000 that’s more “employees” you’ll keep working for you. Imagine if it was an account with $500,000, you would save $3,235 per year!
      It looks even worse with a discount brokerage if you purchase Vanguard ETFs.

      Once we start looking at time lines of >20+years the difference between accounts is ridiculous.

      Imagine an initial amount of $50,000, a yearly investment of $5,000, and average returns of 6%.

      After 20 years, the Tangerine account would have ~$264,000.
      After 20 years, the TD e-series account would have ~$337,000.

      A difference of $73,000 from a difference of 0.647% between MERs!
      You really don’t want to know the difference between Tangerine and Vanguard ETFs.

      Hope this helps.

      EDIT: I noticed at the end, you mentioned you’re with Equity Growth. Heh… oops. Pretty much the same thing.

  • Rhonda July 14, 2014, 7:49 pm

    LoonieIT….thank you for the breakdown! That really puts things into perspective! I will definitely try to gain the courage to take the next step to TD e-series & save more money! I never realized it would make such a difference….I just read an article over at JD Roth’s site that re-iterated this very thing….the reason we stay with what’s comfortable is “fear” of the unknown….guess its’ time to gain some knowledge & move on up!
    Your reply was truly appreciated!! Hope it helped others as well!

    • LoonieITGuy July 15, 2014, 8:37 am

      You’re welcome. Glad to have helped.

      Just an FYI, if you’re going to go with TD e-series, there are two ways to do it.

      1) Going with TD Waterhouse. Essentially, opening a brokerage trading account.
      2) Going with TD Easyweb. This is done by setting up a mutual fund investment account and converting it to an e-series account.

      If you already have TD Easyweb access, I think the process is simpler. You just need to set up a mutual fund investment account online and then convert it to an e-series account by mailing in a form. http://www.tdcanadatrust.com/document/PDF/mutualfunds/tdeseriesfunds/tdct-mutualfunds-tdeseriesfunds-convertaccount.pdf

      If you don’t have TD Easyweb access, you’ll need to book an appointment to set up an account. You don’t have to book an appointment, but if you go there and mention you want to set up an e-series account, the person probably won’t be as helpful and make you book an appointment to see someone else. (Not as much commissions for them but the same amount of work if you sign up for an e-series account).

      When you do see someone, you should tell them up front what you want to do. “I’m here to open a (regular, TFSA, RRSP, RESP, etc.) mutual fund account and I want to convert it to an e-series account.” Sadly, they might pretend they don’t know what you’re talking about. In some cases, they really don’t know. Just bring a printed copy of the form above. Maybe have the link to this on your smartphone. http://www.td.com/to-our-customers/tdhelps/#psce%7Ccid=871%7Clid=1%7Ctid=001%7Cvid=b042d063d

      Seems confusing, I know. The people at TD will resist you at every attempt. Once they know you really want to sign up for an e-series account, they might try to get you to sign up for their chequing accounts. They might say you need it to fund your e-series account. If you already have one, great. If not, you just need to bring a void cheque with you and they will link the accounts.

      You may also be told that you’ll need to pre-fund your account with $100 (or $25). You don’t need to do it, but the person may insist. Since your account is still not an e-series account, the e-series funds are not an option. In that case, ask them to place the money in a money market fund. You’ll be able to move the money once your account is converted.

      You’ll be asked to perform a risk assessment. You’ll need to select the riskiest profile possible. This will allow you to purchase the funds you want in the correct allocation. Otherwise, you’ll be prevented from purchasing specific funds if it doesn’t match your risk profile and you’ll need to go back to the branch to have that settled.

      If you don’t have a TD Access card, you’ll need one as well. The branch should provide you with one. You’ll need to set up Easyweb access at home, but they’ll need to start the process at the branch.

      Finally, the form you printed and brought with you, the advisor will need to fill out the information to convert the new account to an e-series account. Afterwards, they can use their internal mail system to send the form to the correct office. No need to pay for postage.

      That should be it. After a few weeks, you’ll get an email (a very messy looking email. Seriously, it’s so messy your spam filters might grab it first.) stating that your account has been converted. With your Easyweb access you can now purchase the e-series funds. Purchases made will be deducted from your linked chequing account.

      Seems like a pain and it is.

      The reason people go with TD Easyweb is that you are charged fees (I think around $10) to buy and sell at TD Waterhouse. However, at TD Waterhouse you can also purchase other investments such as stocks and ETFs and not just TD investments. Since the MERs with Vanguard ETFs are lower than e-series mutual funds, people usually go with Vanguard in a TD Waterhouse account.

      With TD Easyweb, you can only trade in TD mutual funds. However, there are no fees unless you sell within 90 days of purchase.

      Yikes! Sorry for the wall of text.

      The alternative to TD e-series are other online discount brokerages to purchase Vanguard ETFs. However, rebalancing ETFs are more difficult as you cannot purchase partial units. If you’re into no hassle investing, probably should get comfortable with the TD e-series first before looking into online discount brokerages.

      Good luck!

      • Frugal_canuck January 27, 2015, 8:52 am

        Great work LoonieIT guy. It’s helpful to have this info here, perhaps we should (canucks) look into developing a wiki for this? I’ve had to piece this information together over many hours and one wiki page would be a great resource

        • LoonieITGuy January 28, 2015, 11:05 am

          Thank you Frugal_canuck!

          A wiki is a good idea. Not sure where we could host such a thing.

  • Jane September 26, 2014, 10:27 am

    Thanks for all the great info. I am with Patty though (Dec 15 2013) I find all the investing info similiar to trying to read a foreign language. Therefore my question is for my own mini moustachian, he is 11 years old and just got his first job. He is planning his life of financial independence and wants to start investing immediately. He intends to split his weekly $42 salary three ways, retirement, education and saving for holidays etc. I know it is a small amount of money but he has time, enthusiasm and is on the right track. With my lack of financial knowledge I don’t want to give him poor advice that could put him off investing for the long term. I would appreciate any advice you could offer. Thanks.

  • Marsh November 11, 2014, 2:44 pm

    Mr. Money. Just recently started exploring/reading your site. I’ve starting from the very beginning and working my way to the present. I saw in one of your earliest posts about investing in SPY. I have a sizable amount of money in my checking and even more in my savings. I have a discount brokerage I use (Trade King). I have transferred money there (aproxx $1,025) and want to put it all in the SPY. Questions: 1) is this a good start, dollar wise? 2) Do you still recommend SPY, or maybe IVV, VONE, THRK, etc. ? 3) The trade fee is $4.95 (each trade), so won’t this take away from potential earnings? (I know long term it won’t matter, but I am also thinking about buying a house/condo very soon, so investing might take a temporary halt). Any advice or other recommendations are welcome. Thanks!

  • Chad November 16, 2014, 8:26 pm

    Hello and thank you for your great ideas!
    I am looking for some advice…
    My wife and I have about $75,000 invested in a TFSA with Scotia Canadian Dividend Fund – I am looking to move it from this TFSA into a TFSA with a low MER index fund with Quest trade.
    I am planning to transfer it all directly but I would like to know if you have advice for me so that I will be able to transfer between TFSAs smoothly without being penalized for over-contributing to our TFSAs.
    Also, I would appreciate any suggestions as to which index funds to invest in with quest trade.

    Thanks so much!

    • Chad November 19, 2014, 7:18 am

      Hey there,

      I received a response for the first half of my message from Questrade:

      Questrade has informed me that transfer of TFSAs is simple from Scotia bank (and I assume other banks) to Questrade without over contribution by simply opening a TFSA account with Questrade and filling out an account transfer form. Once they receive the transfer form by mail, they’ll take care of the transfer.
      If you are transferring more than $25,000, Questrade will cover the transfer out fee from your existing broker up to $150.

      Now to discover your opinions for some of the top index funds for Canadians to invest in – taking into consideration foreign taxes, fees and rates of returns

      …Thanks again

  • scott November 29, 2014, 1:05 pm

    Hi there,
    Curious if Frugal Toque will be retiring soon, and what level of “Stashe” he needs to fund ER.
    Also with kids, there are certain “low income” benefits you get here in Ontario Canada that you otherwise would not get at a higher income level. If he does plan to ER soon, is he factoring these additional government benefits into his math?

    • Mr. Frugal Toque January 18, 2015, 8:26 pm

      Hi Scott,
      I was just looping through my old posts and chanced upon this.
      Any government benefits I will receive for my kids aren’t actually factored in at this point. I notice that the Feds have just created a new $100/mo baby-bonus type system that will fund every kid until he or she turns 18. That’s pretty impressive, although not strictly necessary for most of us. There’s also a property tax rebate that occurs at certain low levels of income.
      Our monthly expenditures, about $2400 + property taxes, will require somewhere between $800k and $900k for us to declare ourselves safely retired. It’ll still be a couple of years before I can consider us well beyond the margin, but I’m certainly considered 4-day work weeks and weeks of unpaid vacation in the near future.

      • Scott January 21, 2015, 4:55 pm

        That is kinda where we are too. Paid off house, and sitting at about $650k of combined Vanguard ETF’s and TD E Series Funds. We also figured on $800 -$900 would be plenty. The bonus government benefits along with any “fun money” earned will create an awesome ER! Thanks for the response!

        • Chad Wotherspoon January 28, 2015, 4:48 pm

          Hey Scott,

          If you don’t mind me asking, which Vanguard ETFs do you put your money into and what sort of percentages of that 650k do you allot where? I would especially like to know how you allocate money within your TFSA (if you have one) as to avoid foreign taxes while still getting decent returns.

          Thanks very much,

          • Scott April 12, 2015, 3:46 pm

            Hi Chad,

            Sorry about the delay in getting back. This is how we are set up currently.

            25% VAB (Vanguard Aggregate Bond)
            25% XEF (ISHARES International)
            25% VCN (Vanguard CND Broadbase Index)
            25% VUN (Vanguard USA Broadbase Index)

            We have RRSP’s, RESP’s, LIRA, TFSA’s and Non Registered Funds.

            For the LIRA and RESP’s we keep the allocation for those accounts independently.

            For the rest of the accounts, the allocation is tracked as one giant account (TFSA, RRSP, and NON Registered). We have all CDN in the non registered. VAB, VUN and XEF are held in the remaining accounts. I track the allocation with a simple spreadsheet and re-balance every 6 months or when an allocation is off by more than 5 bases points. I don’t worry about being taxed in a TFSA because the tax is only on dividends, not capital growth. This is equivalent to paying an extra mer of about .3% on VUN inside the TFSA. To mitigate this, my focus is to find appropriate investments with the lowest mer possible and limit trading costs.

            Hope this helps – and btw that $650 has now grown to $710 as I type this from the above investments. :)

  • Kori March 2, 2015, 11:03 pm

    Great Blog! I wish I had read this two weeks ago as I just signed up for a BMO RSP Growth ETF Portfolio (diversified in Asset Class, geographical allocation, and industries).
    We had to rush to contribute as we jus returned to Canada and had the RRSP deadline creep up on us but I thought this portfolio was diverse and mildly comforted that it will be rebalanced as needed but I now I am questioning the 1.7% MER. Should I move my investment out of this portfolio to another RRSP product with a lower MER?
    We do like having direct debit withdrawals of our RRSPs but all this MER talk has me second guessing even with no concern over turn over rates or capital gains eating away my sheltered investment… Open to suggestions.

    • LoonieITGuy March 3, 2015, 11:09 am

      Wow! Totally. 100%.

      Here’s why. I just googled this ETF. It’s mostly a wrapper of index ETFs, except instead of charging index ETF fees (< 0.2%), they are charging you as if they are actively managing this.


      The question is where to move this. Based on your comment, you seem more comfortable if you didn't need to rebalance your portfolio. That being the case, Tangerine would be your best bet.


      The MER is on a high side (1.07%). However, you just put the money into the account and forget it.

      If you're willing to learn how to manage your own portfolio then Vanguard ETFs or TD e-series mutual funds have really low MERs (average 0.17% to 0.43% for balanced portfolios).

      I don't understand your comment about the debit withdrawals of your RRSP. Are you taking the money out of your RRSP with your debit card? Or are you referring to automatic deposits of your paycheque to your RRSP account? (If it's the second one, Tangerine can do that too. If it's the first one, MMM might have a remedy for you that involves a fist and a face.)

  • Diego March 4, 2015, 2:25 pm

    MFT and MMM (and any canadian readers), does all that is said in these 2 articles applies to Quebec? I know they have different laws there, so much they want to be a separate country.
    I ask because I am thinking about living there, so I am adjusting my early retirement plans in case I make the move.

    • alex April 3, 2015, 5:48 pm

      Yes rrsp s and tfsa apply to Quebec and work in the same way. If you retire in Quebec you may have to apply for qpp instead of cpp if you end up working there at all, your cpp contributions would transfer over to the qpp prpgram. Old age security is canada wide. you will likely pay slightly higher taxes since tax rates are higher in Quebec so you can look up revenue Quebec s website for tax rates.

  • Yama April 27, 2015, 2:03 pm

    I found this blog last week and I cannot stop reading it! As a fellow Canadian, what do you think of the newly increased TFSA limit to 10000/yr? Is it worthwhile to invest exclusively into TFSA instead of RRSP as future withdrawal will not be taxed? US/international stocks dividends are still subjected to withhold tax within TFSA. I have an investment horizon of 20+ years. I wonder if it will make a big difference in that time frame to be losing a percentage of dividend paid out over such a long time. (I actually contributed maximally to both TFSA and RRSP and can retire today at age 41.) I wonder if I should stop paying myself income from my incorporation and forego the RRSP for now) I am sorry I am such a math/money nerd.

  • TJ April 12, 2016, 8:01 pm

    Hello, I just found this blog and have been reading it every spare moment. I am excited to get myself on a path to relative non-suckiness. It was wondering if any of you brilliant people could give advice to a dual American Canadian citizen living in Canada, not numerically gifted, and just starting to invest. The new tax laws make it inadvisable to hold a TFSA or any non- US mutual funds, so what can I do when I max out my RRSP? US funds in a non-registered account? Any lurking tax problems there? I am hoping the mustachians can triumph where the internet has (thus far) failed me.
    Sincerely, Dual Citizen Charlie Foxtrot

  • Marie-Soleil April 18, 2018, 5:18 pm

    Hi! Is it still the case? Buying Vanguard, opening a td account… is it better options now to invest without paying MER or transactions fees? I’m not sure where and how to invest.

  • Maggie Laidlaw July 11, 2018, 1:20 pm

    I am about to retire, my husband and I will sell our home and rent in future, so that we can travel extensively and live on the interest from our investments, although we do currently have some investments. However, my biggest problem is the imbecile south of the border. The POTUS idiocy could precipitate a recession, depression or even a stock market crash, from what I read from investment experts. I don’t want to invest a plug nickel in the U.S. What is wrong with investing only in Canada and internationally, or is Trump’s reach so far that the downward trajectory of the U.S. will drag us all down, in investment terms?

    • Mr. Money Mustache July 11, 2018, 4:48 pm

      Hi Maggie, I actually have a great answer for you.

      #1: We are not all doomed. Prosperity will continue, and in fact will probably accelerate despite having a more corrupt party in power in the US for now. Read this:

      #2: STOP READING THE NEWS! You are just distracting yourself and will make yourself a worse investor for it. You cannot make stock investment decisions based on today’s news headlines. So now, read this:

    • Reade July 13, 2018, 10:56 am

      Hi Maggie, fellow Canadian here. If the US sneezes Canada catches a cold, so investing only in Canada or Internationally won’t protect you from whatever happens in the US. As MMM said, the media’s job is to get ratings, that is why the sky is always falling, hard to get ratings with “People have never had it so good” headlines. Live simply, eliminate all debt, build your skills, and invest in low cost index funds. You will be better shape than the vast majority of people.

  • Barbara J. Fournier February 19, 2020, 4:47 am

    Incredible post Mr Frugal Toque! There are a great deal of similitudes to be found in your article for us European financial specialists. I’m doing an intensive research on the theme (contributing with Vanguard for Europeans) at this moment and I am extremely glad to see that I have arrived at similar resolutions up until now. We’ll begin contributing with Vanguard as of January.

    Be that as it may, there are two things I am battling with and I was pondering whether those would apply to Canadian financial specialists too. I couldn’t imagine anything better than to know your view on these.

    First up: cash hazard. Do you put with American Vanguard assets in Canadian dollars or American? With the two choices there’s the matter of money chance. What’s your interpretation of that?

    Second: charges. Profits paid by American Vanguard reserves are burdened in the U.S. yet in addition in Canada, isn’t that so? How to you approach this retention charge? Do you fill in a W-8BEN shape and recover the profit retaining charge with the goal that you have disposed of twofold tax assessment?

    These are the two points that I am battling with this moment. Living in Europe we’ll in the long run need euros for our initial retirement. At that point there’s the twofold tax assessment issue which could be inconvenient to one’s TER.

  • Bazehead April 1, 2020, 3:00 pm

    As a fellow Canadian I really appreciated the Mr Frugal Toque articles and would like to see more! In particular, since i also have a family of 4, I’d love to see a breakout of Mr Toques expenses to get a sense of how he lives off $24,000/year. Thanks!


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