Setting up an RESP

Kindergarten graduationIn my last post I wrote about what a Registered Education Savings Plan is about, and today will go over my experience and the how & why of my choices. This is my own experience to date and not to be taken as advice; government regulations and Promoter rules may change over time.

As mentioned, I did a lot of research:  scouring blogs, newspaper & magazine articles, the government website, books, and asking questions.  Fortunately I have the time to commit to this, as well as just enjoying gathering information. When the time came to meet with the bank customer service representative, it made the whole process painless because of the fact she was A-mazing!  I have to say this because when reading of others’ experience, it was often dismal and frustrating solely because of the ineptitude or uncooperative attitude of the bank rep.  So, as prepared as I was, it was made all the easier because I dealt with someone who was on the ball. 

Before you make an appointment

Before heading off to set up a RESP account there is some planning to do because once the paperwork is done, the bank rep will want to know what you want to hold in the account and this is not something you want to leave up to someone else or chosen on the fly.

One of the first decisions I made was that this savings plan would be invested with the objective being growth as opposed to safety because the money would not be needed for more than 15 years.  In the investment world, this is a fairly long horizon with time to even out the inevitable spikes in return.  With growth and long term horizon as the criteria, the next decision was where and how to invest.  Mutual funds are a great way to save with regular contributions which can be purchased without transaction fees–as is required for stocks. The downside is the MER or management expense ratio; Canadians pay some of the highest MERs in the world of investing, but if you do your homework, there are mutual funds that have low MERs.

For me, the choice was TD Canada Trust’s e-Series Mutual Funds which offer index funds at a low MER and have had good returns.  An index fund tracks the performance of a given index (i.e., TD’s Canadian Index-e mutual fund tracks the Standard & Poor/TSX Composite Index; this is the one on your nightly news) rather than buying specific companies (i.e., TD Bank) or industries (i.e., Banks) or sectors (i.e., Financials).  Spreading the performance over more stocks evens out the impact of good or bad news for one company. 

Next up was asset allocation. Long time investors will tell you this is THE most important criteria for determining how well a portfolio will perform. You’ve heard the expression “all your eggs in one basket”?  Eggs are the asset and the basket is where they are allocated.  Having a basket of Canadian stocks, a basket of U.S. stocks, one of international stocks, and another of bonds, will spread the risk of one basket falling or eggs breaking.  In addition, with a greater quantity of eggs (stocks) in each basket as you have with an index fund, the likelihood of all of them breaking is reduced.  I must be hungry thinking about eggs.

It would be a long time before the money will be needed, so I went with an allocation suggested by the blogger at Million Dollar Journey; this will be updated as my granddaughter gets older.

TD Mutual Fund e-Series Fund Symbol Allocation
Canadian Equity – CDN Index-e* TDB900 30%
US Equity – DJIA Index-e* TDB903 30%
Global Equity – International Index-e* TDB911 30%
Fixed Income – CDN Bond Index-e* TDB909 10%
Money Market – TD CDN Money Mkt TDB164 0%


Once those decisions were made, it was time to gather the documentation the bank needs to set up the RESP.   This is where you will want to know if the Promoter (or institution) has registered with CRA for the grants you’re entitled to; check with HRSDC list of Promoters online. You may or may not be entitled to all three incentives: Canada Learning BondBasic Canada Education Savings Grant (CESG); Additional CESG.   Since this was for my granddaughter, I had to obtain her SIN from my daughter, and have her sign a document to provide consent for CRA to pass income data to HRSDC. If you’re a parent setting up a RESP for your child, this particular form will not be required since you consent when you apply for the CESG.

There are forms for opening the RESP account with the Promoter as well as applying for the grants.  As with any account opening, you will be required to provide photo ID by the institution.  Since I was planning on investing in mutual funds, with TD, there’s a choice of opening a Mutual Fund RESP or TD Waterhouse RESP. You can also open a GIC RESP, but that limits you to GICs. The Mutual Fund RESP is the one I chose and converted it to a self-directed e-Series mutual fund.  The e-Series funds are only able to be purchased through online accounts (either e-Series Mutual Fund or TD Waterhouse). If you read others’ experience setting up an e-Series Mutual Fund with TD you will encounter bitter complaints of bank staff who have no idea or are only vaguely familiar with this product.  It is a self-directed online product, however in my opinion TD should provide more training to their front line staff, particularly since there’s nothing on their website to allow account opening without visiting a branch.  The bank customer rep should be able to send the application to convert from a Mutual Fund account to an e-Series Mutual Fund account either through interbank mail or fax on the spot. 

Part of the account opening process also involves the bank representative walking you through questions required by the Mutual Fund Dealers Association to assess the customer’s investment profile.  In the financial services industry it’s referred to as KYC (Know Your Client); you will be asked about the time horizon for needing money from the account, how you feel about risk, your investing experience, and more. This will give them an idea of what products (mutual funds) are appropriate for you, and can be updated or changed with a phone call to their customer service 1-800 number.  FYI the asset allocation and e-Series funds I’ve selected are considered consistent with an Aggressive investor profile; this may not be suitable for your comfort level or objectives so be honest with yourself and the representative.

Once the TD Mutual Fund e-Series account is open you will be asked how much will be contributed–this can be done monthly or periodically.  I chose to make a monthly contribution and instructed TD to purchase money market funds and went online to switch to an e-Series fund according to my investment plan. You do not have to have a TD bank account to set up a monthly contribution; at the time I banked with BMO and a transfer was put in place between banks. Once the contribution is made, TD submits a report to HRSDC and a proportional grant is paid into the RESP account, usually within a month.  The first grant(s) may take longer than that; it’s been my experience the government does not react with lightning speed. 

In the three years since my granddaughter’s account was opened the returns have been very encouraging and I’m satisfied with the choice of investment and the ease of managing the account online. Last summer I set up an RESP for my grandson born in the spring, and as the original plan was a Family RESP, he was an add on. You might think it would be a simple matter of adding his name but, no. At TD, another account must be set up and go through the same procedure as for the first child, even though both grandchildren are in a family plan; I’m not sure if that is a HRSDC or TD requirement.

If you have any questions about my experience with the process, feel free to ask in the comments.

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About Leslie

Trying a little bit of everything: writing, learning Wordpress & basic coding, cooking, playing with grandkids, travelling, gardening, making soap & body treats, and getting older. Not necessarily in that order.


  1. Hi:

    Do you know if the “Self-Directed RESP” through TD Waterhouse is essentially the same as opening the TD Mutual Funds RESP and converting to e-Series? Seems to me the only difference is that the Waterhouse account has a $50 annual fee, but no need to jump through hoops to convert the account, etc.


    • There is another consideration in where to invest. Promoters (a.k.a. what the CESG calls banks, brokerages, trust companies, credit unions, etc) of RESPs have to apply to administer the various grants and Canada Learning Bond (CLB) offered. TD Waterhouse and TD Canada Trust have only applied for & support the Basic CESG. Depending on your family net income, the threshold may have an impact on where you choose to set up the RESP. You can check this list here for what institutions have applied to administer (promote) which grants. TD Canada Trust supports the Additional grant and CLB for its Term Deposits/GIC products.