Investment Accounts

The first hurdle when I wanted to begin investing was understanding the account structure (and fee structure) offered from by bank, TD Canada Trust. In order to carry out my investment plans I opened two accounts:

• Direct investing cash account
• Basic self-directed RSP account

In early July I didn't really even understand what an RRSP (registered retirement savings plan) was. It is basically just an account, but is considered a registered account (meaning it serves as a tax shelter). Any money I deposit in my RSP account is deducted from my income for tax purposes, and any gains I make on investments inside the RSP account are not taxed until I take them out (when I retire). American investment resources will always mention the US versions of retirement accounts, which I believe can be IRA's, or 401(k)'s. Anything you read about those is probably useless to you.

There is a penalty if you take your money out of your RRSP account before retirement (except in certain special cases, I believe), thus it was necessary for me to open a second, direct investing cash account (non-registered) for my discretionary investing, and because I wasn't ready to lock up too much money in the RSP account for the long term.

Fees and limitations: The RSP account is 'Basic'... Thus it is in the lower fee structure (as far as TD Waterhouse RSP accounts go), of $25 / year, just to have the account. The limitation of the basic account is that I cannot hold individual stocks. Only mutual funds and things like GIC's (guaranteed investment certificates) may be held in the basic RSP. Thus I decided to use the direct investing account for any individual stocks I might by 'for fun', and choose some promising mutual funds for my RSP account. If I recall correctly, the direct investing account has no fees.

Once I signed up for both my new account online, and mailed the bank signed copies of the accounts, I was almost up and running. The TD telephone staffers have always been very helpful, and within a few days after the accounts being open, I was able to access them online through Webbroker, and execute my own cash transfers between accounts, and mutual fund purchases.