How to Build an ETF Portfolio at TD Direct Investing


Hi, I’m Justin Bender, Portfolio Manager at
PWL Capital in Toronto, and this is episode one of my DIY Investing series. Today’s lesson is on How to Build an ETF portfolio
at TD Direct Investing. For our example, we’ll be purchasing the
five ETFs from my 40% fixed income / 60% equity model portfolio – please feel free to download
the model portfolios from my blog before getting started. We’ll begin by reviewing the cash balance
in the account details screen. As you can see, we currently have $15,000
of cash available for the trades in our Canadian dollar RRSP account. When you’re ready to start trading, click
on the ‘Buy/Sell’ icon at the top of the screen. This will bring us to the trading screen. You’ll notice that the account drop-down
menu is set to the Canadian dollar RRSP account, and that the available cash is $15,000. Let’s start by entering VCN as our symbol. When the fund name appears, click on it
– this will populate a quote to the right of the screen. The letters “CA” that appear after the
ETF symbol just means that the ETF trades on the Canadian stock market. We can then select ‘Buy’ as our action. When we’re buying an ETF, we will be focusing
on the ‘Ask’ price, which is the price per share that an investor is willing to sell
the ETF to us for. In order to determine the number of shares
that we need to purchase, we’ll use our computer’s calculator: Multiplying the total account value of $15,000
by VCN’s target allocation of 20% (or 0.2), gives us $3,000. We then subtract the trading commission
of $9.99 from this amount, and divide by the current ask price of the ETF, which is $29.28
in our example. This equals 102 shares (we can just round
down to the nearest whole share). Let’s go ahead and enter 102 in the ‘Quantity’
field. For the next step, I prefer to select ‘Limit’
instead of ‘Market’, as this puts a cap on how much we are willing to pay for the
ETF. In the ‘Limit Price’ field, enter an
amount that is a couple cents above the current ask price. Even if you use a higher limit price to
place your trade, you’ll still receive the lower ask price if it’s available. The ‘Good Til’ drop-down menu should be
set to ‘Day’, meaning that if your trade does not get filled by the end of the trading
day, it will expire. Enter your four-digit trading password next,
and click on the ‘Remember password for this session’ checkbox, so that you won’t
have to enter it again. When you’re ready, click on ‘Preview Order’
to move to the next screen. On the confirmation page, you’ll notice
a warning about your limit order being above the current ask price – you can safely ignore
this warning. Once you’ve reviewed the order details,
and verified that the estimated cost is approximately the dollar amount that you would like to purchase,
click on ‘Agree & Send Order’. And to place another trade, click on ‘New
Order’. We’ll enter VUN next as our symbol. When the fund name appears, we’ll click
on it to populate a quote to the right. We’ll select “Buy” as our action. In order to calculate the number of shares
to purchase, we’ll multiply our total account value of $15,000 by 20%, subtract the $9.99
commission, and divide this value by the current ask price of $38.89, which equals 76 shares
We can then enter 76 in the quantity field. We’ll select ‘Limit’ price, and enter
a price that is about 2 cents above the current ask price. We can then click on ‘Preview Order’. After verifying the order details , we’ll
click on ‘Agree & send Order’ To place another order, click on ‘New Order’. We’ll enter XEF next as our symbol. When the fund name appears, we’ll click
on it to populate a quote to the right. We’ll then select “Buy” as our action. And in order to calculate the number of shares
to purchase, we’ll multiply our total account value of $15,000 by 16%, subtract the $9.99
commission, and divide this value by the current ask price of $25.13, which equals 95 shares
We can then enter 95 in the quantity field. We’ll select ‘Limit’ price, and enter
a price that is about 2 cents above the current ask price. We can then click on ‘Preview Order’. After verifying the order details , we’ll
click on ‘Agree & send Order’ To place another trade, click on ‘New Order’. We’ll enter XEC next as our symbol. When the fund name appears, click on it
to populate a quote to the right. We’ll select “Buy” as our action. And in order to calculate the number of shares
to purchase, we’ll multiply our total account value of $15,000 by 4%, subtract the $9.99
commission, and divide this value by the current ask price of $21.82, which equals 27 shares
We can then enter 27 in the quantity field. We’ll select ‘Limit’ price, and enter
a price that is about 2 cents above the current ask price. We can then click on ‘Preview Order’. After verifying the order details , we’ll
click on ‘Send Order’ To place our final trade, we’ll close the
confirmation screen and click on the buy/sell icon. This should ensure that our remaining cash
balance is updated. For our final trade, we’ll try to use up
as much of the remaining cash as possible – there is currently $6,042.11 available. We’ll enter VAB as our symbol. When the fund name appears, we’ll click
on it to populate a quote to the right. We’ll then select ‘Buy’ as our action. And in order to calculate the number of shares
to purchase, we’ll take our remaining cash balance of $6,042.11 and subtract the $9.99
commission. We’ll then divide this value by the current
ask price of $26.45, which equals 228 shares We can then enter 228 in the quantity field. We’ll select ‘Limit’ price, and this
time, we’ll actually enter a price that is the exact same as the current ask price. We want to try to use up most of the available
cash while ensuring that we don’t place the account into a debit position). We can then click on ‘Preview Order’. After verifying the order details , we’ll
click on ‘Send Order’ Now that our final trade has been placed,
we can verify the order details by clicking on ‘Go to Order Status’. The ‘Fill Status’ column shows that
all shares from each ETF purchase have been completely filled. If you’d like to review your new portfolio
holdings, click on the ‘Accounts’ heading, and then click on the ‘Holdings’ sub-heading. Here we’ll find that we now have about $3,000 of our portfolio in Canadian stocks, $3,000
in U.S. stocks, $2,400 in international stocks, $600 in emerging markets stocks, and $6,000
in Canadian bonds. You may also notice that the portfolio percentages
now closely correspond to the model ETF weights. There is now about 20% allocated to Canadian
stocks, 20% allocated to U.S. stocks, 16% allocated to international stocks, 4% allocated
to emerging markets stocks and 40% allocated to Canadian bonds. If you have any questions, please feel free
to send them to me via email:  [email protected]

Paul Whisler

19 Comments

  1. Several major Brokerages…. What about Questrade and other low-cost options? The big, overcharging banks have enough free publicity already 🙂

  2. Hey Justin! I love your DIY videos and that you talk about how to trade across Canadian institutions. Looking forward to your upcoming videos. I'm now a subscriber!

  3. Hi Justin, I've seen you answer similar questions to this, so I'm hoping you can give me some advice. I have $10,000 that I a'm looking to grow in 5 years to put towards a down payment on a house (around $25-$30k in my neck of the woods). I am hoping to find an option for myself that does not feel like a glorified savings account that sees only minor returns. What would you recommend for a new investor like myself so that I may potentially make this financial gap smaller?

  4. Hi Justin, thanks for the great vid. Couple question: 1) can you use DRIP with the Vanguard ETF through TD (and if so, is there a fee)? 2) Is it possible to set up these trade outside market hours to be executed the following day? cheers

  5. Great Video.
    Hey Justin, I just opened up the TD E-Series Account and want to get into index funds but don’t know where to start and which ones to buy. Any advice?

  6. Justin great clarity and content one question…..how did you determine the ETF target allocation of 20% 16% 4

  7. Never mind I understand how you got that number…like I said it's clear & concise 😇😇😇 thanks again

  8. Great video! Gave great insight into how the interface works, thank you!

  9. For my company TD bank don't benefit my business in on way i can't even login my account as I wish to do.thank you TD

  10. I had to fight with TD from September until December to get my money out.  They repeatedly lied to me, tricked me and did everything possible to make it as hard as possible to withdraw my money.  It took dozens of phone calls for hours and hours and drives to branches.  Hell will freeze over before I do business with these scam artists.

  11. I have so appreciated your YouTube tutorials and podcast, and it’s really empowered me to want to take control of my investments.

    However, I’m struggling with the very first step in the process – how to navigate transitioning my portfolio from the intestment advisor who currently manages it into a self directed fund. In kind trades? Cash balance (bad time to pull out of the market)? How do I best minimize fees and losses associated with changing strategies?

    I know these aren’t questions that you can answer directly, but I thought that perhaps this might be a great topic for a blog or YouTube tutorial. From what I’ve seen so far, there are a lot of great info and tutorials (yours especially!) on how to set up the self directed funds and build your portfolio, which is great if you’re just starting out with investing, but relatively few that deal with the best ways to transition if you already have a lot invested but want to shift how it’s being managed.

    Maybe a topic for another tutorial??

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