If you want to invest in stocks, shares and equities, there are two common strategies. One is to try to pick individual stocks that suit your investment needs and goals. The other is to try to buy groups of stocks that perform the same as a major stock index such as the S&P TSX Composite or the S&P (NYSE/NASDAQ) 500. This second type of investing is sometimes called “Couch Potato” investing and there is an excellent website that covers this type of investing in depth run by the Canadian Couch Potato. On his site, he suggests that for beginning investors who don’t have tens of thousands of dollars to commit but who want to contribute small amounts regularly to their savings, TFSA or RRSP Couch Potato portfolio, they could consider buying units in a single mutual fund at Tangerine. In case this approach fits your needs, I decided to write up how to buy units in the Tangerine Balanced Portfolio.

UPDATE: Please be aware that as of January 2015, Tangerine plans has started charging a fee if you transfer your RRSP or TFSA from Tangerine to another bank, credit union, brokerage or financial institution.

Why Did I Pick the Tangerine Balanced Portfolio?

There are actually 4 mutual funds sold by Tangerine

• the Balanced Income Portfolio
• the Balanced Portfolio
• the Balanced Growth Portfolio, and
• the Equity Growth Portfolio

Of these, the Balanced Portfolio invests

• 40% in Canadian Bonds
• 20% in Canadian Stocks
• 20% in U.S. Stocks
• 20% in International Stocks

That’s a commonly suggested investment strategy for a person in their 30s to 50s who does not want to take high risks with their savings. It isn’t intended to earn the highest profit but it also isn’t expected to suffer the highest losses, either.

If you read the white paper written by the Canadian Couch Potato, it offers some other factors for consideration. You might find one of the other 3 funds suits your needs better.

Whichever fund you pick, though, you can buy your units using the following instructions by just choosing the different fund at the appropriate points.

Know Your TFSA and RRSP Contribution Limits Before Buying Mutual Fund Units in a TFSA or RRSP

Before buying units within a TFSA or RRSP be sure you know your contribution limit for the year. There are nasty penalties from the CRA if you put too much money into your TFSA or RRSP.

If you are buying the mutual fund units with cash from your regular bank account, you should only spend as much or less than your available contribution room.

You can, however, buy units using cash already in a Tangerine Tax-Free Savings Account or a Tangerine RSP Savings Account. That just requires moving old TFSA or RRSP money into a new type of investment; it’s not a new contribution. Similarly, you can transfer TFSA or RRSP money from another bank to Tangerine using a T2033 form and then when it arrives you can use it to buy units of the mutual fund.

What’s the Smallest Amount I Can Invest in a Tangerine Mutual Fund for a Tangerine RSP?

I tried to buy just $1 of the Tangerine Balanced Fund for my first mutual fund purchase for my RRSP. It was rejected. The minimum I could buy was $100 of the fund.

For subsequent contributions, the smallest amount I can buy is $25 worth.

NOTE: Unlike when you buy individual stocks, you don’t have to buy exact whole units of the mutual fund. For example, the NAV for the Balanced Portfolio fund is $12.20 today but you can buy $25 worth of the fund. You’ll get some a fraction of a unit as well as your two whole units.

(You generally can’t buy fractional shares or stocks. You may be able to buy what seems like fractional shares in a dividend reinvestment plan through the transfer agent for a listed company but that’s not the common practice.)

Can My Teenager Buy Tangerine Mutual Funds

It depends on their age. Although a 16-year-old person can have their own savings or chequing account at Tangerine, they can’t buy Tangerine mutual funds at that age.

According to the fine print in the Legal section (Like me, you do read all the fine print don’t you?) it says that a person must be of the age of majority for their province or territory to buy units of Tangerine mutual funds.

I took note of this because I hope that when our children become teenagers they may start working. (Hey, I can dream!) And if they do I’d like to introduce them to the concept of “you must save your rent but you can invest your vacation money.” (That means only risk money you can afford to lose, not the money you need to pay for necessities.)

How to Buy Units of the Tangerine Balanced Portfolio If You Already Bank with Tangerine

For this example, I am going to buy the units in my RRSP at Tangerine, using funds already in my Tangerine RSP Savings Account. There are slight variations when buying units for a TFSA or a regular savings account but the process is pretty similar.

1. Log in to your Tangerine account.
2. From the top navigation bar, click on the heading Investing, then select RSPs.
3. For the Tangerine RSP Investment Fund Account, click on the Learn More button. Descriptions of each of the 4 mutual funds are provided if you click on the tabs labelled
   • Balanced Income;
   • Balanced;
   • Balanced Growth;
   • and Equity Growth.

   For each:

   • Check the management expense ratio. Is it acceptable to you to pay that amount each year to Tangerine? (The payment comes out of the value of your units not out of cash.)
   • Notice that the Distributions, if any, are made once a year in December. If you need monthly income you won’t get it from these funds.
4. Click on the Fund Facts PDF link. Read through the summary of important information about the fund. Notice that you can lose money! Your principal is NOT guaranteed.
5. If everything looks acceptable, click on the Invest Now button.

Since this is my first purchase of a mutual fund at Tangerine, I will have to complete the online enrollment process.

1. To answer the question “What type of Account would you like to open?” click on the Individual RSP or Spousal RSP as appropriate.
   I chose Individual RSP.
   NOTE: It is the spouse who has received the RRSP money to invest that can open a Spousal RSP mutual fund account. It’s not the person who contributed the money and received the income tax receipt.
2. Then click the Next button.
3. Read through the agreement on Consent to use of Electronic signature. If you are willing to accept this, click on the I agree button.
4. Read through the Use of Personal Information warning. If you are willing to accept it, click on the I/We agree button.
5. Click on the Next button.

The Personal Information Page

1. Review the information filled in for the sections
   • Primary applicant information
   • Contacting you
   • Home address
2. If necessary, add any information. Click on the Next button.

The Employment Information Page
Review the Employment information section. Click on the Next button.

The Investor Profile Questionnaire Page

1. From the drop-down list, select your approximate income.
2. From the drop-down list, select your approximate household net worth.
3. Beside the paragraph that best describes your investment knowledge, select to check the radio button.
4. Beside the paragraph that best describes your risk tolerance, select to check the radio button.
5. Beside the paragraph that best describes your objective for the Account, select to check the radio button.
6. From the drop-down list, select when you plan to withdraw a significant portion of your holdings.
7. Click on the Next button.

Recommended Fund
Interestingly enough, the system recommended I invest in the Tangerine Balanced Portfolio. Good thing, since that’s what I want. (I suspect if I wanted to invest differently I would have to phone Tangerine and/or change my choices for investment knowledge, risk tolerance, objective and holding duration.)

Click on the Next button.

The Investment Funding Details Page

1. From the drop-down list, select where to get the money to buy the mutual fund units.
   NOTE: I had to choose “an existing bank account” which seemed odd to me since I want to fund this from my Tangerine RSP Savings Account. It’s ok though because once I selected that, another drop-down list appearts called “Which acocunt will fund your initial investment?” where I can select the RSP account.
2. In the What is the amount of your initial investment field, type you much you want to spend today.
   In an attempt to test the lower limit, I put in $1.
   The system advises me I must purchase at least $100 or more.
3. Answer Yes or No to whether you have borrowed money to make this investment. This includes whether you have taken out a RRSP loan.
4. Read the details.
5. If everything looks good, click on the Next button.

The Set up an Automatic Savings Program Page
If you want to keep contributing to your mutual fund weekly, bi-weekly (every two weeks) or monthly, you can complete this screen. If not, don’t fill in any fields.

To complete the screen,

1. In the ASP amount field, type how many dollars you want to contribute each time.
2. From the How Often drop-down list, select Weekly, Bi-weekly or Monthly.
3. Select the date to start making contributions.
4. From the drop-down list, select the Source of the ASP deposit.
   Again, note that you must not exceed your annual TFSA or RRSP contribution limit! Think carefully about how much you can safely contribute and how often!
5. Either way, click on the Next button.

The Legal Page

1. Read through the details of the legal disclosure.
   NOTE that
   • you could lose money if your funds decrease in value
   • you could lose all of your  money if the fund totally tanks (hey, it COULD happen)
   • if you borrowed money to buy the units, you still have to pay back the borrowed money even if your fund loses some or all of its value
   • mutual funds are NOT covered by CDIC
   • you can not buy funds if you are under the age of majority in your province: so 16 and 17-year olds in Ontario cannot buy mutual funds from Tangerine directly even though they may have jobs and bank accounts
   • you have to put in your purchase order before 3 p.m. Eastern Time on regular work days to get the mutual fund at that day’s closing price
   • you generally can NOT sell or switch your units of a fund within 30 days of buying them without paying a big penalty

   If the details are ok, click on the I agree button.

2. Read through the details of the Privacy Code section.
   If they are ok, click on the I agree button.
3. Read through the details of the Consent to Electronic Delivery section.
   If they are ok, click on the I agree button.
4. Read through the details of the Declaration of Trust section.
   If they are ok, click on the I agree button.
5. Read through the Anti-money Laundering section.
   1. From the drop-down list, select the intended use of the account.
   2. Answer Yes or No for whether a third party will benefit from this account.
6. Read through the details of the Acknowledgement and Consent section.
   If they are ok, click on the I agree button.
7. Click on the Next button.

The Summary Page

1. Review the details of all the information you have provided.
2. If necessary, click on the Edit button to go back and fix errors or omissions.
3. If you want to go ahead and buy your Mutual Fund units:
   1. In the Electronic Signature section,
   2. In the Client Number field, type your Tangerine client number.
   3. In the PIN field, type your Tangerine password.
   4. Click on the I Agree button.
4. To buy the funds, click on the Submit button.

The Thanks for Enrolling! Page
Make a copy of your Reference Number.

It should take 5 business days before I’ll see the new mutual funds listed in my account.

I now need to set up a Beneficiary for this new RSP.  Which reminds me that I need to write an article about designating beneficiaries and successor account holders for Tangerine accounts soon.

I’ll keep an eye on my email for my enrollment confirmation and for the prospectus for the Tangerine Balanced Fund.

Does It Always Take So Many Screens to Buy a Mutual Fund?!

No. This was my first enrollment. After that, buying units of a mutual fund is a matter of a couple of clicks.

UPDATE: Please be aware that as of January 2015, Tangerine plans to start charging a fee if you transfer your RRSP or TFSA from Tangerine to another bank, credit union, brokerage or financial institution.

Related Reading

• How to Buy a GIC at Tangerine

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Do you invest using Tangerine mutual funds? Does the 1.07% MER bother you even though it includes automatic quarterly re-balancing of your desired percentages of the various holdings, and it’s a no-load fund with a very small contribution requirement? Please share your views with a comment.