Fast Fatty the Third (#227)

We use my long-awaited holiday to catch up to some user questions for the next three weeks. We hope you enjoy the shorter episodes as much as I plan on enjoying my break!

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IM

I have an Old Mutual Endowment policy that matures in November 2020.. I also have a lump sum in a TymeBank account in various GoalSaves, which I don't need to use any time soon. I have another lump sum in an African Bank account. 

I'm not sure whether I should pool all the money and put it into a fixed deposit account with African Bank for 5 years (the interest rate is very attractive at 10.01% annual interest payout) and have the interest payout annually, so that it doesn't go over the R23,800 tax exemption.

Or should I take the money and invest it into ETFs, split 50/50 into local and international. With the idea of investing for dividends and growth. I know that I won't be sheltered from taxes if I do this.

I was thinking of splitting it between the following ETFs (I use the same ETFs for my TFSA):

• Coreshares Preftrax
• Coreshares DivTrax
• Satrix Divi
• Coreshares Top 50
• Coreshares Property Income
• Coreshares Global DivTrax
• 1nvest Global REIT
• Satrix MCSI World
• Satrix S&P500
• Sygnia 4IR

If I decide to do the fixed deposit, then I was thinking of using the interest payout each year and invest it in ETFs (and be subjected to taxes).

My wife doesn't know anything about RA/TFSA tax benefits or investing, and has absolutely no interest in using her TFSA. I even helped create and set up one for her on Easy Equities. I could use the fixed deposit interest payout and then fund her TFSA each year and then top it up to max it out as well. However, the disadvantage is that on death, then the TFSA will form part of her estate.

And then lastly, I could also put it into my RA, which I currently have with Sygnia (Sygnia Skeleton Balanced 70). I won't benefit from a tax return, but will possibly benefit from CGT, DWT and tax on interest earned.

I'm finding it difficult to make a decision on what would be most beneficial. Any suggestions on what I could do with this lump sum?

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Ash

I switched the Sygnia MSCI USA to their new Health Innovation fund. This is an active fund (with performance fees 😱) that uses the MSCI World Health index as a benchmark and applies an ESG filter. 

My reasoning was that new developments in health care (including a COVID-19 vaccine) are likely going to play an outsized role in the world economy and I wanted a piece of that action. 

Unfortunately, there are no local ETFs which track any health-related indices, so this seemed the only available option for someone who wanted global exposure to this sector. I've attached the factsheet and I'd be interested to know your and Simon's thoughts on this fund.

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Guillym thinks he knows why Anne's Liberty fees are 12% of her monthly contribution. 

This is probably because these sort of products also can give one cover for illness and disability. Not that they not screwing you over, they probably are so fuck em, just this may explain away a bit of why its to high. 

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Stephen

Give Edwin a Bells!

I have invested in some Thematic US ETFs and was worried about overlaps as I have ARKK (Ark Innovation (Active ETF)) and BOTZ (G