Phoenix Endowment - Advice required please

cathw_3

Hi All

I hope that one of you kind folk out there will be able to offer me some advice.

First off, I know next to nothing about endowment policies - for example I have no idea what a 'managed fund' is.

My husband took out an endowment policy back in 1989, only paying £25 a month to it.

This endowment isn't connected to our mortgage in anyway - his parents simply thought it would be a good idea for him to take one out when he turned 17.

Anyway.... We have just received our annual unit statement through from Pheonix.

It states the following figures:
19/9/2007 - Managed Fund, Units held:1026.67, Bid price:833.10, Value:£8553.18

19/9/2008 - Managed Fund, Units held:1058.88, Bid price:719.20, Total current value: £7615.46


I understand why it has lost value over the last year.

It is due to mature in 2014.

We don't know whether to leave the policy as it is and just accept that it will be worth, whatever it will be worth in 2014, OR should we think about cashing the policy in and perhaps investing it elsewhere????

As I said we only pay £25 a month on the endowment but obviously we would like to get as much as we can come 2014 - I have plans for that money LOL

Any help would be really appreciated!!

Thanks
Catherine

hedgehunter_2

A managed fund is a unit linked fund that invests in mainly equities ( normally up to 85%) and some property gilts and bonds as a spread of investments. (its a bit of a mish mash but that does not make it a good or bad thing)

It is your choice to continue with the policy or surrender it now. It all depends on what your priorities are. Money today or tomorrow. If you intend to reinvest the money elsewhere you have to consider the cost of doing so and that there is unlikely to be any guarantee that you will do any better than not doing anything.

I suggest that whatever decision you make (or any decision after receiving advice) the best thing to do is to live with that decision and try to avoid being too smug if it turns out to be a good decision, and don't beat yourself up if it turns out to be a poor decision made for the right reasons.

cathw_3

Hi
Thanks for your reply.

We don't need the money now so are happy to wait until 2014 if we leave the endowment policy in place.

We were just wondering if it might be better decision financially to cash in the policy - invest the funds elsewhere and make our £25 a month payment into that alternative investment.

As you said, I will be happy with whatever decision we make because at the end of the day it will be nice to have something rather than nothing.

Thanks again!

EdInvestor

cathw wrote: »

We were just wondering if it might be better decision financially to cash in the policy - invest the funds elsewhere and make our £25 a month payment into that alternative investment.

Endowments are obsolete nowadays.They tend to have high charges, rather poor quality funds, provide possibly unnnecessary life cover and are docked for tax.

IMHO you would be better to surrender it and pay the money into a tax free stocks and shares (not cash) ISA, for which the annual allowance is 7,200, so most of it can go in immediately. Choose a selection of 3 or 4 funds, according to your risk profile.Then, next year, pay the monthly premiums in too, as well as any money left over from the surrender value.

The following provider has the cheapest charges: https://www.h-l.co.uk

This should hopefully provide a better long term return than the current arrangment.