will stock market drops affect endowment

working_mum_3

hi,
I have an endowment which has about 5 yrs to run. Its last performance indication was a payout about 20% below what it was intended to pay out.
My worry is that its performance will be even worse now due to the yo you action of the UK stockmarket.

Will i be better off selling it and dumping the money in a 6% paying savings account or are the fund managers really able to make some good of the current situation ? I appreciate it varies according to who your find manager is and what the fund invests in, but lets say its a PRU fund and UK blue chips.

Any views ?? I can't afford to have this money slump any more.

opinions4u

You need to post more.

Type of policy (e.g. with profits or unit linked?)
Premium
Sum Assured
Latest projections based on 3 different growth rates
Latest surrender value
Maturity date
Any other relevant info from their last letter.

Yes, one day's events on the stock market will affect the policy (it had it's biggest %ge jump ever the other day, so you did well then) but it is a long term investment and any decision to cancel should be taken in the context of the long term, not 8 hours of madness by overpaid dealers in London or New York.

dunstonh

Pru have a 100% record on hitting target with their with profits fund. The copy statements I have been getting recently have shown increases (Pru bucking the trend). Scot Am rebadged as Pru are not quite as strong with 90%+ success rates but still much better than average.

On monthly contracts, a stockmarket crash can be a very good thing as it allows the monthly payments to buy investments much cheaper. As long as you have enough time left to benefit from future rises. Typically a stockmarket crash occurs once every 5 years so you have had many before this one.

thedon

I've got 3 Pearl Assurance policies, and I've seen similar posts before indicating that Pearl are now amongst the poorest performers. I'm guessing because they are a closed book, and only trading with existing funds which must be dwindling each month as more policies mature or are surrendered - it sounds to me like the "bad end" of a pyramid selling scheme.

I've asked for surrender valuations earlier this year which came out at around £18k against an original target of £57k (maturity 2016). The surrender paperwork also suggested selling the policies to a broker - I approached 2 agencies that offer it to a panel of (alledgedly) 99% of the potential UK buyers - not one of them was even interested enough to make an offer. I should have realised and surrendered at this point, but didn't.

I've received the first of the 3 surrender valuations requested a week or so ago, and that's only increased by the amount I've paid in monthly since the last valuation. I'd assume the other 2 policies will have similar values.

Maturity isn't for another 8 years - it looks like a fairly rocky future between now and then, and the likelihood of Pearl performance improving over the term seems (to me at least) highly unlikely. The final bonuses and "Pearl promise" seem unlikely to make it worthwhile hanging on.

I'd be very interested in other MSEs views - especially DunstonH....(please!)

dunstonh

Pearl are pretty poor (moreso on pensions) but they they did have some good bonus rates early on and actually quite a few are on track to hit target (using original illustrations, no that current type).

I dont see Pearl improving though. They barely pay any bonuses and didnt through the 5 years of much better returns. They are still paying for a lot of the mismangement of AMP and have to keep the FSA solvency requirements in mind as well. They dont have the scope to take hits in the same way Norwich union or Pru have for example.

EdInvestor

Presumably most of the Pearl WP fund is invested in bonds?That will make policy returns more stable at times like the present, but there is no real chance of making up shortfalls.

widget1974_2

I have an endowment with L&G hasnt been performing that brilliant. Paying £50.60 per month. Have a number of years left for it to run. Can anyone advise on L&G's performance.

Many thanks

baby_boomer

dunstonh wrote: »

On monthly contracts, a stockmarket crash can be a very good thing as it allows the monthly payments to buy investments much cheaper. As long as you have enough time left to benefit from future rises. Typically a stockmarket crash occurs once every 5 years so you have had many before this one.

Utter nonsense, dunstonh. The OP has only had one stock market crash in the first 20 years of a 25 year endowment i.e. 1999-2002.

And a crash after 20 years is probably a lousy thing. If someone was five years short of retirement you'd be recommending that they reduce their investments to guard against a crash.

So you can't square that with what you've just said to the OP.

dunstonh

Can anyone advise on L&G's performance.

With profits fund or unit linked, if with profits is it unitised with profits or conventional with profits. If unit linked, what funds?

opinions4u

baby_boomer wrote: »

Utter nonsense, dunstonh. The OP has only had one stock market crash in the first 20 years of a 25 year endowment i.e. 1999-2002.

And a crash after 20 years is probably a lousy thing. If someone was five years short of retirement you'd be recommending that they reduce their investments to guard against a crash.

So you can't square that with what you've just said to the OP.

Depends on the definition of a crash.

1992, 2000ish, 2008. 3 in 16 years isn't a million miles of once every 5 years.