My Endownment (10 years in) please help me!

lazzareo2009

Hi,

I have an endowment policy with Barclays called a 'Life Managed Fund'. I am just over 10 years into the 25 year term and I pay £95.40/month with a view to obtaining a lump sum of £50,400.00 in 2024.

I obtained a valuation on the 4th January 2008 and the fund was worth £10,467.54.

12 months later and £1,144.80 worth of additional payments I today rang up for another valuation and learnt that the fund is now worth £,9,115.03 as at 26th January 2009....ouch!!!

This is wear I need your help: -

a) do I stick it out and keep the fund running for another 15 years

or

b) do I cash in now and count my losses

I would appreciate your advice on which option you would go for and if you suggest option a) how much do you think it might recover (if any) and if you suggest option b) what is the best way to cash in.

Thanks so much for your help.

Steve.

EdInvestor

What interest rate are you paying on your mortgage?

lazzareo2009

5.24% but this is an endownment from an old mortage which I kept running as a way of creating a cash sum when it ends.

EdInvestor

You need to obtain some projections of the maturity value of the endowment at different growth rates.

If you cashed it in and used the lump sum to reduce your mortgage, also increasing the montly payment by the amount of the endowment premium, at maturity you would have the equivalent of a return of 45,364.This is a tax free no-risk return.

Get the projections and compare the endowment's projected maturity value at, say 6% growth. If it is significantly more than 45,364 - enough to compensate you for taking the risk of keeping the policy, then hold on to it.If it's much the same or less, then cash it in.

There is no point in taking a risk to get a return that is much the same as one that is guaranteed.