Dipping my toes into the murky world of investing...

john_s_2

I got my surrender value so here are all the details requested to give me a view on my endowment policy:

As at 31/12/2007
Provider: Legal & General
Guaranteed sum assured: £15,698.00
Declared bonuses: £7,155.20 (2008 not declared yet)
Surrender value: 16,500 (as at 12/02/2009)
Monthly premium: £74.80 **
Maturity date: 24/06/2016
Maturity forecasts: 4% = £31,400; 6% = £35,800; 8% = £40,500 (as at 01/09/2008)

** The monthly premiums started at £37.40 and increased by £7.48 each year for the first five years until they hit £74.80. (Note, I edited these amounts since I first entered them as I realised I was a £ out pcm.)

I also enquired about making it paid up. The details I got were that the Basic Sum Assured would be £10,700 so with the bonuses the life insurance would be (around) £18K. Which is food for thought. My outstanding mortgage is in the 30s so I'd only need to get cover for the difference.

I'd also like to say how good their customer service was! Easy to get through to, polite, informative etc etc. They also advised me to speak to a financial adviser before doing anything. I didn't think I should mention I'm asking random people on internet ;-)

EdInvestor

john_s wrote: »

Maturity forecasts: 4% = £31,400; 6% = £35,800; 8% = £40,500 (as at 01/09/2008)

If you cashed in this endowment now and used the lump sum to reduce the mortgage, also increasing the monthly mortgage payment by the amount of the (now redundant) endowment premium, at maturity your loan would be reduced by 32,704.

This compares with a likely return from the endowment of about the same amount.

But the big difference is that by using the money to pay the mortgage off directly, you take no risk and you know where you are. Whereas with the endowment, you could end up with only the guaranteed value ( currently around 23k) and a substantial shortfall.[You will not end up with a substantial profit, as promised when the policy was sold].

I would check out how much it would cost to replace the life cover, with a view to getting rid of this policy, which is no longer likely to pay you a premium for taking a risk - which, after all, is what investment is supposed to be all about.

TDS_2

Don't base your investment decisions on the views of a couple of vocal forum members.

For what it's worth, all the research I have done has essentially recommended index trackers...

dunstonh

For what it's worth, all the research I have done has essentially recommended index trackers...

Post the research then and lets see it.

Don't base your investment decisions on the views of a couple of vocal forum members.

You mean dont base your decisions on the views backed up with evidence but base it on yours with no evidence.

TDS_2

The OP has already done their research. Although many on this thread disagree with the OP's POV, there is little evidence to back it up (with the exception of dunstonh's single table).

I'm not advocating either way (my research happens to have led me in thsame direction as the OP). I'm simply warning the OP of changing tack based purely on a few posters. Nothing personal meant by it!

dunstonh

There have been a number of threads with information from a range of people that shows its not just as simple as made out. This is one of the quieter threads on the subject. probably as we have had a number of these in quick succession recently.

Its not a case of being pro tracker or pro managed. Its knowing when to use each one and the pros and cons of each as its not as clear cut in favour of either.

john_s_2

Thanks for the information about my endowment situation. I think if I decide to go down this road then it would probably be a good idea to engage the services of an IFA. Then again, I suppose if I was going to start bunging £50 pcm at the stock market it would also be a good idea to engage an IFA!

That said, I feel pretty confident I understand all the issues with my endowment/mortgage... How much time would it take an IFA to advise me about this, and how much is that likely to cost? Or is that like asking the length of a piece of string?

Well, it's all food for thought in any case. I've decided to read the books I mentioned above before going any further - and I'll obviously keep my eye on relevant threads on here.