Should I cash in my Friends Prov Endowments?

mae

Hi I have 2 small endowments with FP and I am wondering if I should cash them in with the markets as they are and pay it off the mortgage at £500 per month (as I that’s the amount I can over pay by). I would also pay the £40 per month (that I am currently paying to the endowments) to the mortgage instead. I know very little about endowments other than they are not very good these days. I have a £97,000 mortgage with Nationwide and at the moment it is on interest only and I am making overpayments when I can. The mortgage is a tracker (+0.23%) deal ending Jan 2010.

1st Endowment start date 25/09/1992
Cash Value as at 20/02/2009: £7,131.00
Regular Payment: £34.97 Monthly
Payment if Death Occurs Today: £26,540.91
Gross Fund Value as at 20/02/2009: £7,182.06
Projected Value
* £13,000.00 assuming
4% annual growth
£14,600.00 assuming
6% annual growth
£17,500.00 assuming
8% annual growth
Investment Choice
MANAGED (50%)
WITH PROFIT (50%)
Investment Value as at 20/02/2009
MANAGED (£3,219.69)
WITH PROFIT (£3,962.37)

2nd Endowment start date 25/09/1992
Cash Value as at 20/02/2009 : £801.60
Regular Payment: £5.35 Monthly
Payment if Death Occurs Today: £3,003.47
Gross Fund Value as at 20/02/2009: £801.60
Projected Value
* £1,460.00 assuming
4% annual growth
£1,630.00 assuming
6% annual growth
£1,960.00 assuming
8% annual growth
Investment Choice
MANAGED (50%)
WITH PROFIT (50%)
Investment Value as at 20/02/2009
MANAGED (£357.00)
WITH PROFIT (£444.60)

Sorry its so long I just thought it would help if I posted all the details I could find. ~Any ideas if I should leave them for now or if I should pay it towards the mortgage.
Thanks

dunstonh

Both are unit linked and probably have an annul management charge of 0.7% and no longer have any initial charges. So, from an investment point of view, it will be cheap investment. Although if you were to keep them, you would want alternative funds.

mae

dunstonh wrote: »

Both are unit linked and probably have an annul management charge of 0.7% and no longer have any initial charges. So, from an investment point of view, it will be cheap investment. Although if you were to keep them, you would want alternative funds.

Thanks, so if I decide to keep it is there a way for a numpty like me to decide what alternative funds to change them to?

Thanks

EdInvestor

There's no real advantage to cashing in as they can recover and you are paying a very low interest rate on your mortgage.

mae

Thanks

I think I might hold on to the endowment for a while longer then at least but I still need to know/learn how to decide what to change the funds to?

Any ideas anyone?

dunstonh

Ask FP for a funds list and switch form. They will send you a list of the available funds.

Whilst investing means you can go down as well as up, you have to remember that zig zagging is quite normal. We are in a zag now and you want it to zig. That zig may not happen this year or even next but at the moment you are buying units much cheaper each month than they were 18 months ago. When it comes, it will be these units that have the potential to make the most money.

The problem you have is not the managed fund (basic option for people that dont know much about investments) but the with profits fund. That is low quality.

mae

Thanks again. So would it be better if I changed it all to a managed fund

EdInvestor

dunstonh wrote: »

Ask FP for a funds list and switch form. They will send you a list of the available funds.

First you need to see the list of fund choices.