Endowment - going down in value instead of up

lazzareo

My Barclays Life Managed Fund Endowment Policy was worth the following at different stages: -

£10,468 - Jan 2008
£9,115 - Jan 2009
£8,445 - Mar 2009

I pay £100/month and as you can see it is dropping in value at an alarming rate.

Should I sell?
Is it right it's dropping so fast?
Shoudl Barclays be advising me that it has been dropping so fast rather than me ringing them for updates?

Also,

If I did sell shoudl I invest or switch my interest only mortgage to repayment (currently owe £158,000 on interest only mortgage at 5.24%).

Thanks, Steve.

Robert_Sterling_3

IF you sell then use the money to reduce your mortgage and switch to a repayment mortgage.

The stock market if falling at an alarming rate and so you should not be alarmed that your endowment is falling too.

Since it is on the news and in the press every day Barclays do not need to communicate with each individual customer.

dwsjarcmcd

The endowment you have is unit linked and will probably be mostly invested in a mix of UK and overseas equities. As you will know these have plummeted in value over the last couple of years.

As to whether you surrender it, I would add a couple of thoughts

1. If you do surrender it, you guarentee to lose out and crystalise your losses.
2. As the price of the units are dropping, your £100 p.m buys more of these. If stock markets recover, then you have more units recovering therefore you could benefit.

The key questions to ask yourself are
- How long until the policy matures? If it is a year you may make a different decision to if it was 10 years
- Do you believe equities will recover within the above timescale? If yes, then hold, if no then sell.

As an aside, it is still a good idea to revert to C & I either way.

David

BlondeHeadOn

dwsjarcmcd wrote: »

The endowment you have is unit linked and will probably be mostly invested in a mix of UK and overseas equities. As you will know these have plummeted in value over the last couple of years.

As to whether you surrender it, I would add a couple of thoughts

1. If you do surrender it, you guarentee to lose out and crystalise your losses.
2. As the price of the units are dropping, your £100 p.m buys more of these. If stock markets recover, then you have more units recovering therefore you could benefit.

The key questions to ask yourself are
- How long until the policy matures? If it is a year you may make a different decision to if it was 10 years
- Do you believe equities will recover within the above timescale? If yes, then hold, if no then sell.

As an aside, it is still a good idea to revert to C & I either way.

David

I am in a simlar postition with a unit linked HSBC endowment, which is only 12 years through its 25 year life. I was thinking about cashing it in before Christmas, but after reading advice on here and asking a few questions of HSBC I have decided to let it carry on for now. I know that my premium buys more 'units' at the moment, and I think that 13 years is a good length of time for the stock market to recover at least a bit!

I am not relying on this endowment to pay off my the mortgage though, as we have been overpaying monthly on that for a while (flexible tracker mortgage, very useful at the moment!), and have already cut it down to under £37k (from £69K). On current form, we will have paid off the whole of the mortgage balance well before the term ends anyway. So we don't have the pressure of that for the endowment performance.