Pathetic returns on Endowments

welnik

I was of the opinion that it may be wise to carry on paying my £48 per month into my Clerical Medical low cost endowment as I would be better off in the long run, but I think I'm wrong to do so. I have a sum assured of £12,560 and it was supposed to achieve £37,500 and cover my mortgage.

I was shocked to receive my statement showing my reversionary bonus as £122 even though I had handed over £576! I understand that there is an element of life cover, but this is about £3.50 per month.

Ive got three options (as far as I can make out)

1.Cash it in and walk away with about £800 more than I have invested over the last 15 years.

2. Make it paid up and in 10 years time walk away with £13,766 then at least I will have made over £4,000 in profit. If I then invest the same amount I was paying in premium (allowing for a bit of life cover) into an ISA, I will end up with about £20,000.

3. Pay them another 9 years premiums at £5184 and in return get less than £1000 in reversionary bonuses and get about £20,000 but then I would have given them the £5184! So really im £15,000 or less better off (as it were!)

I just find it astonishing that I give them £500+ a year and they invest it for me and turn it into £122! Surely these people making the decision and investing my money should be sacked. I could do a much better job and Im a layman.

I did a bit of an excel spreadsheet yesterday and worked out that if I had been paying for term assurance and investing the rest, after 25 years at 4.5% I would have £28,000! Bear in mind also that 15 years ago interest rates were high and my mortgage interest rate was 16% so investment wise you could have been achieving a minimum of 12%!

I think Im going to have to make it paid up and start investing my money elsewhere!

Am I right, or are there other options?