Endowment maturity

Statto

I'm not sure if I am on the right forum here. I have an endowment policy with Scot Widows maturing next month but it is not linked to a mortgage. I took it out 20 years ago and have been paying £130 per month ever since. The payout is £43,000 which I have used a spreadsheet to work out is a return of around 3.6% per annum.

I know investments go up and down but my feeling is that this is a poor return over a 20 year period.

Am I on the right forum and if so does any one have an opinion.

Regards

Jim

dunstonh

I know investments go up and down but my feeling is that this is a poor return over a 20 year period.

Its not

Its down because we have had two major stockmarket declines in the final 10 years. What it does in the first 10 years doesnt really matter. The bulk of the money isnt in the investments until the end and if you suffer a 40% drop near the end you will take a big hit.

i.e. lets say after 5 years you suffer a 40% drop. If your value then is £7800 then a 40% drop is £3120. However, you can then buy units 40% cheaper after that and you can do really well if you get big drops in the early years.

If you get a 40% drop near then end when the value is say £43,000 then you lose £17,200.

If you had a servicing IFA, they would have looked to reduce the investment risk as you get closer to maturity. Tied FAs and transactional IFAs wont do that. The provider wont do it automatically on a contract that old. So, its either down to you to do it or employ a servicing IFA to do it.