selling endowments

ynot2005

its nice to see experts on the forum giving advice...surely this is the "real" independant advice...where no-one has a hidden agenda to sell you something or try and make and make money out of you

on the point of wether its a good idea to sell endowments or not...my thoughts are that if someone wants to buy it and make a profit out of your endowment then you should keep it..is it true that these buyers know a good thing when they see one and are only too glad for you to part with your endowment

surley the general rule is too keep endowments unless you would be taking on a expensive loan instead of cashing in the endowment

or am i missing the obvious ?

keasden

Don't think its quite as simple as that. I am in the process of selling 2 endowments because the capital raised will then be used to pay a chunk off the mortgage and the monthly endowment fee can also be saved to go towards the new repayment mortgage.

I realise that I *may* be financially better off in the long run by keeping the endowments for the remaining 8 years or so, but by doing it this way I have removed any risk element whatsoever and will be glad to see the mortgage reducing at a fairly fast rate as I can now afford to reduce the term to 13 years instead of the 20 I currently have outstanding. i couldn't have afforded to reduce the mortgage as much as I am doing if I kept the emdowments on.

dunstonh

its nice to see experts on the forum giving advice

No-one is giving advice and if you look at some of the comments on this site and acted on them, it would cost you a fortune. Indeed, I just posted on one in the savings section where one suggested response would cost the poster thousands of pounds a year when there is no need to.

It is against board rules to give advice and FSA rules to do so on here without meeting the necessary requirements and the person being authorised to do so. Normally I wouldnt comment like this but after seeing that other thread and then coming directly to this one next, I felt it is important that you realise that no advice is being given and what you read here may not be correct.

on the point of wether its a good idea to sell endowments or not...my thoughts are that if someone wants to buy it and make a profit out of your endowment then you should keep it..is it true that these buyers know a good thing when they see one and are only too glad for you to part with your endowment

No, that is looking at it too simply. There can be tax advantages to certain individuals utilising TEP funds as well as the company buying still getting them cheaper than their current value (surrender values are often thousands less than the current value).

surley the general rule is too keep endowments unless you would be taking on a expensive loan instead of cashing in the endowment

Nope, an equity ISA and term assurance could be an alternative which cheaper and offers greater potential. A half decent equity ISA invested before the stockmarket crash should be around 50-150% up now depending on risk profile despite the crash. Most endowments arent anywhere close to the lower amount, let alone the more common middle ground.

Then there is the risk that keasden mentions. Some people just dont want the risk.

Whilst there do tend to be a number of "shall I keep or sell" threads on this forum, it should be noted that they are a guide only and many of the things that need to be considered dont get taken into consideration and acting on the "advice" without looking at those other things could end up costing more than you realise.

ynot2005

ok dunstonh thanks for that...yes advice was the wrong word...i should have used "ideas" or "thoughts"

and i wasnt aware that endowments often have surrender values thousands less than current values, perhaps this was the obvious point i was missing and why companies want these endowments

it just seems that every tom !!!!!! and harry wants your endowments...and that makes me suspicous

EdInvestor

it just seems that every tom !!!!!! and harry wants your endowments...and that makes me suspicous

I'm not sure where you got that impression.These days only a few endowments are saleable - most are not of any interest to the TEP traders, and the premium you get for those they will buy is not much compared with the old days.

They do provide an independent opinion about the potential value of the policy.However with most endowments struggling to return more than 4-5% on a risk basis long term (because of the way they are invested these days), for many people cashing in and getting the guaranteed return at the mortgage rate (often higher at 5% or more) is a better deal.

Keeping the endowment may be a good move for someone who has developed health issues since it was taken out and can't get competitively priced replacement life cover - or is on benefits, where cashing in would have an effect.But many people don't need the life cover in the endowment and are paying extra unnecessarily for it.

On the whole, endowments are past their sell-by date because their high charges and changed investment mix mean they no longer do what it said on the tin when they were taken out. But there are some exceptions, which is why one needs to look at each policy in some detail.

Re "advice", the word is used in the financial services industry in a very specific way, involving precise regulations, and usually refers to the guidance given when someone is selling something.

We don't sell anything here or give regulated " advice" - individuals try to provide helpful information and comment and to fix any obvious errors that come to their attention.

But you are strongly advised at all times to Do Your Own Research as there is no guarantee the information on this or any other bulletin board is actually correct.