Endowment policy payout - is this good?

pauljoecoe

I received a surprise endowment payout today. Its 25 years since i bought my first houce for around £15K

Fortunaly i long sine moved to a repayment mortgae so this is just a nice cash bonus.

Anyway - it matured at £14,394.00 and has cost me £20.09 per month for 25 years.

So thats £6027 paid in over 25 years.

Is there away to work out what the average interest rate for this would have been?

Obvoiusly a a simple sum of 6K as a percentage of 14K divided by 300 would show about 40% or 1.4% per year but clearly I didn't have 14K invested for 25 years.

Just out of interest really to see how it compares with shoving in a savings account.

bilbo51

Assuming interest added monthly, it's slightly less than 5.96% pa.

dunstonh

I make the average rate of return 6.36%.

McKneff

Dont forget, you had life insurance cover for all those years also.

TrickyDicky101

I make it a nominal rate of 6.22% pa (monthly interest with payments in arrears) using Excel's RATE function.

pauljoecoe

So thats around 5 - 6 % then. Yes of course there is the added bonus of life cover.

It does concern me that if an endowment policy from the period 1985-2010 only manages 5% then what will my larger policy which started in 1993 and ends in 2018 manage to produce - doesn't look good does it.

I assume its still best to keep going for another 7 years rather than cash in/sell?

dunstonh

It does concern me that if an endowment policy from the period 1985-2010 only manages 5% then what will my larger policy which started in 1993 and ends in 2018 manage to produce - doesn't look good does it.

I assume its still best to keep going for another 7 years rather than cash in/sell?

You havent told us about the investments. They may have potential for 20% a year going forward or just 3% a year.