Investing Endowment Compensation

Treeman_3

I have recently found out that a complaint against my endowment provider re. misselling has been upheld :j (although a second has failed ) and I have been awarded £4700 in compensation.

The question now is: What is the best way of investing this money given that the projection for the endowment forecasts a shortfall of £15800 (@ 6% growth) when the policy matures in 9 years? I have an interest only mortgage for £76000 (of which £55000 should have been covered by the endowment in question) due to be paid off in 2015. I am currently paying £369 a month in interest. The surrender value of the policy is £19195.

As I see it I could:
· Pay off some of the mortgage capital and so reduce the interest.
· Deposit the compensation sum in a high interest account and use the accrued sum with the matured endowment to pay off the mortgage loan.

But if anyone has any better ideas please let me know.

I would rather not change the method of mortgage repayment or increase the monthly payments at the present time.

Thanks in anticipation.

EdInvestor

If you use the money to overpay the mortgage you will receive a notional return of 6% ( the mortgage rate) which is of course tax free, unlike interest And usually higher than deposit rates.

If you want a view on what to do with the endowment itself, post the following info:

Provider
Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity projections

It is usually best to surrender/sell the endowment and apply the proceeds plus the monthly premiums to reducing the mortgage, but there are occasional exceptions to the rule.

dunstonh

An endowment was an investment product. It didnt perform as you wanted so you complained (no doubt saying you didnt want to invest) and got redress. Now you are saying you want to invest it.

Who are you going to blame next time when this investment doesnt pay out enough?