Should I cash in this endowment

Moby

I have an endowment policy with Friends Provident in which I've invested £51.06 since March 1995. I am now 16 years into a 25 year plan and its only worth about £10,500. Its 50% managed and 50% with profit (unit funds). I know about the poor return but my question is at this point is would I be better off cashing it in and reinvesting the money in an ISA or bond. I would like the flexibility of having access to the money within the next 5 years really and letting it mature for the next 10 years will not earn me much more but there is a maturity bonus if I leave it where it is? I don't want to take risks by investing the money in the stock market. Any advice gratefully received.

dunstonh

I know about the poor return but my question is at this point is would I be better off cashing it in and reinvesting the money in an ISA or bond.

Put similar funds into different tax wrappers in the same period and you get a similar return. The 2000s were one of the worst periods for western investments in generations. So, it has more to do with where it is invested rather than the actual tax wrapper.

Many of the FP endowments have very low annual charges. They also have a relatively good internal fund range (although weak overall as no external funds). However, for a novice investor, the choice is fine.

So, it really comes down to whether the cost of surrender and reinvestment is worth it compared to the alternatives.

I don't want to take risks by investing the money in the stock market.

So you want inflation risk and shortfall risk instead. That is fine if you accept a different type of risk. However, the ISA tax wrapper with the same investments will carry the same risk as the life funds tax wrapper.