scottish widows endowment

highet

wife has just received payout for SW endowment she was sold as ''saving plan'' 20 years ago - she has been paying £25/month into it (was set up as 5 x £5 policies for some reason) so has paid in £6000 in total and has received the grand payout of £8138 - is it just me or does that seem like a fairly miserable return for 20 years of investment? (about 35% in total over 20 years)

Thrugelmir

You need to view in the context that inflation has whittled away the value of the saving. A £300 annual investment 20 years ago would have been a reasonable sum.

Also remember only £300 has earnt a return for the full 20 years. The remainder progressively less. Some only for a matter of a month.

Savings need to be regularly reviewed and increased if possible. In order to build sizable sums.

McKneff

You also have to remember that endowments have life insurance cover in them, so she has had this for 20 years, that has to be paid for, just thank your lucky stars that you hadnt had to claim on it, if you see what I mean.

dunstonh

The first 10 years of that savings plan saw good growth. Problem is that you have hardly anythng of worth in it as you have only just started. The last 10 years have seen turmoil that hasnt been seen before for nearly 80 years. It was a bad decade. They can happen (which is why the risk warnings exist). Thankfully they dont happen often.

The plan is obsolete. It was almost obsolete when you bought it 20 years ago (they went obsolete around mid 90s). Modern plans are more flexible and allow you to move money around within them so you can protect gains when they occur and diversify more and invest more when the markets fall to take advantage of the lower prices. You didnt get that with those old plans as the couldnt do it.

was set up as 5 x £5 policies for some reason

Tax purposes. It would allow a segment to be surrendered without creating a tax liabilty on the other segments. Most life policies are segmented. 100 segments is the most common.