Endowment update: payouts still falling

mayb_2

I don't see where my judgement is clouded here or my economic understanding. I could say it is your self satisfaction that clouds your judgement of both dunstonh - but I am happy to concentrate on addressing the points raised and do not need to deflect them.

I copy the statement here so that you may understand the part of my post that referred to inflation.

"As far as I am aware the governments preferred measure of Inflation does not include mortgage interest rates and some wages are not even keeping up with inflation, public sector workers face average rises of just 1.9% (nurses pay for instance). This is a pay cut in real terms. The cost of my rates has just gone up above inflation and my water rates are up too. Not something a home owner can avoid paying. The property price boom is only helping those people who can release the equity in their property in some way but is making buying a first home virtually impossible. We all do still have to live somewhere."

This was in direct response to the points made in your post dunstonh - you know the one where you were telling me how I was better off - any chance of a direct response to the points raised in mine?

Addiscomber

If we could go back to the first post in this thread, the company (Zurich) that currently operates our endowment is not included in the chart in the linked article. How can we find out what level of terminal bonus they are paying?

EdInvestor

Buy the current edition of Money Management from which the figures were taken.The magazine should have the full list.

mayb_2

So what you are saying Jamesd is some will benefit from those who lost out earlier? As I understood it a fund which had closed could not sell new business or increase old business in the fund. If these funds have to pay out to those who have either left because their policy had reached its end or those who left because of poor prospects of returns, where is the money coming from to put in to equities? Presumably the money needed to cover guaranteed payments still has to be kept in low risk/low return investments.

If the funds are not closed but failing - how do you generate enough money to risk placing more in equities. It cannot be easy to sell more business for one of these funds. This means that those succeeding now will continue to succeed and possibly improve but those not managing this or failing now could possibly continue on their downward spiral?

MUSTBEFUNNY_2

Hope I'm not being rude Dunstonh but do you own any endowments?

dunstonh

No. I had one in the past but surrendered it many years ago and switched it to PEPs (now ISA). I do have an investment backed mortgage though

MUSTBEFUNNY_2

Then, to be honest, you don't know what it "feels" like to receive a "bonus" statement for a policy that you've paid say £720 into over the year and it shows a bonus of £3 for the whole year. It's terrifying and frustrating and there is no amount of logic that can say otherwise. If you owned an endowment (and I had two but now have just one with NU - pre 1988) I think you would feel the anger and frustration that those of us who have these policies feel. It's easy to use logic when something is not actually directly effecting you.:eek:

mayb_2

My son has just received a final payout on his WP policy and he received a total of £140 profit after 10 years. This was accompanied by a letter inviting him to reinvest the money they had made him so they could help him to continue to fullfill his hopes and dreams for the future!!!!!!!!!!!!

He is buying his first house and had hoped when he took this policy out that it would at least cover the expenses. So much for hopes and dreams. He only received information regarding bonuses etc in the last two years of its life so no chance to change tack mid stream either. This is mugging pure and simple.

On the question of logic correct me when I go wrong here. If I had an endowment mortgage the endowment would be used to cover capital repayment at the end of the mortgage term. I think we can all agree on that. I would then pay interest only on my mortgage over the term. Agreed? How then would I have failed to benefit from the lowering of interest rates on mortgages if the policy had continued to cover the capital repayments on my mortgage? I would have been free to change my mortgage provider if necessary. Not only would I have benefited from this but I would have had my mortgage repaid at the end of the term for, in my case, £125.00 per month on the endowment policy. How then am I better off now than I would have been if these things had not failed? Mine was destined to shortfall by £25000 by the way.

The payments into endowments do not change over the period in which you agree to pay them. Regardless of inflation they are not affected. The amount of mortgage to be repaid is not affected by inflation. Are we claiming here that inflation affected the performance of these policies?

If as many have experienced you get no return from your with profits policy, the only claim that lower inflation can have on it is that it prevented you from spending your money at a time of higher inflation. But you were not spending it were you - you were investing it.

We also have record levels of personal debt in this country at the present time and interst rates are rising.

Originally quoted by dunstonh

"If you balance it out, you would have to take the poor endowments and better economy every time.":rolleyes:

dunstonh

MUSTBEFUNNY wrote: »

Then, to be honest, you don't know what it "feels" like to receive a "bonus" statement for a policy that you've paid say £720 into over the year and it shows a bonus of £3 for the whole year. It's terrifying and frustrating and there is no amount of logic that can say otherwise. If you owned an endowment (and I had two but now have just one with NU - pre 1988) I think you would feel the anger and frustration that those of us who have these policies feel. It's easy to use logic when something is not actually directly effecting you.:eek:

I see it happen fairly often and I have been through a few stockmarket crashes and watched values drop by 30% before going on to recover. So, you could say I have suffered worse than you at times as at least you havent dropped 30%.

I have to apply logic because if you dont you can let the emotion get on top of you and my clients expect logic and not emotion. I usually post in that in that style as well. Its far easier to post and act all sympathetic but that doesnt get anyone anywhere. Its much better to look at the facts, understand it and deal with it.

We also have record levels of personal debt in this country at the present time and interst rates are rising.

Originally quoted by dunstonh

"If you balance it out, you would have to take the poor endowments and better economy every time.":rolleyes:

So mayb, you would prefer the high unemployment, high inflation boom/bust economy with mortage payments upto twice the level they are at now then?

Each economic cycle brings it's challenges but the low inflation, steady economy we have had for the last 10 years is far better than that we had the 10 years before that.

mayb_2

What I would have preferred dunstonh - as I am sure many others would have too - is if the financial steps I had taken following the financial advice I was given had led to the financial outcomes I was promised.

originally posted by dunstonh

"I see it happen fairly often and I have been through a few stockmarket crashes and watched values drop by 30% before going on to recover. So, you could say I have suffered worse than you at times as at least you havent dropped 30%."

Oh dear! Somehow I don't think so! - Could it be that 'going on to recover' bit that lets you down here.

Lots of endowments didn't recover did they - nor have the With Profits - and those that have shown some sign of recovery are not necessarily passing that on to the consumer.

The only people who do not appear to suffer financially no matter the state of the economy are those advising others it would appear.

You are still talking about the effects on your financial world dunstonh and not mine or others like me.

You haven't given me a direct response to any of my points either - many of which looked pretty logical to me - you have just issued a general statement- it is a bit like talking to a politician!