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Plod on with endowment or sell ?

can anyone offer any advice ?
I have 10 years to go on my standard life endowment. it costs £45 a month and has a current surrender value of £9900. It was to pay off the mortgage (£34K) but is forecast to be worth only £19.5k at maturity(assuming @ 5.55 growth per year).
It is now used as a savings policy as I have alternative life cover and no mortgage. Would it just be better to sell or surrender it, bank the money and still end up with around £20k in 10 years time ? My only concern is if an investor is paying money to buy this policy, then is it worth more than the forecast £19.5k ?

Comments

  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    IMHO you would be better to sell it for 5-10% more than the surrender value and then reinvest the money in a maxi ISA through a discount broker such as https://www.h-l.co.uk ,choosing a selection of quality funds.

    Old endowments have high charges, no tax relief and very poor fund choices.
    As investments they are obsolete and should be replaced.
    Trying to keep it simple...;)
  • Gorgeous_George
    Gorgeous_George Posts: 7,964 Forumite
    Part of the Furniture Combo Breaker
    EdInvestor wrote: »
    IMHO you would be better to sell it for 5-10% more than the surrender value and then reinvest the money in a maxi ISA through a discount broker such as https://www.h-l.co.uk ,choosing a selection of quality funds.

    Old endowments have high charges, no tax relief and very poor fund choices.
    As investments they are obsolete and should be replaced.

    I was offered just 3% more to surrender my policy so 5-10% may be difficult to find.

    My policy matures in Jan 2010 and is also with SL at £45 per month. I have been disappointed with the cuts that policies suffered in recent years however, the value since Sep 06 has increased by approximately 7% p.a. tax free. I have a mini-cash ISA at 6% and my mortgage is less than 7% even after recent IR rate hikes.

    Sep 06......£21,512.62
    Oct 06......£21,668.06
    Nov 06......£21,824.08
    Dec 06......£21,982.74
    Jan 07......£22,140.00
    Feb 07......£22,352.43
    Mar 07......£22,525.33
    Apr 07......£22,698.95
    May 07......£22,873.27

    I'm happy to keep my policy to maturity unless someone offers me substantially more than a 3% premium. Ed's 10% would see me selling.

    :)

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    My policy matures in Jan 2010 and is also with SL at £45 per month. I have been disappointed with the cuts that policies suffered in recent years however, the value since Sep 06 has increased by approximately 7% p.a. tax free.

    Endowments (unlike ISAs) are not tax free. Gains are taxed at 20% within the fund and this cannot be reclaimed.
    Trying to keep it simple...;)
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