Standard Life Endowment. Help Please!!

Dithering_Dad

Gorgeous_George wrote: »

Dithering Dad: Paying off your mortgage has to be a good thing but remember, each pound of your overpayments are worth more than the pounds that you will save (i.e., over pay £100 today and you may well save paying £200 in 14 years' time but the £100 today may well be worth clo0se to £200 in 2021). It's important to enjoy life as well as clearing your mortgage in time for retirement. For example, I wouldn't sacrifice my holidays just to overpay my mortgage. I don't want to be a rich pensioner at the expense of living like a pauper today.

Hi GG,

Don't worry, I'm not scraping by in order to pay off my mortgage. I have fairly recently started my own company and it's doing really well. What I decided to do when all the money started rolling in was to just maintain the nice and comfortable lifestyle I had when I was a wage slave, and not fall into the trap of expanding my lifestyle to match my new, much larger income.

This means that the extra money I get above my old salary is put into my mortgage and my pension. If everything works out in the MFiT challenge, in three year's time my house will be paid for (it's a 4 bed detached, so we won't be moving again, except to downsize) and my pension will be worth 100k (with a further 23 years for it to grow before I reach 65).

A small sacrifice of "Living within my (old) means" for 3 years will result in me being financially secure for life. Not a bad thing to aim for .

Dithering_Dad

catsneel wrote: »

Dithering Dad
I really like your outlook on life and common sense.
Well done so far.

Thanks catsneel, that's a really nice comment. The decision to live within my old means was pretty much a "no brainer" for me because I doubt I'll be able to maintain the effort it takes to bring in such a large income for more than 3-5 years, so I didn't want to get used to a larger income when it was only temporary. I also wanted to make sure that the sacrifice was worth it, hence piling so much of it away.

When I return to my nice and secure salaried job, I'll have quite a bit of cash spare because I won't have a mortgage to pay so I'll take up Dunstonh's advice and learn how to invest this and my 100k pension pot a little better (my pension is currently in a stakeholder pension, much to Dunson's displeasure )

catsneel

All these different opinions about handling finance is very confusing and as you said earlier Ditherig Dad,it has got me all messed up as what to do for the best and the future

EdInvestor

(no falls since flotation - coincidence?).

Not a coincidence. At the DM, Standard raised new capital ( that was why they demutualised) and about 1 bn pounds of this was put into the WP fund.It showed up in higher policy values the following month.

The reason SL reduced bonuses pre DM was quite simple - it didn't have the money to pay them, having lost most of the free assets in the market crash :mad:

Dithering_Dad

Just do whatever you think will give you piece of mind. We're not dealing with millions here so even a wrong financial decision will only cost you a few hundred pounds at worst.

The endowment I cashed in could have surged ahead and ended up giving better returns than the mortgage interest saving I'll make from paying it (and the endowment premiums) directly on the mortgage. However, the difference between the two will only be a hundred here or there. In the meantime I know my interest free part of my mortgage will now definitely be paid off, so I can rest easy. Personally, that's worth whatever few quid I may have lost out on.

You've probably lost more money in car depreciation than you will in cashing in your endowment, and I doubt that it gave you sleepless nights. Go with your gut feeling, make your decision and then forget about it. Just make sure that if you do cash in the endowment you pay the money onto your mortgage, not buy a car with it!! Also make sure you pay the endowment premiums onto the mortgage too.

Sarahsaver

So if I tell my endowment provider I want it 'paid up' then is it kind of frozen? No increase in value? I cannot get life cover anyway as I have had a stroke!

EdInvestor

Sarahsaver wrote: »

I cannot get life cover anyway as I have had a stroke!

Here we have a case where continuing to pay into the endowment may well be worthwhile, even if it is not a star performer treating it as mainly life cover with the cash maturity benefit on the side.

JoeK_3

EdInvestor wrote: »

Here we have a case where continuing to pay into the endowment may well be worthwhile, even if it is not a star performer treating it as mainly life cover with the cash maturity benefit on the side.

The most sensible thing I've seen you to write.

JoeK

alexspurs16

I also have a standard Life Endowment which I took out in 1986 and will mature in 2011. The same was on 24.5K but they have send me letter for the last 10 years telling me it will not achieve it's value. I have kept paying the premium as it does offer life cover. I have had a statement today which tells me there will be a shortfall of 6.5K on the 6% valuation.

My advice keep the endowment and swap to a repayment mortgage

alexspurs16

I also have a standard Life Endowment which I took out in 1986 and will mature in 2011. The same was on 24.5K but they have send me letter for the last 10 years telling me it will not achieve it's value. I have kept paying the premium as it does offer life cover. I have had a statement today which tells me there will be a shortfall of 6.5K on the 6% valuation.

My advice keep the endowment and swap to a repayment mortgage