1998 endownment, £20,000 short

Moncs_2

Editor wrote:

Moncs:

I agree with Dunstonh's query on the idea of holding onto your RSA 1998 endowment. Post some figures on it if you want a view. Older RSA endowments can be worth holding to maturity but this one looks a little juvenile

If you can let me know what figures your after, I will post them.

Thanks

paulie

Just phoned Friends Provident and it turns out we have a unit linked endownment anyway, so we will only be able to surrender it and not sell it on. :O(
We'll loose about £1000 - £1500 if we surrender, we might do that anyway, as we are going to a repayment mortgage anyway.

EdInvestor

Moncs wrote:

If you can let me know what figures your after, I will post them.

Thanks

Guaranteed sum assured
Total bonuses so far
Monthly premium
Maturity date
Surrender value (and terminal bonus amount,if any)

Moncs_2

Figures as at 31/12/04

Guaranteed sum assured (Guaranteed Min Death Benefit) - £60,000
Total bonuses so far - £1868.30
Monthly premium - £110
Maturity date - 01/04/2023
Surrender value - ??? Don't know

When I took it out in 1998, they said it should get around 6.5%, it's now sitting around 4%.

EdInvestor

HI Moncs

Is this is a With Profits endowment? Better ring up and check and also get the surrender value.

Moncs_2

Editor wrote:

HI Moncs

Is this is a With Profits endowment? Better ring up and check and also get the surrender value.

The current surrender value is £6262 and yes it is a with profit's policy.

Any advice would be very grateful. I'm happy to keep paying until maturity and get a lump sum as as I said I hope to change my mortgage to repayment next year, however if you think I should surrender it and put money into another scheme that would give me a better return over the next 18 years that would be great.

Moncs_2

bump :beer:

EdInvestor

Hello Moncs,

If you took the surrender value of 6262 and put it in the bank at 4% paying in your premiums as well to maturity you would end up with 47,267. So a bit less than a 13k shortfall, compared with the 17k shortfall R&SA have quoted to you.[The difference is caused primarily by charges and the cost of the life cover.)

So looks to me that you should surrender and use the money to reduce the mortgage.Your "saving" will be higher of course if you pay back (tax free) mortgage interest at say 6%, rather than earning (taxable) bank interest at say 4%.

Moncs_2

After re-reading the letter, it seems to be a projected 4.5% (I said 4% previously), which would give the projected final amount as £45,100.

You mentioned part of the charges being Life Cover, I have a seperate insurance policy that runs alongside this which covers that.

I'm happy to continue with R&SA, however one question I do have, is there any signs of the endowment's improving in performance over the years, as someone mentioned that although they project 4.5% now, it could go back up to around 6 or 7% by the time the endowment matures.

dunstonh

I'm happy to continue with R&SA, however one question I do have, is there any signs of the endowment's improving in performance over the years, as someone mentioned that although they project 4.5% now, it could go back up to around 6 or 7% by the time the endowment matures.

The R&SA fund has limited potential IMO.