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Endowment policy maturity / reinvestment
EachPenny
Posts: 12,239 Forumite
I'd be interested to hear people's thoughts on the best way to handle the maturity of my endowment policy which is due to mature later this year. The policy was taken out with Barclays Life now managed by ReAssure and is invested in the BL Managed Series 3 fund.
Current value is in the region of £26k which would have left a shortfall of £9k if I still had the mortgage. :eek:
To plan ahead I made enquiries with ReAssure about what happens at maturity, crucially they said there was no option to leave the funds invested, at maturity I would get a cheque, end of story.
Part of my plan was to consider the risk of a large fall in unit price close to the maturity date. Without the option to remain invested and allow the price recover my alternative strategy was to cash in early at the risk of foregoing some additional growth in the final months. A General Election has slightly complicated that decision making process!
The first question is whether there is any reason (apart from missing out on possible growth) not to take the money early? I understand there are no tax implications, and the policy has no terminal bonus. The only financial implication I can see is the early loss of life assurance which I don't need anyway.
Secondly, the big question, what to do with the money when I get it?
It will mean a significant shift in my cash - S&S balance, so my natural reaction would be to reinvest it in S&S somehow. But I have a niggling doubt with the market currently so high whether it is wise to reinvest as a lump sum now.
I generally take a cautious approach to investing, my preference would be to leave it where it is, but as that isn't an option the nearest equivalent is to reinvest the full amount somewhere reasonably safe asap. I realise that is somewhat contradictory.
I have an investment in a Royal London (formerly CIS) S&S ISA, spread over several funds, which have done reasonably well but it does feel like the management costs are a bit high compared to some quoted on here.
Would you take the endowment funds and add them to the Royal London fund (outside the ISA initially), or start fresh elsewhere?
My intention is to use most of my ISA allowance on a cash ISA this financial year in order to maximise the interest rate available on that lump of cash.
I will be having an appointment with an IFA before making a final decision, but was interested to hear other people's thoughts so I could check them out in advance of the appointment.
Many thanks for any suggestions or ideas.
Current value is in the region of £26k which would have left a shortfall of £9k if I still had the mortgage. :eek:
To plan ahead I made enquiries with ReAssure about what happens at maturity, crucially they said there was no option to leave the funds invested, at maturity I would get a cheque, end of story.
Part of my plan was to consider the risk of a large fall in unit price close to the maturity date. Without the option to remain invested and allow the price recover my alternative strategy was to cash in early at the risk of foregoing some additional growth in the final months. A General Election has slightly complicated that decision making process!
The first question is whether there is any reason (apart from missing out on possible growth) not to take the money early? I understand there are no tax implications, and the policy has no terminal bonus. The only financial implication I can see is the early loss of life assurance which I don't need anyway.
Secondly, the big question, what to do with the money when I get it?
It will mean a significant shift in my cash - S&S balance, so my natural reaction would be to reinvest it in S&S somehow. But I have a niggling doubt with the market currently so high whether it is wise to reinvest as a lump sum now.
I generally take a cautious approach to investing, my preference would be to leave it where it is, but as that isn't an option the nearest equivalent is to reinvest the full amount somewhere reasonably safe asap. I realise that is somewhat contradictory.
I have an investment in a Royal London (formerly CIS) S&S ISA, spread over several funds, which have done reasonably well but it does feel like the management costs are a bit high compared to some quoted on here.
Would you take the endowment funds and add them to the Royal London fund (outside the ISA initially), or start fresh elsewhere?
My intention is to use most of my ISA allowance on a cash ISA this financial year in order to maximise the interest rate available on that lump of cash.
I will be having an appointment with an IFA before making a final decision, but was interested to hear other people's thoughts so I could check them out in advance of the appointment.
Many thanks for any suggestions or ideas.
"In the future, everyone will be rich for 15 minutes"
0
Comments
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Is a pension contribution a possibility?0
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Not currently working, and have past LGPS membership, so not sure of the feasibility. But thanks, that wasn't something I'd thought about so will certainly have a look."In the future, everyone will be rich for 15 minutes"0
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If you have no relevant earnings any pension contribution would be limited to £2880 net, (£3660 gross).0
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