Help! Endowment figures

nyck

At the moment my outstanding Mortgage and Endowment are getting close to being equal with 5 years still to go



It is a Prudential(scot Am) Unit-Linked fund(Managed).It's due to mature in August 2023. The life insurance is for 50k and as of March 2018 has a value of just under 47k, we pay £134.70 per month and their estimated payout on maturity is:
£52400 (1.5%) surplus £2400
£65000 (4.5%) £15000
£80200 (7.5%) £30200

I've 5 years left 60 months
I over pay my mortgage so roughly in 5 years ill owe £28700 of £50000
So with any endowment surplus ill have at the end

£23700 (1.5%)
£36300 (4.5 %)
£51500 (7.5%)


If i continue Mortgage + endowment payments ,ill be paying 60x £694.70 = £41682


If i've got the figures right @4.5% which Prudential think is a realistic target Im still going be roughly £4000 short of the £41k i would of paid out over the 60months/5 years



The thing that is stopping me is the endowment has over doubled in the last 6 years the increases being since 2012 --£5k, 1.5k ,6k, 0.5k, 9k & 1.5k


My cautious side says cash in & pay off the mortgage and invest the £694 a month

My gambling side says see out the 5 years and hope the rises continue


thanks nyck

dunstonh

and their estimated payout on maturity is:
£52400 (1.5%) surplus £2400
£65000 (4.5%) £15000
£80200 (7.5%) £30200

So, this one is on track for a healthy surplus as the managed fund is running at close to 6% after charges whereas the projection for 7.5% is before charges. That is that is the closest match.

I am an experienced investor and would normally go for investing. However, you need to look at where we are in the cycle. We are about 6/8ths of the longest growth period on record. So, statistically, we are close to a crash. Plus, Trump's daft stimulus at the wrong time of the cycle risks turning it in to a bubble that would make the crash bigger and with the stimulus already spent and used up, the recovery may be slower.

You cannot time the market. However, you can make informed decisions based on clearing debt and starting the next cycle clean. Indeed, with the mortgage cleared and starting with £694 ish a month, a drop in the near future would be perfect for you.

dimbo61

If you do decide to cash in the endowment and pay off the mortgage consider your life assurance arrangements !
You have done well to get a 6% return on an endowment

nyck

*UPDATE*
I just got an updated value of £51136 which was a bit of a shock so its gone up £4100 since March ,this would totally clear my morgtage with a couple of hundred pound spare.


As I mentioned to keep it going it will cost £41k thats quite a bit more than the 4.5% they recommended ill get back at the end including the over payments on my mortgage.


If I then invest that £694 a month that bridge the gap further I would hope.


What would you guys do??

dunstonh

*UPDATE*
I just got an updated value of £51136 which was a bit of a shock so its gone up £4100 since March ,this would totally clear my morgtage with a couple of hundred pound spare.

The 10% market drop over winter/spring had recovered a few weeks ago. Down a bit again now from recent highs

thats quite a bit more than the 4.5% they recommended ill get back at the end including the over payments on my mortgage.

That projection is not a recommendation or an estimate or even a probable figure. It is a synthetic projection using assumptions. a 4.5% projection is more like a net return of 3%. Whereas most managed funds (40-85% equity) have been returning in excess of 6% net of charges.

Thrugelmir

nyck wrote: »

I just got an updated value of £51136 which was a bit of a shock so its gone up £4100 since March ,this would totally clear my morgtage with a couple of hundred pound spare.

Investment returns are backloaded. As the fund grows. Likewise will be the income generated being reinvested. Markets may rise and dip, but the income is the primary driver of the final payout.

nyck

Ive 95% decided to cash it in :undecided:undecided
I called today and they are sending the paperwork so ive got until next week to decided .


I must admit the new projection figures they provided today looked tempting to hang on

62K,,,71.4K,,81.2K