Value of Endowment plummets

edgex

We have savings in a couple of savings accounts and I have a pension pot (bit more than this one) which was recently transferred to Utmost from Equitable Life.  So basically our other money for now is in safe(ish) cash deposit accounts (not making much)
We were originally going to use it towards upgrading our current motorhome, otherwise I guess I would have transferred it to one of our savings accounts.  I dont like the sound of High Risk though, Im fairly middle to high risk averse.

1) I wouldn't be buying big ticket items like motorhomes now or for a while.
Is there anything around the property that needs doing, could be done, would like to have done (in that order). I would especially look at anything that could reduce costs, as your on fixed/low income.

2) With interest rates plummeting, you should look around for better rates. Even just having regular savers that you feed from lower-rate savings accounts would be something. Also have a look at the NS&I products.

barryd999

Thanks again.  I dont need the money for anything really.  If need be I could continue paying into it and extend it after it matures in October. I think L&G said I could do that as an option but if its risky?  I presume there is no way to transfer it into something safer?  The motorhome upgrade was just something we were going to do anyway (we already have one).  We are both 54. My wife does not work and I am semi retired but still earning enough to survive on reasonably well.   I am aware of the loss due to inflation of bank accounts. Most of ours is with investec which does pay something at least and I think I opened up a couple of new savings accounts with a couple of banks recommended on here (not transferred anything yet).  I guess I am risk averse mainly out of ignorance of the markets and investments etc. Will read the guide Badger posted.

barryd999

Just updating this thread.  They say ignorance is bliss.  Its true. I Cant stop watching the FTSE All share index now and L&G are sending me weekly updates.  I think it was down to £33k last week and up to £36k today.  My gut feeling based on no theory whatsoever is that maybe as the lock down eases and the economy moves it will continue to rise but I am also guessing that a second wave and further lock down will see it plummet. Anyone else share that view?  Would it be safer to ride it out until it looks like that might happen then cash it in before it drops like a stone again? Or Fingers Crossed if it all goes well and the virus goes away just let it ride and keep paying in?  I know its impossible to predict but would be interested on others opinions.

dunstonh

I think it was down to £33k last week and up to £36k today.  My gut feeling based on no theory whatsoever is that maybe as the lock down eases and the economy moves it will continue to rise but I am also guessing that a second wave and further lock down will see it plummet. Anyone else share that view?

It is doing what it always does.   It did similar in 2015/16, 2008/9 and 2001-3.   

The problem is really being in a FTSE all share tracker with 100%.   Its not good quality investing.

bowlhead99

barryd999 said:

My gut feeling based on no theory whatsoever is that maybe as the lock down eases and the economy moves it will continue to rise but I am also guessing that a second wave and further lock down will see it plummet. Anyone else share that view?  Would it be safer to ride it out until it looks like that might happen then cash it in before it drops like a stone again? .

If/when it 'looks like that might happen' (i.e. with any more certainty than it looks like today), the markets will have already dropped like a stone because everyone else moving their trillions around will have had the same idea as you, before you have it, because they have more information than you do and are more sophisticated. You are not going to be successful at calling the top or the bottom of an index movement. 

If you already know it's an investment you don't want, either:

(a) because you don't like the fact that it swings in value too much, which it does because it's 100% invested in company shares, and company shares can be volatile;

(b) because it's a specialist fund that allocates its money to the biggest companies which happen to be listed on the London stock exchange... and having canvassed opinion here you've learned that's not good quality investing, because it's not wise to invest all the money in those companies without also investing in all the other companies on other markets around the world;

Then it sounds like you should give up and buy something else.

For solution to (a), you could invest the ISA in a more balanced investment fund that isn't just invested in company shares allocated to the biggest companies, but also othe types of assets (bonds, property etc)

For solution to (b), you could invest in a more 'global' investment fund that isn't focused on whatever happens to be listed on the london stock market.

There are investment funds available that give you both solutions at the same time - a global investment fund that isn't just invested in company shares and isn't just invested in the UK.

Or you could cash out and just hoard the cash.
Or you could keep the investment that you already have, acknowledging that it's not a very good investment.

barryd999

Thanks. So if I were to follow solution (A)  to invest the ISA in a more balanced investment fund that isn't just invested in company shares allocated to the biggest companies do I cash in the L&G ISA and then reinvest the money somewhere else or request L&G transfer it to another fund?  I have a recollection that someone suggested it was not transferable.  I think I may just cash it in and seek advice as to where to put money safely that will make a bit more than the banks.  I would be happy for my various pots to just keep up with inflation to be honest.  I think I really need a decent advisor but would have absolutely no idea where to look or who to trust. 

fewcloudy

barryd999 said:

I have an endowment with Legal and general which matures in October.   Its not a huge one but was originally set to make £44k.  Before the Coronavirus the value was £39K.  I just noticed yesterday last months statement showed a value of £28k!  Thankfully they sent one this month where it had risen to £32k.  Mortgage is long since paid off thankfully but its still a bit of a worry.  Whats the best advice? Sit tight and hope it recovers or cash it in? My gut feeling is to just leave it.

I am quoting your original post as a reminder.   So given that last month it was worth 28k, and it could be worth that again in October (or lower), I would think I would sleep easier getting out with anything around 36K. Each to their own though.
And it does matter just how big a % of your portfolio it represents, when deciding whether to just let it run its course, or get out now!
You do mention gut feelings... although that was before you understood the product i think i am right in saying?

barryd999

fewcloudy said:

barryd999 said:

I have an endowment with Legal and general which matures in October.   Its not a huge one but was originally set to make £44k.  Before the Coronavirus the value was £39K.  I just noticed yesterday last months statement showed a value of £28k!  Thankfully they sent one this month where it had risen to £32k.  Mortgage is long since paid off thankfully but its still a bit of a worry.  Whats the best advice? Sit tight and hope it recovers or cash it in? My gut feeling is to just leave it.

I am quoting your original post as a reminder.   So given that last month it was worth 28k, and it could be worth that again in October (or lower), I would think I would sleep easier getting out with anything around 36K. Each to their own though.
And it does matter just how big a % of your portfolio it represents, when deciding whether to just let it run its course, or get out now!
You do mention gut feelings... although that was before you understood the product i think i am right in saying?

Thank for the reminder.  I cant stop watching this though now.  https://www.google.com/search?q=ftse+all+share+index+chart&rlz=1C1CHBF_en-GBGB822GB822&oq=FTSE+al&aqs=chrome.1.69i57j69i59l2j0l2j69i60j69i61l2.6066j1j7&sourceid=chrome&ie=UTF-8

Its been steadily rising the last few days.  I was discussing it with my wife yesterday and her feeling is just to leave it but mine is to probably cash it in.  I keep hoping it will leap back up to £39k and then do it

barryd999

Bit more info. I had a chat with a very helpful L&G advisor this morning.  Apparently I can transfer the fund to a normal ISA and select from some different funds if I terminate then life cover policy.  At least I think that is what she said.  So they are gong to send me details of other funds that would be available should I choose to do that.  So perhaps one option might be to do that and get out of the current fund when the time is right and into something more secure (if such a fund exists right now).  As we can jointly put £40k per year in on top maybe we could start transferring other funds sat in banks etc to that to hopefully make a better yield.  Does any of that make sense?   Funds up to £37k today.

badger09

barryd999 said:

Bit more info. I had a chat with a very helpful L&G advisor this morning.  Apparently I can transfer the fund to a normal ISA and select from some different funds if I terminate then life cover policy.  At least I think that is what she said.  So they are gong to send me details of other funds that would be available should I choose to do that.  So perhaps one option might be to do that and get out of the current fund when the time is right and into something more secure (if such a fund exists right now).  As we can jointly put £40k per year in on top maybe we could start transferring other funds sat in banks etc to that to hopefully make a better yield.  Does any of that make sense?   Funds up to £37k today.

Please don't make any hasty decisions.

I think I suggested a while ago that you could probably transfer from a FTSE All Share Tracker to something more diverse and less risky, while still inside the ISA wrapper. 

Just to be clear, while you can 'jointly' pay in £40k of new money into S&S ISAs, they are Individual products, so you and your wife would need an S&S ISA each.

Even if you decide to leave your ISA with L&G until maturity, either in its current form or in a different fund, there is no need to tie yourself & your wife to that provider for future S&S ISA investments.