Effect on share price due to Bank of England rise

AngieJordan

Can anyone offer some advice please?  I have an old endowment which is now a savings account which it is nearing it’s expiry.  I would like to use the money to pay off my repayment mortgage early and was planning to do this at the end of the year.  However I’m concerned that the share prices may drop between now and Jan due to the rise in the Bank of England rate, and wonder if I should withdraw the money now and just keep it in my current account for 4 months.  Do people think share prices are more likely to fall than rise in the next few months?  

Any advice appreciated 

eskbanker

What exactly is your money currently in - it can't be both a savings account and something based on the value of share prices?

What do you see as the correlation between your product and the Bank of England base rate?

masonic

It is generally unwise to remain in high risk investments in the months leading up to you needing the money, especially if the current value is sufficient for your needs, but a future value may not be. Those saving for retirement who wish to purchase an annuity would de-risk over the years leading up to that purchase, and your situation is quite similar. The likelihood of your investments going up vs down over a period of a few months is not going to be much better than 50:50.

Albermarle

 Do people think share prices are more likely to fall than rise in the next few months?  

Only someone who could see into the future, could tell you that. Some may have an opinion, probably many different ones, but the reality is nobody knows. 

sevenhills

AngieJordan said:

Can anyone offer some advice please?  I have an old endowment which is now a savings account which it is nearing it’s expiry. 

So you are thinking about cashing it in, before it matures. Is there a penalty?

jimjames

masonic said:

It is generally unwise to remain in high risk investments in the months leading up to you needing the money, especially if the current value is sufficient for your needs, but a future value may not be. 

I agree but isn't an endowment already designed like that so the value is smoothed over time? You might get a terminal bonus but it shouldn't drop 50% in the last few months as that could mean it was unable to pay off a mortgage. So I'd expect as such it's not in high risk assets at present but definitely something to clarify as OP refers to savings account.

masonic

jimjames said:

masonic said:

It is generally unwise to remain in high risk investments in the months leading up to you needing the money, especially if the current value is sufficient for your needs, but a future value may not be. 

I agree but isn't an endowment already designed like that so the value is smoothed over time? You might get a terminal bonus but it shouldn't drop 50% in the last few months as that could mean it was unable to pay off a mortgage. So I'd expect as such it's not in high risk assets at present but definitely something to clarify as OP refers to savings account.

Yes, OP needs to clarify what the investment is. I suppose a concern about rising interest rates could be valid if the endowment is now in long dated government bonds. Though I think we've probably now seen the bottom of that particular reversion to the mean.