Endowment - freeze, cashin or continue???

BabyDragon_2

I was wondering if you can give me any advice please?

I have an endowment that I took out to pay the mortgage on my house (started aug 2000 for 25 years) that has since been paid off when I sold it. I have at the moment continued on with the endowment policy but I am unsure whether to carry on with it or not? They told me back in 05 that it wouldn't make it's target of £48k and since then has even less chance to make any where near it's target. (Might make 70% of it's target value if it's very lucky and grows at 5%)

I could do with the £100 a month that it's costing me, but don't want to do myself any harm either. I was wondering if you had any idea whether I would be best to let it run, freeze it or cash it in (I would loose about £150 if I cash in now). Is there better alternatives out there? Could I be £50 a month better off and reinvest £50 into something better with better growth potential?

dunstonh

You have asked us to give an opinion on the endowment but have failed to give any details about it. Please provide the details (you will see from many other threads in this section the sorts of information required).

BabyDragon_2

Sorry this should help...

Start Date: 1 Aug 2000
Amount contributed so far: £7459
Current Value: £ 6617
Cash in/Surrender Value: £ 7307
Maturity Date: 1 Aug 2025
Life Cover: £48250
No sum assured or gaurenteed amount except life cover

Original Target : £48250
Estimate target at present : £32500 - 39000 in 2025
Stop paying / freeze it poss target £12-13000 in 2025 (Loose life cover)
Cash in now : Loose £150 but it has given me £48250 worth of life cover for 8 years (as the man on the phone told me last week

Until last week I was paying approx £100 per month but that includes income protection which I decided to cancel last night and save 15.94 per month so actual Payments will now be £83.82 per month.

So rough figures I worked out : If I carry it on I will pay have paid in £25581 by 2025 to possibly get £32500 back = £7000 over 25 years?
? good growth or poor growth?
Cash in and put the £7000 in a decent savings account growing at 4% net = £14000 = £7000 over same period = same growth in my bank? but taxed of course?

I have done a little looking on the net and am struggling to find any replacements or similar that have any guarantees? Everything seems to be linked to Stockmarkets and give no guarantees these days

I currently have no dependants or pension plans in place.

BabyDragon_2

More info after doing a bit of digging..

It's a Mortagage endowment - With Profits

Following details from 05 statement

Cash in value as at May 05 was £4139
If Grows at 4% target = £30700
If Grows at 5.5% target = £37500
If grows at 8% target = £53000

Unit price 143.3p

Annual Bonus rate Feb 04 to Aug 04 was 1.25%
Aug 04 - Feb 05 was 1.00% Feb O5 to May 05 Statement was 0.75%

Final Bonus may or may not be applied?


Please let me know if you need any more info?

dunstonh

Last bit to ask.. Provider and fund name.

BTW, the fact it is unit linked and taken out in 2000 is a good thing. You would expect a good endowment to still be showing a shortfall after just 7-8 years so that shouldnt worry you. However, we need to know where its invested. Look for the fund name.

BabyDragon_2

Its with the Friends Provident and it's called With Profit (4).
There is a statement saying to increase the holding to our With Profit Fund Series 24.

That's all my last statements says - Does that mean anything to you??

dunstonh

With profits fund is naff. However, FP do have a range of unit linked funds which could offer much greater potential. They have a low cost and offer potential for 8% growth which is more than you need. I wouldnt want to stick on the with profits fund.

Rabiddog_2

ANy pension fund would grow at a good rate with the added tax free credits eg you invest 80, 100 is credited to your policy. ANd pensions really appreciate the extra (early) years. maybe do 50 in investment and 50 in pension? covers you for the later years and gives you a pot for bigger items. You can put a minimum of £3600 into a stakeholder pension per year, translyvanian funds are good for this

BabyDragon_2

Excellent Guys, Thank you both for your valuable advice, much appreciated.