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15yr Endowment ?

adie_white
adie_white Posts: 7 Forumite
in Mortgages & endowments
Have received payment from a 15year endowment we have been paying £54.16 per month into. We received 12,461 this seems very low as if you take out a 25 year endowment out for £50 per month the return is estimated to be 42,000. Can anybody explain why?
Thanks
:confused:

Comments

  • jonesMUFCforever
    jonesMUFCforever Posts: 28,898 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The estimate was probably too high.

    Did you cash yours in after 15 years (of a 25 year term?) if so then the terminal bonus at the end will have been lost.
  • dunstonh
    dunstonh Posts: 120,328 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    10 more years of investment and extra contributions is the reason. Plus a longer period to ride out any short term fluctuations and declines.

    £42k on £50pm would net a net return of 7.5% p.a. Perfectly possible on a unit linked endowment or the better with profits funds.

    Yours has come out at just over 3% a year.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    adie_white wrote: »
    Have received payment from a 15year endowment we have been paying £54.16 per month into. We received 12,461 this seems very low as if you take out a 25 year endowment out for £50 per month the return is estimated to be 42,000. Can anybody explain why?
    Thanks
    :confused:


    Which company?

    The TB is not lost when you surrender BTW.
    Trying to keep it simple...;)
  • dunstonh
    dunstonh Posts: 120,328 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Terminal bonuses can be reduced or removed on surrender.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • adie_white
    adie_white Posts: 7 Forumite
    jonesMUFCforever wrote: »
    The estimate was probably too high.

    Did you cash yours in after 15 years (of a 25 year term?) if so then the terminal bonus at the end will have been lost.
    no it was a 15 year policy
  • adie_white
    adie_white Posts: 7 Forumite
    friends proident
  • adie_white
    adie_white Posts: 7 Forumite
    3% is low is this normal?and who can you complain to
  • dunstonh
    dunstonh Posts: 120,328 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    adie_white wrote: »
    3% is low is this normal?and who can you complain to

    No-one. Investment returns are unknown and the FSA do not allow complaints about returns (you can complain but the company will reject the complaint).

    The returns are low for a number of reasons. Main one is that the fund and product you are in is obsolete and designed for an economy that was boom/bust and high inflation. The progression to a more stable economy has made us all better off but it really crippled the performance of endowments compared to modern plans which are far more flexible and cheaper.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • adie_white
    adie_white Posts: 7 Forumite
    what modern plans would you recomend
  • dunstonh
    dunstonh Posts: 120,328 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Nowadays its unit trusts and unit trust ISAs and the mainstream retail product typically using a fund supermarket.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
This discussion has been closed.
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