Help please - endowment - to cash in or keep?

kosma1

Ok, have more info for this thread so hope i am better prepared.

I originally bought house on endowment, i have now re mortgaged and it is all on repayment, so my question is, should i keep my endowmwnt as a savings plan? or should i cash it in and is there any alternative investment that can be offered?

Policy is with Prudential. initially for a 25 year term, at a monthly cost of £34.90 (this includes my life assurance) so have paid in for 9 years now.

Info they have just sent me shows i have 3 possible options, keep paying, sell it or, stop paying but keep mney invested for term (which i didnt know i could do)

Policy is (5 with profit clusters) + (5 investment linked clusters)

surrender value as of 17 march 2008
with profit clusters 1895.54
Investment linked clusters 1636.16
total 3532.16

with a paid up value of 2974.91
(values assume the last premium was paid 1st march 2008)

If i keep it in for a further 15 years and 11 months paying premiums
14300.00 @ 4.00%
18100.00 @ 6.00%
23000.00 @ 8.00%

assuming no further premiums will be paid
6190.00 @ 4.00%
8390.00 @ 6.00%
11300.00 @ 8.00%

this was initially taken to pay back interst mortgage of 20500.00, but as all my mortgage is now repayment do not need for this use.

but all these figures really do baffle me, and i dont know what is best to do, i am happy to save the money each month if it is a good place for it, then when i am 50, hey, a bit of money in my bank:) but not sure if this is the best investment i can do, so any help is appreciated, hope i have put enough info for you, and thanks in advance for any advice that can be offered on this.

Geenie

Not up on endowments now, but we kept ours going even when we sold the house it was taken out for 3 years later, on advice from financial friends. Now 25 years on we are going to get a nice sum in 3 months time...even with a down turn in predictions it has done very well for us, so can't complain about the small amount that went out each month. Is coinciding with my 50th and kids starting University, so some will probably be used to help them. Others with more knowledge on them may suggest different though as markets have changed.

kosma1

thanks geenie, i too, will be turning 50 when policy matures, and it is nice to know there are some savings coming your way, as not will hopefully be mortgage free around same time, but with so much that has been happening with them (shortfalls etc) would be nice to know if this is still a worthwhile savings investment?

the 3rd option of no longer paying premiums but keeping the endowment could be useful? i could then maybe use the extra money for paying off mortgage? or use it on another investment?

but it is like a minefield out there for me, never know what is best to do

gfplux

If you can try to ignore the arguments for and against due to the actual financial return I would suggest looking at it in this way.
Can you afford the £34,90, do you miss the money. is it in fact like a "hidden" savings account. Almost like an extra charge on you national insurance or income tax.
If, and only if, you can look at that way and ignore it for the next 16 years you might enjoy the lump sum dropping through the letter box in the form of a nice cheque to do what the hell you like with.
Remember if you stop now will you actually invest the £34,90 or will it disappear on little extras. This year or next when you invest in an ISA will you add £34,90 to the amount you would have invested.
My point is that although the "Experts" probably would say cancel/make it paid up. My view is that these hidden little savings accounts can bring fun in the future.
Money is about having as good a life as possible and sometimes it is better to go with the heart than the head.

kosma1

thanks for that gfplux. and i am not missing the 34.90 as such, and if i was so stop paying premiums, i would hope to invest it elsewhere, but you are right, the fear is that if i cancel it, it may get wasted on on other things. if i save in my isa, as it is instant access, i use it to pay for holidays, so probably would not be the best place to invest it, i would probably need a seperate account that is not easy access to encourage me to actually keep it there. but still unsure if it is better off to keep paying the premiums, or perhaps stop the premium now but keep the smaller amount invested

i am still open to any other views/advice you guys may have, see if i can get a better picture of things, and thanks to everyone who offers any advice.

dunstonh

I cannot give a proper response now but it is worth noting that Prudential have a 100% success rate in hitting target and the size of the suprlus they have been paying out has been increasing each year for the last 5 years.

Now that doesnt mean anything for the future but Pru have a very good track record and are one of the best endowment providers out there. They have been exceeding the 8% projection figures you have.

kosma1

thanks to everyone who has posted. and i think based on pru having a good success rate and not really missing the money, just want it invested, i think i shall stick with my emdownment for now, thanks again.

EdInvestor

Before finally deciding it may be worth looking at some actual figiures

What interest rate are you paying on the mortgage?

Rabiddog_2

FWIW I am in a similar situation (only different). I have decided to keep part of my endowment, but paid up, and invest the extra money in repaying the mortgage. for me its better knowing the mortgage is being paid off than the uncertainty of the investment and possible future returns from the stock market. At some point in the future the amount outstanding on the mortgage will equal the trade in value of the endowment and Viola! I'm off the mortgage treadmill.

undercoat11

We have recently (over the past 2 years) had 2 25 year with profits endowments from the Pru mature and have had excellent pay outs from them. I would stick with it, I am really glad that we did.

Ali660

Hi, can I be cheeky and join in on this chat? We have a Pru with profits savings account (open ended) - not sure how different this is compared to endowment. Does anybody have any info on the possible windfall coming customers way? Is it worth hanging on to these policies until then?

We have been investing £30 per month for 14 years and 16 months ago increased this amount to £50. I'm not sure whether this was the right thing to do now.

Lastest account summary reads as follows:

Total payments since account started: £5250

Current cash in value: £7026

There's no denying I could spend the money in a flash - central heating needs updating and cavity walls need insulating - but what's the general feeling about these long term savings account? Is there a better home for £50 per month?

Thanks for any advice you may be able to offer ...