Endowment

garybark

i have an endowment should make £60000 not using it for mortgage anymore,still have 17 years to pay.should i keep it or sell?

EdInvestor

Hello garybark

Post some details so we can see.

Guaranteed sum assured
Bonuses so far
Surrender value
Monthly premium
Maturity date
Company it's with

Froggitt

and the projection at 4%, 6%, and 8%.

dunstonh

There are endowment funds that havent fallen below 10% a year for the last 10 years. It is important to note that the endowment is one thing, the investment fund(s) are another and the projections at 4,6 & 8% are another thing.

You cannot look at just one of those and make a judgement. You need to look at all 3 along with a number of other things. Some of which have been mentioned (but not all).

Froggitt

dunstonh wrote:

There are endowment funds that havent fallen below 10% a year for the last 10 years.

However I am 100% sure you would say that past performance is ..............

dunstonh

Past performance is no guide to the future . However, my point was to highlight that fund and product should be treated as two different things.

Ironically, a person on a 10% a year fund would probably still get a shortfall letter and worry because of the limitations and poor information with the projections.

Froggitt

Based on the funds that have grown 10% a year for the past 10 years, let me know which of them will be 10% growth this year and Ill move all my investments into it!!!

They would be right to worry as it is statistically unlikely that it will continue to do so.

garybark

i have an endowment should make £60000 not using it for mortgage anymore,still have 17 years to pay.should i keep it or sell?

FRIENDS PROVIDENT
£115 a month
ends nov 2022
4% = 37,600
8% = 61,800
value november 2004 £6000

sorry dont have a recent value

EdInvestor

Hello Gary

I assume that this endowment is either a unitised WP or unit-linked one, as you haven't posted any GSA/bonus info.If so, you won't be able to sell it but will have to surrender it to FP.

If you did so and put the S/V of 6k in the bank @4% until maturity, also paying in your premiums, you would get just over 45k at maturity. Since this is considerably more than the insurer's estimate of 37.6k at the same percentage growth figure for a risk-based product, I would surrender this one .

The only reason for keeping it might be if you needed the life cover and it would cost you a lot to replace it - perhaps because you had developed serious health problems since you took out the endowment.

Otherwise if you want to take risks with your money, they are cheaper ways to do it which ought to deliver a better return.

Froggitt

Unfortunately most people believe that they will achieve the original projection. At current rates, it is most unlikely to make your £60,000 target. Even if it achieved growth of 6%, which I believe is optimistic at the moment, it will only make about £49,000.

You didnt say when it started, but I would guess its a 25 year policy....youve so far paid in over ten grand for a current value of six grand. The good news is that youre now over the front loading of the charges, which have unfortunately lined the pockets of your IFA.

Im not sure, but if youre thinking about a misselling complaint, they have less chance or have a smaller compensation amount if theyre not backing a mortgage.

Whether you keep or sell is up to you.....use whatever information you manage to glean from this forum to help you (and an IFA you trust) to make your decision.

Good luck

Frog

garybark

thanks for the advice