Endowment

Froggitt

dunstonh wrote:

Potentially correct. However, we dont know the risk profile of the OP. There could be a range of low risk funds available, such as index linked, property or fixed interest. These would offer greater potential than 4% on the building society.

Past performance being no guide for the future but those three funds with FP have managed 10.7, 7.7 and 8.7%, respectively, a year average over the last 10 years. They have low volatility and should be considered as a possible option, if they are available.

However if anyone thought they would produce similar returns over the next ten years, they would remortgage their house at about 4.6% fixed, and put the lot on red.......Im mean on those funds in the missus name

EdInvestor

Garybark might like to read the FP "with profits guide", particularly page 7, which explains what has happened to his investment since he took it out.

http://www.friendsprovident.co.uk/doclib/with_profits_guide_2005.pdf

Note the percentage of the fund invested in equities before, compared with now.

Even funds which are fully invested in equities are these days expected to grow at only approximately 7%, and that's taking today's lower charges into account and takes no account of any life cover cost.

This is an old policy which will almost certainly have higher charges than today's lower ones, and it has only a third of the money going into equities.

I am sure the OP can draw his own conclusions about how well this policy is likely to do compared with a guaranteed cash deposit @say 4% attracting no charges, or a modern 100% equity investment with low (or no) charges.

He can then act accordingly.

This is information, it is not advice.

dunstonh

Even funds which are fully invested in equities are these days expected to grow at only approximately 7%, and that's taking today's lower charges into account and takes no account of any life cover cost.

This is an old policy which will almost certainly have higher charges than today's lower ones, and it has only a third of the money going into equities.

And what are the charges that he is currently paying? I cannot see any reference in the posts saying what the charges are. Therefore you cannot say if the charges are lower or higher. Endowments tend to be front loaded. Therefore he could have paid all the charges and now have 100% allocation or even upto 105% allocation.

Your "recommendation" could mean he has paid the charges and then not benefited from the period where charges would be lower or almost not exist.

Also, you have assumed its with profits. The OP hasnt said whether it is unit linked or with profits.

I am sure the OP can draw his own conclusions about how well this policy is likely to do compared with a guaranteed cash deposit @say 4% attracting no charges, or a modern 100% equity investment with low (or no) charges.

building society/bank accounts charging cannot be compared with explicit charges. Indeed, savings accounts are closer to with profits funds in the way they charge than to unit linked funds. It is quite possible that an equity fund could produce a 6% net return which betters the 4% return from the bank. Therefore, if he has the risk profile to accept equity investments, he would do better sticking where he is in that case.

However if anyone thought they would produce similar returns over the next ten years, they would remortgage their house at about 4.6% fixed, and put the lot on red.......Im mean on those funds in the missus name

That is not the point and you are detracting from it. If there are alternative funds available for selection, then these may be more appropriate for use than surrendering because one particular fund doesnt suit the OP. Therefore avoiding an unneccessary surrender penalty.

I'll simply draw your attention to the statement which applies to all posts on this board and can be read at the bottom of every page :.

Quote:
This website is based on journalistic research. It does not constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research.

That does not cover you. You have no research, you are not a journalist. Journalists are still accountable but they have facts to back up what they publish. Otherwise they can face action against them. You have no facts, no research, no licence, no qualifications and very little knowledge about what you are talking about. Yet you choose to advise people in things you know very little about.

EdInvestor

:T:T

you are not a journalist

Have a word with that chap Ocean Blue, would you mind?

He's totally convinced that I'm definitely a journalist and as such I have to be "watched".:rolleyes:

It's kind of a bore having him hang around like a bad smell, tracking after me round the site all the time...

He'll be deciding he has to start "watching" Martin next

oceanblue_3

"He'll be deciding he has to start "watching" Martin next" - this crass non sequitur tells us all we need to know about the quality of intellect at work here; I hope that no poster ever feels so desperate that they will choose to act upon your "advice".

Just in case you didn't read my earlier post, let me reiterate..."on a simple human level, we all owe a duty of care to everyone who asks for advice. For you to say to somebody you have never met "I would surrender this one" is bold, to say the least. For you then to seek the protection afforded by this website betrays a callous disregard for the genuine welfare of this poster."

Your simpering invocation of Martin's popularity does absolutely nothing to allay my fears concerning your real motives.

defender_of_the_weak

A few brief observations

There seems to have been a lot of heated debate about a policy we know so little about, nobody even knows which fund this is in or the charging structure.

Why does it always seem to be an IFA who ends up attacking other posters on these forums (Dunston seems to be the exception to this)

Yes there are good advisers out there, the problem is finding one

oceanblue_3

"There seems to have been a lot of heated debate about a policy we know so little about, nobody even knows which fund this is in or the charging structure." I agree - yet some have chosen to give advice concerning this policy.

"Why does it always seem to be an IFA who ends up attacking other posters on these forums (Dunston seems to be the exception to this)" - I think you'll find that all IFA's on this site become exasperated by the accuracy of some of the information posted, and by the bigoted "advice" offered.
It is wrong of you to try to differentiate between the posts made by me and those made by dunstonh - we have no agenda other than that of attempting to guide posters to make good decisions about their pensions and investments.

defender_of_the_weak

Okey dokey ocean blue I will accept you at your word.

I think some of the problem here is one of communication. Most posters have a little knowledge of this subject gleaned from the which website, man down the pub and my mate says. This, as you rightly state, is quite exasperating when you read some of the comments posted as helpful advice but remember where they came from. I don't think the advice is necessarily bigoted, merely inaccurate in most instances.