Could I invite expert opinions please?

Honkycat

Hi,

I'm thinking of selling this turkey and would appreciate any views on whether this is wise. (I sold one in a similar state last year).
Friends provident
Start: 3/4/1989
Matures: 3/4/2014
Monthly payment: 21.31
Target amount: 15,500
Declared Bonuses: 2,623
Min Guaranteed Cash Sum: 8,002 (last year's was 7996!)
Current surrender value: 7056
Guestimates:
@4%: 10,000
@5.5%: 10800
@8%: 12300

I'd be really grateful if you could have a quick scan of this and tell me what you think.
Also, is there any news on FP joining with another company (I think it was resolution) and, if so, would it be worth holding on because of this?

Thanks very much,

Steve.

dunstonh

Min Guaranteed Cash Sum: 8,002 (last year's was 7996!)

Why the exclamation mark? 2007 was not a good year for investments and you were more likely to see a drop in value, not an increase.

Is your endowment conventional with profits (doesnt look like it from what you have posted) or unitised with profits. If unitised, does it have access to the unit linked fund range?
Is it an original FP endowment or was it another company when you started?

Also, is there any news on FP joining with another company (I think it was resolution) and, if so, would it be worth holding on because of this?

Doenst make any difference.

Honkycat

Thanks,

I'm not sure what type... I think it's a conventional with profits. We bought it from Abbey National originally when they were linked. The one I sold last year was the same, so I think they have to be with profits to be saleable?

Honkycat

Thanks,

I'm not sure what type... I think it's a conventional with profits (It's a "low cost endowment plan"). We bought it from Abbey National originally when they were linked.

Conrad

Honytonk, you refer to the policy as a Turkey, yet fail to spot plenty of the shrewdest investors in the world want to buy them from you at a premium price!

Royal Bank Of Scotland is one of the key names behind the buyers. They dont come any more canny than that.

So why is no one on this forum wondering why such shrewd investors will gladly take thier policies off thier hands? Imagine all the costs of advertising and running the companies that buy these policeis, and yet still they deem the expense worthwhile.

chappers

Conrad wrote: »

Honytonk, you refer to the policy as a Turkey, yet fail to spot plenty of the shrewdest investors in the world want to buy them from you at a premium price!

Royal Bank Of Scotland is one of the key names behind the buyers. They dont come any more canny than that.

So why is no one on this forum wondering why such shrewd investors will gladly take thier policies off thier hands? Imagine all the costs of advertising and running the companies that buy these policeis, and yet still they deem the expense worthwhile.

Because they buy them cheap

luckyfool

chappers wrote: »

Because they buy them cheap

but for more than the surrender value. When you factor in their overheads and costs and the fact that they will continue paying the premiums to maturity, they obviously think it is a good investment.

dunstonh

TEPS can provide a useful alternative to gilts.

Plus, whilst some endowments are quite poor, there are some very good endowments which people are selling up which have shortfall projections but go on to pay surpluses. Others may have high surrender values where it is better to keep than surrender purely on the basis of the amount you lose if you surrender rather than the amount you gain in investment return.

Honkycat

So what about this particular case...any thoughts?

Thanks.

chappers

luckyfool wrote: »

but for more than the surrender value. When you factor in their overheads and costs and the fact that they will continue paying the premiums to maturity, they obviously think it is a good investment.

As dunston says the predictions are not always correct and thats why its called investing and not printing money.
The surrender value will be below the predicted maturity value . They will offer a price between the two after taking the factors you mentioned above into account, sometimes the surrender value will be more than anything offered on the open market. As I said this is no exact science otherwise the market value would always be the same as the surrender value.

Honkycat

So, what do you think? Sell or keep?

Cheers,
Steve.