Endowment - surrender, sell or keep?

If you continue to pay into it, you are simply making an assumption that x a month invested with the NU will earn a return of y%.

If you did *not* have an existing policy, would you still assume that, or would you find a different home for your monthly investment in pursuit of that yield?

If the answer is "Yes, I would still assume that," then you think the NU is the best deal available, and you should continue to pay in.

If the answer is "No, my research indicates that I could earn more elsewhere with an initial deposit of 20k and continuing monthly deposits of x," then you should sell the policy and buy a different investment.

Converting to capital, repayment provides a certainty of paying off as long as you don't mind varying monthly payments. Over most long terms, equities outperrom cash so you may get a better return from equities - though that is dangerously close to how endowments were originally sold, of course.

Part of the problem here is that the projections are based on future growth rates which the government oblige the endowment provider to assume. They do not having anything *at all* to do with how their funds are *actually* likely to perform. Could be worse, could be better, but the fact that, as you report, you've got buyers queueing up to relieve you of your holding should tell you something.

True, it will be less of a gamble. But the fact that your endowment is at present well below target is indicative of poor past performance which will not necessarily continue. If only you could get a feel for what the growth rate on these funds is likely to be over the next

10 years, and compare that with your loan interest rate. If the fund performance is likely to be better than the loan rate, it would be a good idea to keep the endowment going. Otherwise not. It's as simple as that, modulo the uncertainty aspect.

Perhaps. My crystal ball can't promise that your endowment will beat the £45k, but chances are probably good that it will. But if it's certainty you want, you know what to do.

However: You need to upgrade your repayment by £25k anyway, since it would be imprudent to rely on the revised target being exceeded. What this will cost you more than now, in monthly terms, is equal to what a £25k repayment mortgage over 11 years would cost at your current interest rate (not forgetting to plan for possible rate rises), minus what interest-only on £25k is costing (since you're paying that already). I guess, then, that you have about £140pm to find in any case.

The only question then is whether you *also* upgrade the remaining £45k which will obviously cost you a second extra £140pm for £25k of it, minus the £100pm premiums you'd be saving and diverting to this purpose, and the other £20k would be paid off already anyway from the proceeds of the sale, and you'd also be saving interest on the £20k, which is maybe £90pm, so you'd be quids in to the tune of £50pm. But you'd lose out on the chance of the endowment bettering £45k.

Your call! :-(

In message , Alan Paterson writes

I've snipped the rest because my main point is that the projection means nothing at all, and bears no relation to reality. It will be based on 3 rates of growth typically 4, 7 & 9%.

If it is a 'with profit' policy the ring NU and find out what the current bonus rate is, I think you will find it is about 1.5 - 2.5% and that is on the *basic* sum assured (not the amount of life cover) which will likely be less than the policy is already worth.

If you need life cover and are in good health so you can get it cheaply elsewhere, then sell the policy, buy some cheap Decreasing Term assurance and invest the difference in premiums into a decent stock picking monthly contribution equity ISA, avoid a tracker. Go for a decent fund manager such as Jupiter, Fidelity, Invesco, Gartmore etc., and choose one of their best funds, or go for a spread via a supermarket such as Skandia etc.,

DONT buy a tracker, Take no notice of the 'charges' thing everybody goes on about, look for absolute performance AFTER charges. I'd rather pay a wodge of charges and still come out on top, then buy cheaply and be mediocre.

In message , Ronald Raygun writes

Or sell, and invest in something better.

Eh? You cant mean that?

If you can find something better than the loan rate. The safety aspect comes into the balance too.

Not only can I, but I do. Have you got a better crystal ball?