MegaSack DRAW - This year's winner is user - rgwb
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Being a straight thinking/simple kind of guy, can someone explain to me how when the stock market seems to have made a recovery, but the same investments used for emdowment purposes are still in the doldrums.
Following on from the above if the endowment based inveatments are not performing then how are these companies mnaking any money?
Maybe worth giving Vince Cable an E mail !!!!
Ok then is it only me that has a problem with this two track system, banks make money/ punters who put their money in DONT
A simple reason is that endowments are more widely invested that the stock market, they will have exposure to fixed interest securities and property as well. However, this whole area is one I don't understand too well, my brother who is an actuary has explained it in the past but frankly I came to conclusion it is not a market for me and have forgotten what he told me.
Endowments are long-term investments and consequently are still suffering from the decline in stock markets since the peak in 2000. The companies still take their percentage though, so they'll still make money regardless.
When you take out an agreement to cover a set amount you would think that in its 21st year out of 25, that it should be improving/catching up to the agreed amount.
Its not as though we have decided not to pay the agreed monthly contribution
Obviously the final bonus will make all the difference!!!
fortunately we have had the option/ fortunate position to use the endowment as investment rather than paying the mortgage off. But is everyone else in this position
An endowmant is just a wrapper for any sum of money to keep it away from the tax man. Endowments used for investment purposes can be invested in just about anything from junk bonds to government bonds, stockmarkets or even derivatives. Depending on how those investments perform and the charges the fund manager applies the endowmant may fair well or perform quite baddly.
There is no reason for an endowmant to follow the stock market. It might be worth you finding out what your endowment is invested in.
Endowments for mortgages are often sold on the premise that the stockmarket return will on average be higher than the bank's mortgage rate in the long run.
How the current short-term down-turn in the stock market will affect your endowment will depend largely on your payment profile and how far into your mortgage you are. If you have only just started paying then the down-turn might be good news for you as stock prices should rally in the long-run. If however you are rearing the end of your mortgage term then a significant devaluation of the endowment could be a problem - although your bank might be understanding and alow you to extend the term of your mortgage (subject to interest payments).
It's because the financial industry is crooked - all the money has disappeared in fees, bonuses, etc.
Yes, just having had ANOTHER red alert letter from Aviva telling me that they are downgrading my estimated payout in October 2012 to 58% of what I signed up for, I wonder what they spend all their time doing.
"Oooh look - equities are at an all-time low, let's sell our equities.
Oooh look - property's at an all time high, let's buy property"
Is it just me or do you guys come across as guys who want their cake and eat it?
As someone who has also had the red letter like BigJohn i accept that my endowment isnt going to pay out the £37,500 i expected it to. But then endowments are a risk. They can perform at the 8% they were being sold at 15yrs ago or they can perform at the more realistic examples they use of 4% nowadays. It has never been a secret.
I also have a huuuge pile of letters from aviva from the last 5yrs warning me about my endowment and to make other arrangements. If i havent done anything about it then i have only myself to blame.
Where does the confusion come in? To the OP i can see you point a little bit in that you would imagine that when things are bad they should be making money but you are probably only making money on your current payments. All those years of payments before are probably decreasing by a similar proportion (if that makes sense).
Personally i am sitting with about 10 yrs on my endowment left and thinking that this isnt a bad thing. With the price promise i am targetted to get about 60% of the target figure without bonuses and price promise of £5500. If things pick up slightly i should end up pretty close to the original figure considering my current investment value is at about 65% (Including the price promise).
If you have an endowment it is a risk. If that riak doesnt pay off then live with it or complain that you have been miss-sold
^^^^
Weren't they even sold at 5/7/9 once as well?
At that time interest rates were generally high and as a result investment returns were high.
As interest rates have fallen investment returns have fallen, but if you have your endowment linked to your mortgage then your mortgage payment will have fallen as well.
That fall in mortgage payment should have been used as an overpayment to compensate for the fall in investment return. Most people just pocketed the extra or spent it.
Wouldnt suprise me.
All very good taking the rough with the smooth attitude, but in our case we started out paying our endowment to Royal Sun Alliance. they then decided to get out of the endowment market and sold us all on to Resolution. we are the "zombie" policy holders.
No options just sold on.
Now apparently Resolution are doing all right, however as we were originally with Royal Sun we dont get afull share in this. Still paying monthly payments to them though!!