Don't leave your endowment to chance
Author: Isla Campbell
Category: Finance
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Share prices in the UK and abroad have been particularly volatile over the past twelve months and this will have a knock-on effect for those investors who are relying on their endowment plan to pay off their mortgage at the end of the term. Alongside the worsening credit crunch this makes those extra few hours organising your personal finances even more crucial to ensure a comfortable future for you and your family.
The value of an endowment, especially if you are investing in a managed-type fund, will be directly linked to the performance of shares and other types of investment including fixed interest securities (a type of corporate loan) and commercial property.
Many investors are advised when starting their endowment to invest either in the With Profits Fund or the Managed Fund and for most, this is the first and last time that the choice of investment fund is considered. Most modern endowment plans allow investors to change their choice of funds during the term of their plan but many investors rarely even give more than a cursory glance at the annual statement, let alone consider what options they have to maximise performance.
Interestingly, endowment plans can even benefit in times of falling share prices as more units in your chosen investment fund are purchased for your given fixed monthly premium.
Insurance companies normally have a wide range of endowment investment funds from which to choose, ranging from managed funds to UK equity funds and corporate bond funds. Indeed, it is doubly important to review your fund choice the closer to the end of your mortgage term you get as you will want to protect your accumulated endowment value in the event that there are any sudden falls in the stockmarket.
Your original adviser will be able to help you and should be offering to review the plan to ensure its continued suitability on a yearly or bi-yearly basis at the very least. After all, your adviser was probably paid a commission in the first place and may even be receiving commission each year which is supposed to pay for on-going advice relating to that plan.
Make sure your endowment does you justice and that it continues to serve your interests, after all, it will be your major source of funds when paying off your interest only mortgage. Contact your financial adviser today to make sure that your endowment is working as hard as it can for you.
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Keywords: Share prices, endowment, investments, loans, interest rates
View Count: 75
Date Submitted: 5/20/2008
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