Endowments

[andrewducker]

Earlier today I was looking at this article and noticing that people paying £50 a month for 25 years into endowments are getting back £37k. Which, if you plug some figures in as compound interest, means they're getting annual interest rates of 6.4%. Hardly spectacular - in fact, only slightly better than you can get in a high-interest savings account. Last year it was £40,459 - or 7%. And 9 years ago it was £107k or 13%. (all on average, of course)

Now, interest rates have definitely dropped over the last few years, but the people currently collecting their cash had their money invested during the high-interest years or the 80s and early 90s, tut now seem to be getting none of that back. Which makes you wonder who did get it - the answer being the people who left when interest rates were just dropping, before companies realised the change was permanent, and not just a blip in the economy.

Comments

[octopoid-horror.livejournal.com]

An interesting article that I read today was somewhat scathing about the legions of people desperately investing in property, getting into property funds etc. All doing so, of course, because in recent years property has been giving great returns. And since it -has- previously done well, everyone wants in. A little after the fact, regrettably.

Curiously, fund managers are the one group who are starting to get out of property. I'm sure that's nothing to worry about though.

I'm fairly sure on all performance charts for investment products, it states clearly that "past performance is no guide to future performance".

[octopoid-horror.livejournal.com]

My sympathy for people locked in to terrible endowment policies lessens when I read about people at the moment buying up interest only mortgages with no plans for how to pay back the capital, and getting into mortgages that will become bankrupting as soon as interest rates change. While some of the media frenzy may blame it all on the evil companies selling these endowment policies to just anyone.... people, when you get down to it, are stupid.. don't read the small print, and will just look at a headline and not plan ahead. A lot of people ask for it, it's sad to say.

[azalemeth.livejournal.com]

I met a fund-managing friend of my father's on thursday night, although I think she's actually a dealer. They're being given a 'touch of humanity' by getting part of their bonus given in a "Long term incentiveised [sic] plan", whereby about two thirds of their bonus is tied to the funds they manage, and is paid out over three years. So, if you suck at your job, and the fund goes down by x%, then your bonus does too.

The fact that they are juggling with their bonuses in addition to peoples' life savings is sure to ram the point home, I'm sure...

[azalemeth.livejournal.com]

Grammar good very is mine. Sleep two hours since two hours sleep before edinburgh trip yesterday. Apologies greatly. Hope you don't mind :).

[channelpenguin.livejournal.com]

yeah, like my folks. Did spectacularly well. Blind luck.