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Endowments
Feb. 16th, 2007 08:46 pmEarlier 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.
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.
