29 this year. Bought GE endowment 2 years ago (pay 10y, hold till 15y to breakeven), with annual premiums 3.6k. Now in 2nd year paid 7.2k. Current surrender value is 0. Just started robo-stashaway?

Hi,

You're 29 y/o, and still considered very young. You have the time to your advantage. Hence you may not want to limit to 15 years timeframe for consideration.

However, before you decide to cancel and jump right into RoboInvesting, you may want to consider:

• Are you looking for guaranteed capital protection? If not, how much drawdown can you tolerate?

• Are you going to monitor and track the portfolio yourself? How will you decide which areas to invest in? Do you have a sound knowledge and criteria to guide your decisions?

• What were your intial goals when you purchased the endowment plan? Have your goals changed since?

Today, there are too many information out there, and there's no one size fits all soluion. It's usually the "free advice" that can cost you the most in the long run. Consider what you need and if need be, talk to a few more professional to get more perspectives.

The reason you purchase your endowment plan is for a very specific reason. Endowment plans are largely inflexible and have a very long commitment period. In order for you to see the fruits of your returns, you will need to hold the plan to maturity. 2-3% is nothing to scoff at if you cannot imagine the possibility of losses. At least, you are inflation hedged.

However, before you take any action, you might want to weigh the consequences of terminating your endowment plan. Investing has no guaranteed returns and you might be better off sticking with the endowment plan. A higher risk may not necessary result in a higher return if you do not know what you are doing.

Furthermore, if you have not been investing previously, you might want to do a risk profile to find out more about your risk tolerance and capacity. Are you able to handle a 5%, 15%, or 20% drop in your portfolio value? A good night's sleep is more important than you having to constantly worry about the drop in your portfolio value.

If you feel that you have to invest and do not have the cash flow set aside for this purpose, you can talk to your GE agent to see if there is a possibility of changing the payout frequency. The majority of the endowment plans now have the "flexi" options whereby you can start getting your money back as soon as the 2nd year of the contribution period. This will free up some of your "stuck" money, allowing you to take advantage of any market opportunity if it arises.

The opportunity cost of not investing is high. The opportunity of cost a wrong decision is higher.​​​

Sounds like GE Great Wealth Multiplier - not an agent but considered buying it last year hence did some homework. I wouldn't say breakeven at 15 years, it's capital guaranteed at 15 years and still has a non-guaranteed return portion by then.

Since you already paid the premium for 2 years, I suggest you continue paying the 8 years. I agree with what others suggested - to treat this as a low-risk portion of your portfolio - although it's a little illiquid at the moment. Then with the balance free cash you have you can afford higher risk investments - go full equities.

Hi Anonymous,

Before you even decide on whether to give up your endowment policy, understand the opportunity cost (forward internal rate of return) in giving up.

If you need help in calculating the opportunity cost, you may contact your financial advisor or contact us on Facebook.

Disclaimer: PolicyWoke is a 2nd-hand endowment policies broker