have I been sold a pup

aidanki

Hi all,

Its a long time ago I signed up to making an investment with Royal Liver Life Assurance policy, 1998 actually. The terms at the time were £800 a year for 30years. At the time I think I was promised that the investment would be worth roughly 250k when mature. Well we are 17years in now and the financial statement is attached, this was to be tax free I think as well.

I remember at the time too the seller saying you could use that as the security for a house if you wanted, I doubt thats possible now.

The statement indicates its worth 41829 today as far as I can make out. Has this been really bad value or does this statement not indicate what the policy is worth today ?. Maybe I am not seeing what the assurance policy is worth today as there is no hope of it being worth 250k when it matures at the current rate. ?

I don't know what my money would be worth had I been investing £800 in the S^P 500 for the last 17 years but a lot more I have a feeling, must work that out actually.

I guess Im wondering, should I keep paying the thing or just cut my losses. Royal london as you can see nicely taking 410 a year as you can see.

thanks

BrokenArrows

aidanki wrote: »

Hi all,

Its a long time ago I signed up to making an investment with Royal Liver Life Assurance policy, 1998 actually. The terms at the time were £800 a year for 30years. At the time I think I was promised that the investment would be worth roughly 250k when mature. Well we are 17years in now and the financial statement is attached, this was to be tax free I think as well.

I remember at the time too the seller saying you could use that as the security for a house if you wanted, I doubt thats possible now.

The statement indicates its worth 41829 today as far as I can make out. Has this been really bad value or does this statement not indicate what the policy is worth today ?. Maybe I am not seeing what the assurance policy is worth today as there is no hope of it being worth 250k when it matures at the current rate. ?

I don't know what my money would be worth had I been investing £800 in the S^P 500 for the last 17 years but a lot more I have a feeling, must work that out actually.

I guess Im wondering, should I keep paying the thing or just cut my losses. Royal london as you can see nicely taking 410 a year as you can see.

thanks

Are you mad?
You have so far invested 13600 (£800 * 17) and have profited £28229

That works out at over 11% interest per year. Which is impressive. You wouldnt have gotten anywhere near that in the s&p.
You're behind the expected 250k return but since the global economy has been questionable over the past 10 years id say you are doing amazingly well. Keep investing.

bmwguy

BrokenArrows wrote: »

Are you mad?
You have so far invested 13600 (£800 * 17) and have profited £28229

That works out at over 11% interest per year. Which is impressive. You wouldnt have gotten anywhere near that in the s&p.

Is the 41k a Euro figure and the 800 an Irish pounds figure? Or is it all the same currency? Either way it's a decent return you are getting and it's the last 10 years where it will really grow (compounding effect).

aidanki

BrokenArrows wrote: »

Are you mad?
You have so far invested 13600 (£800 * 17) and have profited £28229

That works out at over 11% interest per year. Which is impressive. You wouldnt have gotten anywhere near that in the s&p.
You're behind the expected 250k return but since the global economy has been questionable over the past 10 years id say you are doing amazingly well. Keep investing.

I have reread my statement and you post and I think my figures below are more accurate ?

My understanding of the statement is I should have said the total sum assured is €41k as per the statement, should I continue to keep paying it for the next 13 years to bring me up to the 30years originally committed upon.

More accurate way of looking at it is, I have invested 13600 Irish punts €17268 and total bonuses added to date is €7923.

aidanki

bmwguy wrote: »

Is the 41k a Euro figure and the 800 an Irish pounds figure? Or is it all the same currency? Either way it's a decent return you are getting and it's the last 10 years where it will really grow (compounding effect).

yes on both 41k is euro and 800 is Irish punts

see my next post for a more accurate assessment I think of performance to date.

Rackstar

Is this not some sort of life assurance rather than an investment?

What type of product is this?

Rackstar

Is this not some sort of life assurance rather than an investment?

What type of product is this?

aidanki

Rackstar wrote: »

Is this not some sort of life assurance rather than an investment?

What type of product is this?

Yes its Life assurrance rather than investment

aidanki

Just worked it out

IF I had invested £800 (1013 euro) in S^P 500 ever year since 1998, it would be worth 34761 today, giving a profit on my original €18234 investment of €16527. So I would gave to pay CGT tax on this of 33% I guess, giving me 10908 profit, v 7923 from Royal Liver or Royal London as they are now called.

Stheno

aidanki wrote: »

Just worked it out

IF I had invested £800 (1013 euro) in S^P 500 ever year since 1998, it would be worth 34761 today, giving a profit on my original €18234 investment of €16527. So I would gave to pay CGT tax on this of 33% I guess, giving me 10908 profit, v 7923 from Royal Liver or Royal London as they are now called.

Where are you getting 7923?
O
41829 -18234 is not 7923 ? It's about 23.5 K?

Okon

aidanki wrote: »

I guess Im wondering, should I keep paying the thing or just cut my losses.

What losses? On the face of it your policy seems to be doing okay and you have made a good profit.

daheff

aidanki wrote: »

Hi all,

Its a long time ago I signed up to making an investment with Royal Liver Life Assurance policy, 1998 actually. The terms at the time were £800 a year for 30years. At the time I think I was promised that the investment would be worth roughly 250k when mature.

I'm not sure you have been missold here (or misadvised). On an assumption of roughly 11%(after tax & fees) growth per annum and an investment of 1021 EUR, after 17 years you should have a pot of approx 46K. End of year 30 would see a maturing amount of 229K. annualised return of 11.5% gives you the 250K you were promised.

year yr start bal 11.5% invest yr end bal
1998 - 117 1,021 1,138
1999 1,138 131 1,021 2,290
2000 2,290 263 1,021 3,575
2001 3,575 411 1,021 5,007
2002 5,007 576 1,021 6,604
2003 6,604 759 1,021 8,384
2004 8,384 964 1,021 10,369
2005 10,369 1,192 1,021 12,583
2006 12,583 1,447 1,021 15,051
2007 15,051 1,731 1,021 17,802
2008 17,802 2,047 1,021 20,871
2009 20,871 2,400 1,021 24,292
2010 24,292 2,794 1,021 28,106
2011 28,106 3,232 1,021 32,360
2012 32,360 3,721 1,021 37,102
2013 37,102 4,267 1,021 42,390
2014 42,390 4,875 1,021 48,286
2015 48,286 5,553 1,021 54,859
2016 54,859 6,309 1,021 62,189
2017 62,189 7,152 1,022 70,363
2018 70,363 8,092 1,023 79,478
2019 79,478 9,140 1,024 89,642
2020 89,642 10,309 1,025 100,976
2021 100,976 11,612 1,026 113,614
2022 113,614 13,066 1,027 127,706
2023 127,706 14,686 1,028 143,421
2024 143,421 16,493 1,029 160,943
2025 160,943 18,508 1,030 180,481
2026 180,481 20,755 1,031 202,268
2027 202,268 23,261 1,032 226,560
2028 226,560 26,054 1,033 253,648

aidanki

daheff wrote: »

I'm not sure you have been missold here (or misadvised). On an assumption of roughly 11%(after tax & fees) growth per annum and an investment of 1021 EUR, after 17 years you should have a pot of approx 46K. End of year 30 would see a maturing amount of 229K. annualised return of 11.5% gives you the 250K you were promised.

thanks for your input,

you worked backward to calculate 11% or 11.5% I guess

Question - would it be a fair assumption to say investing in the stock market in a relatively low to medium risk index should give annual returns of 11-11.5% ?

daheff

aidanki wrote: »

thanks for your input,

you worked backward to calculate 11% or 11.5% I guess

I just played around with the percentage to get a rough idea of where it is now -extrapolated this out to the end of the term and got that ending value.

aidanki wrote: »

Question - would it be a fair assumption to say investing in the stock market in a relatively low to medium risk index should give annual returns of 11-11.5% ?

no. not at all.
Low risk = low potential return/low potential losses
Medium risk = medium potential return/medium potential losses
High risk = high potential return/high potential losses

but each would have outliers. You can have high risk and low return and low risk and high return, but its less likely.