performance of educational savings plan - Scottish Provident

[Millix]

hello - I'd be interested in opinions on how to assess the performance of an educational savings plan that was begun in Feb 1994. This is the scottish provident capital options plan, which was at that time their standard educational savings plan ( "college plan" ) - it also has a small lifecover element. The lifecover part has a maturity date of 2024.

Since feb 1994 80 euro per month has been saved ( level premium over this period - started off as approx 63 IEP per month ) - up to july 2007 this is 160 months, for a total of 12800 in premiums

As of july 2007 the surrender value of the policy is 17700.

how do I assess whether this has performed well or not ?

thanks, Millix

 

[tyoung]

hello - I'd be interested in opinions on how to assess the performance of an educational savings plan that was begun in Feb 1994. This is the scottish provident capital options plan, which was at that time their standard educational savings plan ( "college plan" ) - it also has a small lifecover element. The lifecover part has a maturity date of 2024.

Since feb 1994 80 euro per month has been saved ( level premium over this period - started off as approx 63 IEP per month ) - up to july 2007 this is 160 months, for a total of 12800 in premiums

As of july 2007 the surrender value of the policy is 17700.

how do I assess whether this has performed well or not ?

thanks, Millix

Off the top of my head that's about a 6% annual return( Correct me if I'm way off, anybody). The thing is: don't they write to you with the annual performance, annual expenses, major holdings etc? If they don't you shouldn't invest in that product.

This is probably some kind of fund of funds. You probably paid a broker a fee, Scottish provident a wrap fee and the underlying funds another fee.
It probably got some mix of stocks/bonds/cash that changes as it approaches maturity date. My guess would be that the mix was too conservative(too little stock, too much bonds).
I also hate investment products with a life insurance element(often for a tiny amount). If you need life insurance buy it seperately.
I would advise: never invest in anything where you don't understand the fee structure, don't invest unless it's clear what your investing in, don't invest unless you get an annual update and finally don't invest unless you can redeem at fairly short notice.
So I would advise selling if there's no penalty. Put the money in a cash/ stock fund mix. Use the highest yielding cash account you can find. For the stock funds use some low cost index/tracker type fund. The mix would depend on when you need the money. If it's greater than 10 years I would go 100% stock.
I hope this helps.
Regards

 

[Millix]

Thanks for your comment - this is useful. An annual statement is provided but it only states whether an annual bonus was added that year and the guaranteed minimum value of the plan in 2024 - fee structure, funds details etc are not included.

Millix

 

[kaff]

? Scottish Prov/ Phoenix investment

Hi,
I too have one of the Capital Options taken out May 1996. We pay (in euros) 44.44 monthly and it's due to finish May 2026.
It's worth €8279.54 if we cash it in today . We are not sure if it's really worth keeping for another 16 years. there are no annual bonuses . The bonuses accumulated are 17.65% from early years worth €2283.05 if we stay the journey.

The maturity value was estimated ( 2008) as €27441.12 assuming a return of 4%. But we also have an endowment ( maturing 2013 so keeping til end - and it's down so much from what was expected).

Is this worth keeping or should we cut loose and invest the money elsewhere?
Many thanks
K