Last Friday, I had an appointment with my financial adviser to review the endowment policies we’ve had for the last 8 years. They could be doing better but at least are growing at 5-7% per annum. Given the current economic crisis spread around the world, it’s not too bad. Our strategy is a bit aggressive (80% funds 20% cash).
Initially we started it as a 20-year long-term investment plan and later linked it to the mortgage loaned for the flat we purchased together in Gibraltar. I remember we opted for the maximum contribution of tax-deductible in this long-term investment policy and I have to say my heart sank when I first saw a big chunk of monies automatically deducted from our joint account.
About a year after the commencement of the policies, I quit my job. I had loathed my job, yet didn’t quite figure out what I really wanted to do either. So the break was a bit prolonged. Money was tight. Mark’s sole income wasn’t too bad, but by no means enough to enjoy life. For the first time I was awfully tempted to surrender the policy, thinking ‘If I had the money in my hand, I would feel less constrained..Oh god 20 years..Was I out of mind or plain stupid?’
But my better judgement won and I kept it alive. After 4 months’ break, I finally decided to join an accountancy firm. Money was still tight as I was working and studying at the same time earning peanuts. Somewhere along the line, we even bought a house in Spain. It was a self-inflicted (!) uphill struggle, hence my temptation lurked about for a quite while.
And at one time, when I saw seemingly better products around, I thought to myself I might be better off trading my policy and invest elsewhere.
Well, it wasn’t always bad.
One day, that year’s annual statement arrived and I found out that my chosen products outdid considerably! Yay, I wasn’t bad, I’m an investment genius! Ha ha I couldn’t help feeling smug. 😉
Then my career started taking off and so did his. Finally we were able to begin to appreciate our endowment policies and it didn’t feel like a burden any more.
When I finally get the large sum in 12 years time, I will probably be glad that I haven’t surrendered. I will be proud to stick to the initial decision and not to deviate from it. Well, I know I still have 12 more years to go in order to validate my statements though. 🙂
Looking back, I think committing to a long-term investment plan like my endowment policy is kind of similar to having a child. When you have a child, you are bound to struggle. You may face regrets and wish you’d gone down to the different road. Then the child grows. He brings joy to your life and makes you experience something wonderful you’ve never imagined before. Then he causes trouble and expels from schools. After backbreaking rebelling, he gets to a good uni… The list can go on forever.
However, at the end of the day, you will feel that ‘I’m so glad that I’ve had my child.’ in the same manner as ‘I’m so glad I’ve kept my endowment policy.’
A tiny wee bit radical? Well, you know what I mean. 🙂