Every year you probably promise yourself that you will begin a proper savings plan in the form of an endowment or retirement annuity but January “20 next year” rolls in and you find yourself in the same position as the year before. When it comes to saving most people tend to be undisciplined because it is difficult to “future” ourselves. So what tends to happen is we postpone our savings plans and promise that our future selves will take care of business. Fast forward 10 years and our future selves will let us down badly. When it comes to effective savings plans the actions you take NOW are the only ones that matter. If you keep sabotaging yourself then the best way to get control of the situation is to create an environment where the physical act of saving is taken out of your hands.
You can do this by saving in an endowment policy. This is a contractual savings agreement with an insurance company. The usual term of investment is 5 or 10 years. You can invest a lump sum of money or you can invest monthly via debit order.
An endowment policy is a good idea for people who have little or no discipline because it commits them to the payments. You can’t simply cancel an endowment when you want the money; you will face penalties. It is not like a regular savings account where you can raid it when the latest version of your cell phone launches.
The important issue for consideration when investing in endowments is affordability. Make sure that you can comfortably afford the premium each month so you don’t have to lapse the policy if you can’t keep up the payments.
You can use an endowment to save for specific objectives like funding a child’s education, saving for the purchase of a home or saving for a family member's wedding. You can also use endowments as part of a retirement strategy. When investing it is important to ensure that you have the right mix of products in your portfolio, you should not invest in one single vehicle.
If you are concerned about market volatility an endowment like Hollard’s Guaranteed Growth could be considered because it offers a Guaranteed Maturity Value. However, even in if you have the best investment product on the planet, dipping into it or cancelling the policy when a need arises, deprives your investment of growth potential and it will be difficult to get traction. If you are committed to a plan and are patient you will reap the rewards of long-term growth.
