And finally ... endowments

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In the past, endowments were the mainstay of the investment market, and were often sold in conjunction with mortgages. You paid in every month and when the endowment matured it was supposed to pay off the loan on the house. But what exactly is an endowment policy?

An endowment is a life insurance policy, combined with a savings and investment mechanism. Sounds innocent, but the same thing happens with endowments as with personal pensions and FSAVCs (free-standing additional voluntary contributions) - "front end loading" or heavy charges in the first years of setting up the policy. The salesman largely creams off - and pockets - the first couple of years' contributions.

It takes seven years for the surrender value to start to approach the value of the contributions that you have already paid in.

Pardon us, but haven't we seen this somewhere before? It can and often does take this long for the transfer or paid-up values of PPPs and FSAVCs to equal what you've paid in. We're starting to see some common threads here: low returns, massive charges, inflexibility. All of these characterise the investments the people out there want to sell you.

The fact is, as investments go, endowments really aren't much good. The Faculty and Institute of Actuaries has gone so far as to say that payments from endowments maturing in future could be half those on policies taken out 25 years' ago. But if you already have an endowment, keep paying into it.

If, however, you have had a policy for a few years and find you can no longer keep up payments, there are people who will buy it. Don't just surrender it to the original insurer: you will almost certainly get more elsewhere. You can get a free brochure on endowment policies from the Association of Policy Market Makers on 0171-739 3949.

Obtain quotes on your policy from several market makers and then call Foster & Cranfield (0171-608 1941) and put your policy in for auction with them at a reserve price equal to the highest quote from market makers. If it doesn't make the price, simply go back and sell it to the market makers.