MONEY Q&A: Halifax shares: do I sell or wait?

I need some cash and was thinking of selling my windfall Halifax shares, but the recent announcement of a cash payout made me postpone the sale until June. However, I am not sure now whether it is worth waiting.

RT, London

Halifax's plan to restructure its capital and return cash to shareholders may not be as generous as it seems at first sight. One way of looking at this is that you are simply being forced to sell some of your shares. For every 40 shares you have now, you will get a cash handout of pounds 24.80. However, you will also have your 40 shares reduced to 37 shares. For each share you give up you will receive about pounds 8.27. That compares with the current stock market value of about pounds 7.60.

So, arguably, you would get a cash bonus of 67p on a small proportion of your shares if you delay your sale. That works out at just 5p a share when spread across the entire holding (based on current market value) or an extra pounds 10 on the minimum windfall holding of 200 shares.

Of course you cannot know what will happen to the share price in June after the restructuring. But there would seem to be no reason why this particular capital restructuring will boost the share price - although obviously the price can change at any time as a result of the normal stock market fluctuations.

Endowment blues

I have an endowment policy with a well-known insurance company. It was taken out to pay off an interest-only mortgage. I have been asked to make quite a substantial percentage increase in my premiums, otherwise there is a risk that the maturity proceeds won't be sufficient to pay off the mortgage. Is this normal?

AW, Northumberland

Check the details of your policy. It could be one that has inbuilt premium reviews to ensure that you are on track for the lump sum you'll need when your mortgage finishes. But it is quite possible that you have an endowment policy taken out at a time (possibly in the early 1990s) when life insurance companies were over-optimistic about future investment returns and did not foresee changing investment conditions.

Some companies are now advising customers to increase premiums. Life companies argue that real investment returns on policies should still be good, but the "real" return is measured by the cash return less inflation. As inflation falls, so do investment returns measured in cash. This presents a problem when you are saving towards a specific cash sum to pay off your mortgage.

You could follow the advice and increase your premiums. But you may prefer to put the extra money in a different investment - such as a tax-free ISA- to spread the risk. And there is another option. Pay the extra money straight into your mortgage account. That would reduce the outstanding balance at the end of your mortgage term so there may not be a shortfall on the endowment policy. Ask your lender what the effect of this option would be on your final mortgage balance.

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