Topic: Premium Bonds

[west_london_red]

Missus and kids have got £85k between them and I've told her we can move the money into fixed bonds for 5 years at 2% but she's not prepared to move the money.

Just remind your Mrs what’s mine is yours and what’s yours is mine goes both ways!

I have a savings bond that’s going to mature and was thinking what to do with the money, and with interest rates so piss poor I might throw some money into these, always got a chance of winning the big one and even if I don’t win anything I’m losing about £200 in interest so not the end of the world. I had a few grands worth a few years ago but sold them when I bought my house.

[AndyMuller]

I think I put money into it back when I was 18 (I’m 31 now) how do I even check?

[west_london_red]

I think I put money into it back when I was 18 (I’m 31 now) how do I even check?

It’s all online now, if you have the paper certificates it’s easier to find them online as you’ll have your membership number of whatever it’s called.

Try this:

https://www.nsandi.com/help/lost-touch-with-nsandi/get-back-to-premium-bonds

[Jake]

Good luck Jake mate, I hope you get hundreds of those £25 wins while I finally get a big one

Cheers John pal I read a good moneysavingexpert where it laid out the odds of winning with 1 premium bond, which of course are astronomical.

But I think 3k gives you a 1 in 11 chance of winning a £25, or thereabouts. So you get one of those a year (not guaranteed but statistically likely and you're at 0.83% interest. Two wins is 1.66% interest.

Considering the best flexi ISA right now is 0.65%, the best 1 year fixed isa is 0.9% etc. You're only getting 1.51% for a 5 year fixed ISA.

Plus hey, there is the slightest chance of all the other prizes too

[.adam]

Cheers John pal I read a good moneysavingexpert where it laid out the odds of winning with 1 premium bond, which of course are astronomical.

But I think 3k gives you a 1 in 11 chance of winning a £25, or thereabouts. So you get one of those a year (not guaranteed but statistically likely and you're at 0.83% interest. Two wins is 1.66% interest.

Considering the best flexi ISA right now is 0.65%, the best 1 year fixed isa is 0.9% etc. You're only getting 1.51% for a 5 year fixed ISA.

Plus hey, there is the slightest chance of all the other prizes too

Or you whack it in an index fund based stocks and shares ISA and get >4% return. Just got to be prepared to ride any dips and not panic.

[AndyMuller]

It’s all online now, if you have the paper certificates it’s easier to find them online as you’ll have your membership number of whatever it’s called.

Try this:

https://www.nsandi.com/help/lost-touch-with-nsandi/get-back-to-premium-bonds

Thanks mate.

[west_london_red]

Or you whack it in an index fund based stocks and shares ISA and get >4% return. Just got to be prepared to ride any dips and not panic.

Combine it with a LISA if you can and then you get the 25% bonus.

[Charlie Adams fried egg]

Or you whack it in an index fund based stocks and shares ISA and get >4% return. Just got to be prepared to ride any dips and not panic.

So then it depends what index and how you define dips. Some indices dropped by over 30% in March 20 and while some recovered quickly, some are still below their Feb 20 values.

It also then depends on your timescale for investment. Cash ISAa and PBs are suitable for shorter term investments and more risk averse people, and while subject to inflation risk, they won't plummet overnight. So switching from something suitable for the short term that is low risk, into a longer term investment that is medium to high risk won't be for everyone.

Put it this way, if I'm saving for a big holiday, home improvements, etc and I'll need the money in a couple of years, then it's the ISA/PBs every time.
If I won't be using the money for >5 years and I can deal with 30% plus dips, then maybe shares are the way to go.

[Elmo!]

So then it depends what index and how you define dips. Some indices dropped by over 30% in March 20 and while some recovered quickly, some are still below their Feb 20 values.

It also then depends on your timescale for investment. Cash ISAa and PBs are suitable for shorter term investments and more risk averse people, and while subject to inflation risk, they won't plummet overnight. So switching from something suitable for the short term that is low risk, into a longer term investment that is medium to high risk won't be for everyone.

Put it this way, if I'm saving for a big holiday, home improvements, etc and I'll need the money in a couple of years, then it's the ISA/PBs every time.
If I won't be using the money for >5 years and I can deal with 30% plus dips, then maybe shares are the way to go.

Just waiting for someone to come along and advise everyone to put their money into crypto - regardless of their circumstnaces or risk appetite. 

[CraigDS]

Should buy crypto.

[.adam]

So then it depends what index and how you define dips. Some indices dropped by over 30% in March 20 and while some recovered quickly, some are still below their Feb 20 values.

It also then depends on your timescale for investment. Cash ISAa and PBs are suitable for shorter term investments and more risk averse people, and while subject to inflation risk, they won't plummet overnight. So switching from something suitable for the short term that is low risk, into a longer term investment that is medium to high risk won't be for everyone.

Put it this way, if I'm saving for a big holiday, home improvements, etc and I'll need the money in a couple of years, then it's the ISA/PBs every time.
If I won't be using the money for >5 years and I can deal with 30% plus dips, then maybe shares are the way to go.

Of course. Here's the index fund I have my pension invested in. Even during Covid it still bounced back quickly. If you need your money available at short notice then by all means keep it in Premium Bonds or a cash ISA but otherwise, this is the way forward I think.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/price-performance

[BlackandWhitePaul]

Just as a matter of interest, was one of your wins within 3 months of buying them (having in mind that you are ineligible to win for a month)?

Sorry for the 7 1/2 year delay John, if I remember right it was quite some time before the 1st win, a couple of years I think and then out of the blue a £25 cheque came through the post.

7 years ago I purchased £500 worth.

3 times I have won £50 and once £25.

Update, I had those £500 worth of bonds up until last year and got a couple more £25 wins then when my Dad died in June I inherited some money and among other things I decided to buy some more Premium Bonds, another £9,500 worth meaning I've got £10,000 worth now.  Last months draw (September) I had 2 prizes, both £25.  One thing I notice when checking the winners Location, I hardly ever see "Tyne and Wear", it's nearly always London, Essex, Hampshire or other places down south.

[WhoHe]

My last job I worked out in Cheshire with/amongst some very wealthy people and they all had the maximum amount possible (£50K?) and - assuming you had the cash - if you invested the maximum then it was literally buying money. They had accounts for every eligible member of the family, this was when the odds were better than now.
This may account for the spread of winners being heavily southern based, they simply have more spare cash.

I've got 23K worth and get 1% every year, I re-invest any winnings so its creeping up very slowly.

[BlackandWhitePaul]

My last job I worked out in Cheshire with/amongst some very wealthy people and they all had the maximum amount possible (£50K?) and - assuming you had the cash - if you invested the maximum then it was literally buying money. They had accounts for every eligible member of the family, this was when the odds were better than now.
This may account for the spread of winners being heavily southern based, they simply have more spare cash.

I've got 23K worth and get 1% every year, I re-invest any winnings so its creeping up very slowly.

Yeah, it's a lot better than having cash in the Bank isn't it with interest rates being next to nothing. My Da used to tell me when he was in his late teens / 20's in the 70's he used to get 12% interest on his savings in the Building Society. 

12% WOWZA. 

[Crosby Nick]

Yeah, it's a lot better than having cash in the Bank isn't it with interest rates being next to nothing. My Da used to tell me when he was in his late teens / 20's in the 70's he used to get 12% interest on his savings in the Building Society. 

12% WOWZA. 

Crazy isn’t it. I set up an ING savings account in about 2005 and think they were paying 5% interest. I still have it but pay very little in now.

I do have a Share Save scheme at work that in theory gives the best return but it takes 3 years and the share price tanked halfway through the first one I did so I just got my money back, didn’t even make an extra penny.

[Red-Soldier]

An absolute waste of time and money.

[BlackandWhitePaul]

Crazy isn’t it. I set up an ING savings account in about 2005 and think they were paying 5% interest. I still have it but pay very little in now.

I do have a Share Save scheme at work that in theory gives the best return but it takes 3 years and the share price tanked halfway through the first one I did so I just got my money back, didn’t even make an extra penny.

I know Nick, it is beyond ridiculous and to be honest it's hardly worth having money in the Bank these days. Before long they will be charging us to keep our money in their Bank.

[Charlie Adams fried egg]

Of course. Here's the index fund I have my pension invested in. Even during Covid it still bounced back quickly. If you need your money available at short notice then by all means keep it in Premium Bonds or a cash ISA but otherwise, this is the way forward I think.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/price-performance

Pension fund is by definition long term money, unless you are just about to take it that is!
Pension money is interesting for younger people because even if their appetite for risk may be low (e.g. they hate the idea of big drops), their capacity for loss is huge (e.g. someone age 27 cannot get their hands on the £ for 30 years, so they have time to ride out the dips.

Investing is all about time and patience, and that's why timescales are so important. A wise man once said "the stock market is a device for transferring money from the impatient to the patient. It's bad enough being impatient and selling low, it's even worse being a forced seller, needing the money and having to sell because you shouldn't have been in the market in the first place.

Arguably there's 3 types of money. Money to spend, which is obvious. Then money to save, which is perhaps rainy day money, or saving up for something. Then there's money to invest, and that's the longer term stuff. Too much rainy day money means you are missing out on returns and losing value with inflation.

[west_london_red]

Crazy isn’t it. I set up an ING savings account in about 2005 and think they were paying 5% interest. I still have it but pay very little in now.

I do have a Share Save scheme at work that in theory gives the best return but it takes 3 years and the share price tanked halfway through the first one I did so I just got my money back, didn’t even make an extra penny.

In about 2007 (before the financial crash) I was 25 years old, lived with my parents, paid no rent, no bills and had saved up just over £50k, I was getting about £250 a month in interest in an easy access saving account, then 2008 came and it plummeted to nothing and has pretty much been the same since.

[Crosby Nick]

Paid no rent? Mingebag!

[Andy @ Allerton!]

An absolute waste of time and money.

But people don't lose money, don't spend time and win money

Like to see your working out there mate?

[west_london_red]

Paid no rent? Mingebag!

I’m Indian, that’s what we do!

And don’t think my parents ain’t laughing now, they live with me and the Mrs rent and bills free while renting their own mortgage free house out (on top of their full state pension and work place pensions on top of that!)

[Crosby Nick]

I’m Indian, that’s what we do!

And don’t think my parents ain’t laughing now, they live with me and the Mrs rent and bills free while renting their own mortgage free house out (on top of their full state pension and work place pensions on top of that!)

Haha fair enough!

Thinking about it, my mum was the mingebag. My first shitty job and she was charging me about 30!quid a week in rent I’m sure of it.

[John C]

JAKE / anyone thinking of investing - buy before 30 October to be in the draw on 2nd December. If you buy in November your first draw will be 2nd January.
You'll need to set up an online account. Once that's done go back in anytime (before the draw) and click go paperless, that means the prize is paid in to your bank rather than getting cheques which are a pain

[Red-Soldier]

But people don't lose money, don't spend time and win money

Like to see your working out there mate?

Invest your money in something that will give you proper returns on it.  Like I said, an absolute waste of your "investment" these.

[Andy @ Allerton!]

Invest your money in something that will give you proper returns on it.  Like I said, an absolute waste of your "investment" these.

There is absolutely no way on earth that I'd have got the returns I have got by 'investing in something else' - unless that something else is something that is genuinely risky and could lose you a packet.

[Elmo!]

Invest your money in something that will give you proper returns on it.  Like I said, an absolute waste of your "investment" these.

It's absolutely fine - and actually more suitable - for things like an emergency fund (which everyone sensible should aim to have). Something you can rely on and know won't plummet in value if the market crashes.

[Jake]

JAKE / anyone thinking of investing - buy before 30 October to be in the draw on 2nd December. If you buy in November your first draw will be 2nd January.
You'll need to set up an online account. Once that's done go back in anytime (before the draw) and click go paperless, that means the prize is paid in to your bank rather than getting cheques which are a pain

Got mine the other day, Saturday I think. Gonna top up a few hundred more on payday

[67CherryRed]

Invest your money in something that will give you proper returns on it.  Like I said, an absolute waste of your "investment" these.

It's basically a free lottery. Chances of winning £5k, £10k, £50k, up to £1m. They're tiny chances, but they're chances. Yeah you might average out at 1% or so, but someone has to win the big prizes, and if you 'lose' you still have your own money at the end of it. I see no downside.

[BlackandWhitePaul]

It's basically a free lottery. Chances of winning £5k, £10k, £50k, up to £1m. They're tiny chances, but they're chances. Yeah you might average out at 1% or so, but someone has to win the big prizes, and if you 'lose' you still have your own money at the end of it. I see no downside.

Makes perfect sense to me especially with Bank interest rates next to nothing.

[Red-Soldier]

There is absolutely no way on earth that I'd have got the returns I have got by 'investing in something else' - unless that something else is something that is genuinely risky and could lose you a packet.

To each their own I guess.

For me, the only i'd ever invest in is property.

[Elmo!]

To each their own I guess.

For me, the only i'd ever invest in is property.

Then you are putting all your eggs in one basket, and very hard to get money out at short notice. Best to diversify.

[Charlie Adams fried egg]

To each their own I guess.

For me, the only i'd ever invest in is property.

That's fine, although I agree with the post below about eggs in 1 basket and liquidity.

But just because you believe premium bonds to be a waste of time, doesn't mean they are for everyone. They are low risk, they are liquid and they offer a chance (albeit a small one) of winning a large prize, and all prizes are tax free.

It's impossible, and in my view a bit irresponsible to dismiss investments without understanding peoples' objectives and attitudes to risk and capacity for loss.

There's enough people making poor financial decisions from online information and I'd hate for anyone on here to be influenced into not investing in PBs because someone on here called them a waste of time. Especially when their idea of a balanced portfolio is 100% property!

[Red-Soldier]

That's fine, although I agree with the post below about eggs in 1 basket and liquidity.

But just because you believe premium bonds to be a waste of time, doesn't mean they are for everyone. They are low risk, they are liquid and they offer a chance (albeit a small one) of winning a large prize, and all prizes are tax free.

It's impossible, and in my view a bit irresponsible to dismiss investments without understanding peoples' objectives and attitudes to risk and capacity for loss.

There's enough people making poor financial decisions from online information and I'd hate for anyone on here to be influenced into not investing in PBs because someone on here called them a waste of time. Especially when their idea of a balanced portfolio is 100% property!

You could say the same thing about all the others who are in favour, no?

Not sure about you, but I certainly wouldn't be taking any financial advice from someone who posts on a football forum.

Didn't you bang on about how vegan milk was bad for the environment, then tried to question a peer-reviewed study, when I presented you wih their findings (comparing them to dairy milk).

Here's what Martin Lewis has to say about them:



Premium Bonds
Are they worth it?

Line up everyone with £1,000 worth of Premium Bonds in order of their year's winnings, and the person halfway along would have won… not a penny! In fact, you'd need to walk past 70% of the line until you hit the first £25 winner.

Premium Bonds are the UK's biggest savings product, with more than 21 million people saving over £112 BILLION in them. But with other savings rates creeping back up – should you still be buying Premium Bonds? MoneySavingExpert.com's Martin Lewis uses exclusive statistical analysis to tackle the big question – are Premium Bonds worth it?


What are Premium Bonds?

NS&I Premium Bonds are a savings account you can put money into (and take out when you want), where the interest paid is decided by a monthly prize draw. You buy £1 bonds and each has an equal chance of winning, so the more you buy, the more your chances improve.

NS&I sexes up the draw by personifying its IT equipment; it calls it Ernie (Electronic Random Number Indicator Equipment). In reality it's a simple, audited, random number generator.

The distribution of prizes changes each month. Below is a table of the typical current distribution:

Chances of winning each Premium Bonds prize per bond
Prize amount    Number per month    Odds of winning at least this amount per £1 bond in one month
£1 million    2    1 in 56,199,445,087
£100,000    5    1 in 16,056,988,178
£50,000    11    1 in 6,244,387,856
£25,000    22    1 in 2,809,975,413
£10,000    55    1 in 1,183,147,717
£5,000    107    1 in 556,431,007
£1,000    1,872    1 in 54,194,344
£500    5,616    1 in 14,616,261
£100    30,445    1 in 2,947,398
£50    30,445    1 in 1,638,948
£25    3,189,365    1 in 34,500
£0    112,395,782,047    Virtual certainty


The interest is tax-free – that used to be a big boon, but isn't any more for most

Premium Bond prizes (the interest) are paid tax-free. However for most people that's no longer a bonus.

Since 2016, the personal savings allowance (PSA) has meant all savings interest is automatically paid tax-free. You only need to pay tax on it if you're a basic 20% rate taxpayer earning more than £1,000 interest a year, a higher 40% rate taxpayer earning more than £500 interest a year, or a top 45% rate taxpayer.

In practice this means more than 95% of people no longer pay any tax on their savings interest – and for those people Premium Bonds therefore no longer have a tax advantage.

For those who will pay tax, there is a decent advantage of Premium Bonds as prizes do not count towards the PSA, so it's almost an extra allowance in its own right (assuming you win something, of course).
The prize rate's now at 1%, but with average luck you won't even earn that




What you'll win over a year with average luck, based on the current 1% rate
Number of bonds    Median average winnings    Equiv. prize rate
£100    Nothing    0%
£1,000    Nothing    0%
£5,000    £25    0.5%
£30,000    £250    0.83%
£50,000    £450    0.9%

https://www.moneysavingexpert.com/savings/premium-bonds/

[CraigDS]

Investing in property - how very Tory.

[Red-Soldier]

Investing in property - how very Tory.

 

[Charlie Adams fried egg]

You could say the same thing about all the others who are in favour, no?

Not sure about you, but I certainly wouldn't be taking any financial advice from someone who posts on a football forum.

Didn't you bang on about how vegan milk was bad for the environment, then tried to question a peer-reviewed study, when I presented you wih their findings (comparing them to dairy milk).

Ha ha.
Not really no. It's not about being "in favour", it's about what's right for the person. I wouldn't take financial advice from a football forum, but there is increasing evidence that some people are making financial decisions from social media.

Your last point. That's a complete misrepresentation of what I said. I never said it was bad for the environment, I just questioned whether it was as good as many people like to make out. I also said that I'd like to understand more about how they made the comparisons with dairy and what data they used for it. Bit strange to bring it up in a completely unrelated thread though....

It looks like you see things as black or white and ignore the shades of grey in between. Your comment about PBs being a "waste of time" and your assertion that you'd only invest in property are 2 examples.

I just don't think you like people challenging your thinking. Last time it was a peer reviewed study, now you're bringing in Martin Lewis.
 
The point still remains that PB's and cash deposits are right for certain people, and have a part to play in many people's portfolios.
You're quite entertaining, I'll give you that 

[Red-Soldier]

I just don't think you like people challenging your thinking. Last time it was a peer reviewed study, now you're bringing in Martin Lewis.
 
The point still remains that PB's and cash deposits are right for certain people, and have a part to play in many people's portfolios.

Not at all.  It's about seeking expert opinion and facts.

[Red-Soldier]

How Premium Bonds compare with savings over a year
   £1,000 saved – what you'll earn    £5,000 saved – what you'll earn    £20,000 saved – what you'll earn
Premium Bonds (1)    £10    £50    £200
Top savings    £6.50    £32.50    £130
Top easy-access ISA    £6    £30    £120
One-year fixed savings    £15    £75    £300
Two-year fixed ISA    £11    £55    £220




Chance of beating a 0.65% savings account if you don't pay tax on interest, based on the current 1% prize rate
Amount saved in bonds    Interest at 0.65% (1)    What % chance Premium Bonds have of beating top savings over a year
£100    £0.65    3%
£1,000    £6.50    29%
£5,000    £32.50    53%
£30,000    £195    83%
£50,000    £325    90%

[Andy @ Allerton!]

To each their own I guess.

For me, the only i'd ever invest in is property.

Right but 'most people' probably have a mortgage and/or own property as well.

The rubbish interest rates make this an interesting proposition because most savings accounts now are giving pretty much 0% interest - ones I had that used to be a bit shite are now fully shite.

Also things you list are actually limited and most of those are providing crap returns these days.

Plus if you invest in property then there is the headache of maintenance, repairs, renting? Rates and everything else. Plus the possibilty of things affecting the price. I know more than one person that put all their money into property and are now literally penniless with no way back.