Your Biggest £ Win on the Premium Bonds...

joeW

RandallFlagg said:

gordiji said:

RandallFlagg said:

Premium bonds are a poor investment.

Not for the winners

The odds of winning big are far worse than the National Lottery, where the odds are poor to start with.

You can get a better return on a high interest cash savings account and if you want to gamble the odds of wining in the horses is far better.

For higher rate tax payers, the interest on high interest cash savings account would have to be pretty high - and would need to be accessible to be a fair comparison.  I don’t think they are a bad investment. 

Shrews

I put in £5000 a year ago and have so far won £200 (1x100, 2x50), but of course always in with a chance of winning the biggie. Plus I've cut down on my lottery spending by half so I'm counting those savings as being another benefit of Premium Bonds (equivalent to another £200)

So, a 5k investment and £400 in return. I'm happy with that.

CavemanGrogg

RandallFlagg said:

Premium bonds are a poor investment.

https://youtu.be/ixtjDEl-LOs?si=vt_f4uNMr5Yefj0q

This and this:

TTony said:

RandallFlagg said:

Premium bonds are a poor investment.

Its not really an “investment” comparable to shares et al though.

Its somewhere to put spare cash, with easy/instant access, and is protected - like a bank account.

The difference to a bank account is that you might win big (or nothing).

Is pretty much how I view and treat National Bonds.  Yes I've won money on them, but not enough for me to consider it a good investment, or even as a means of saving really for that matter, it's just about the tax benefits for me.

SteveRobinson

Best month, £250. This month nothing

tone1

I took mine out when the NSANDI did a 6.2% bond last year….

tone1

RandallFlagg said:

ThePrettyDamned said:

I don't do this but maybe I should - I have a maxed out 5 percent per year interest bank account, and most of my other savings are now going into a 3.something percent account (including the interest from the 5 percent account - every little helps!). Is this worth doing or is there a "tipping point" where the odds increase sufficiently that it's sort of worth while treating for growing funds a bit?

Why don't you invest your money in stocks and shares?  

Which platform do you use? @RandallFlagg ;

RandallFlagg

tone1 said:

RandallFlagg said:

ThePrettyDamned said:

I don't do this but maybe I should - I have a maxed out 5 percent per year interest bank account, and most of my other savings are now going into a 3.something percent account (including the interest from the 5 percent account - every little helps!). Is this worth doing or is there a "tipping point" where the odds increase sufficiently that it's sort of worth while treating for growing funds a bit?

Why don't you invest your money in stocks and shares?  

Which platform do you use? @RandallFlagg ;

Several for investments.

Workplace pension with Aviva, stocks and shares ISA with AJ Bell and a SIPP with Vanguard.

viz

Best to use it just for a place to keep ready cash while you’re putting it somewhere else IMO. Its stated return of 4.4% is vastly skewed by a few big returns and a LOT of miniscule returns. I reckon it yields 1-2% for the majority of people, meaning that if you and a partner have 100k in there it will probably yield you 100-200 per month, 1800 a year. 

You can find over 20 regular savings building society accounts yielding 5% or more which you and a partner could drip 4k into every month; at an average of 6%, you’d be up to 100K in 24 months, earning £473 a month, 6000 a year, taxed down to 3000-4900 a year, depending on circumstances. 

If I had 100k in premium bonds and wanted zero risk I’d wack 40k into ISAs and deplete the rest every month into high yield regular savings accounts. But I guess you wouldn’t have the thrill of “reveal results”

ThePrettyDamned

RandallFlagg said:

ThePrettyDamned said:

I don't do this but maybe I should - I have a maxed out 5 percent per year interest bank account, and most of my other savings are now going into a 3.something percent account (including the interest from the 5 percent account - every little helps!). Is this worth doing or is there a "tipping point" where the odds increase sufficiently that it's sort of worth while treating for growing funds a bit?

Why don't you invest your money in stocks and shares?  

I did - I've recently removed and put into those accounts to protect from a dip. I'm about to move house, so I'll be needing the cash I still drip feed into the isa though. 

PolarityMan

Obviously the other thing with an ISA is don't you get stung with tax once your withdrawals hit a certain amount or is that only pensions?

viz

ISA interest is totally tax free. Even more so than pensions if you have enough in them. They’re just not tax free when you put the money in. 

I think. 

yocky

viz said:

Best to use it just for a place to keep ready cash while you’re putting it somewhere else IMO. Its stated return of 4.4% is vastly skewed by a few big returns and a LOT of miniscule returns. I reckon it yields 1-2% for the majority of people, meaning that if you and a partner have 100k in there it will probably yield you 100-200 per month, 1800 a year. 

I think you're undercooking that.

The chunky prizes of £5k and above are 10% of the pot, and the £500 and £1k prizes are another 10%, so even if you completely discount those as unobtainium the small prizes are 80%. That would bring the return down to 3.5% which is roughly what I see over a year. That's tax free and you get a free shot at the big ones.

https://www.nsandi.com/get-to-know-us/monthly-prize-allocation

viz

Hm. OK that's fair. I thought it was more scooped towards a fewer, bigger prizes. However 3.5% seems a lot more than what I get!

chris78

I don’t like Martin Lewis but anyone with premium bonds should read this article, understand what they have and then sell them

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

TTony

chris78 said:

I don’t like Martin Lewis but anyone with premium bonds should read this article, understand what they have and then sell them

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

I’m currently running ahead of the return projected by their calculator, which I’m happy with given the cost free, risk-free, tax-free and potential upside benefits.

But I wouldn’t use PremBonds as my *only* investments pot.

viz

^ So, if you are a high rate tax payer and you have more than 30K in there, you have a >50% chance of being better off than having the money in a 5.16% interest account. If you're not, or you have less than 30K, it's worse.

joeW

chris78 said:

I don’t like Martin Lewis but anyone with premium bonds should read this article, understand what they have and then sell them

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

This is a decent analysis for most situations 

Neil

I'm an equities investor but have always kept premium bonds as a way to hold ready cash if needed.

I get wins most months but the most I ever got for a single bond was £1000 - which was nice. 

RandallFlagg

joeW said:

RandallFlagg said:

gordiji said:

RandallFlagg said:

Premium bonds are a poor investment.

Not for the winners

The odds of winning big are far worse than the National Lottery, where the odds are poor to start with.

You can get a better return on a high interest cash savings account and if you want to gamble the odds of wining in the horses is far better.

For higher rate tax payers, the interest on high interest cash savings account would have to be pretty high - and would need to be accessible to be a fair comparison.  I don’t think they are a bad investment. 

Salary sacrifice into a workplace pension is the most advantageous way of saving for a higher rate tax payer. Load that up to the £60K limit first then ISAs (40K a year per person  - £20K cash and £20K stocks and shares), so £80K for a couple.

You got any money left to save after that? buy some bricks and mortar..ie a property by either paying off your mortgage early or buying another one.

viz

@RandallFlagg - btw it’s only 20k per person, spread around cash, S&S, LISAs, those peer-to-peer ones, etc. 

If you've got a couple of children, and you intend on living at least 7 years, and you have loads of lolly lying about, you could always put 20K into their ISAs every year - that'd be a good way of avoiding their inheritance tax / building up a house deposit / etc.

For me, the best risk-free way to store money, in order, would be - assuming you were a very high earner:

1) 60K salary sacrifice into pension (or more if two earners) - the 60K comes off gross income, so it only "costs" 33K from net per year assuming you were a high tax payer - and the employer would have to contribute a portion of that anyway. (though you'd suffer the "taper" if you earned too much, whereby the tax break would fade out and that 33K cost would rise back up to 60K).

2) 40K into own and spouse's ISA (saving 3333 a month at 5.5% would provide income of £1000 per month after 5 years, which is the same as a single person's state pension, and would have grown 29K and be worth 229K)

3) 4K into each child's LISA (the government contributes an additional 1K for every 4K, so after 5 years at 3%, a total investment of 20K would be worth 27K) - if you had 2 children that would cost 8K

4) 16K into each child's normal ISA (probably stocks and shares if they're young) - for 2 children that would cost 32K

So far that would cost you the equivalent of 113K-140K a year from net income, or 9,400 - 11,600 a month . Then:

5) Anything else into 6% rate building societies

6) Use Premium Bonds to store cash while you're deciding what to do with it.

That's if you don't fancy investing "actively" with houses, stock market, etc.