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Mr E Driver

8,542 posts

70 months

[news] 
Monday 6th September 2010 quote quote all
Anybody know has PB's improved or got worse as an investment?

nomisesor

666 posts

73 months

[news] 
Monday 6th September 2010 quote quote all
The current rate is 1.5% as it has been for a while, and the lowest prize is still £25.

mark387mw

1,909 posts

153 months

[news] 
Monday 6th September 2010 quote quote all
I've got around £15,000 in premium bonds and the last 6 months prizes have totalled £225 so 1.5% as stated. The prizes were the £25 a month so nothing exciting but you got to be in it to win it!
I have had the bonds a number of years and the best prize was £500 one month, will I get a big win? Probably not but where else should I put the money? I'm using it like a deposit account and would invest another £5,000 but is there better interest or potential high return with similar low risk?

Tiggsy

8,191 posts

138 months

[news] 
Tuesday 7th September 2010 quote quote all
nomisesor said:
The current rate is 1.5% as it has been for a while, and the lowest prize is still £25.
and thats 1.5 across the 40billion held - so when someone scoops £1m it drops the rate for the others.

PB are a VERY cheap way of the government borrowing money from you....so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea

mark387mw

1,909 posts

153 months

[news] 
Tuesday 7th September 2010 quote quote all
Tiggsy said:
so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea
I don't particularly like doing this so where do I invest?

Low interest rates and property on the slide, I may as well look for an investment vehicle if that exists - E Type Jaguar would be nice but a money pit I'd expect so defeats the object. Any ideas?
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onomatopoeia

3,297 posts

103 months

[news] 
Wednesday 8th September 2010 quote quote all
Tiggsy said:
PB are a VERY cheap way of the government borrowing money from you....so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea
Better alternatives for up to 30k where you can get at the money quickly without penalty are?

Given a projected 1.5% tax free, PBs are better than offsetting the mortgage at present and broadly comparable to instant access savings accounts after tax (usually only for the first year, then the bonus runs out and the rate drops to bugger all).

Mr E Driver

8,542 posts

70 months

[news] 
Wednesday 8th September 2010 quote quote all
I have always thought of PB's as a gamble rather than an investment.
If you get a return of around what you would have received in interest being the minimum 'prize' then so be it but nothing else gives you the chance of a big bonus payout.
If you need the money fairly quickly you can get it in a few days without any penalty.

Tiggsy

8,191 posts

138 months

[news] 
Wednesday 8th September 2010 quote quote all
onomatopoeia said:
Tiggsy said:
PB are a VERY cheap way of the government borrowing money from you....so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea
Better alternatives for up to 30k where you can get at the money quickly without penalty are?

Given a projected 1.5% tax free, PBs are better than offsetting the mortgage at present and broadly comparable to instant access savings accounts after tax (usually only for the first year, then the bonus runs out and the rate drops to bugger all).
It's not 1.5% for all bonds - some people get huge wins so the average is far lower.

onomatopoeia

3,297 posts

103 months

[news] 
Wednesday 8th September 2010 quote quote all
Tiggsy said:
onomatopoeia said:
Tiggsy said:
PB are a VERY cheap way of the government borrowing money from you....so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea
Better alternatives for up to 30k where you can get at the money quickly without penalty are?

Given a projected 1.5% tax free, PBs are better than offsetting the mortgage at present and broadly comparable to instant access savings accounts after tax (usually only for the first year, then the bonus runs out and the rate drops to bugger all).
It's not 1.5% for all bonds - some people get huge wins so the average is far lower.
1:24000 of getting any prize, lets assume all prizes are £25 so the big winners don't skew things. So on a £30,000 holding that's 15 prizes a year, or £375, which is 1.25% gross or 2.08% net. Not as good as 2.5-2.75% net you can get in a savings account (with bonus) admittedly but not that far short. So by "far lower" you mean 1.25% vs 1.5%.

I haven't done any stats in over 20 years so that may be all wrong, of course.



condor

6,638 posts

134 months

[news] 
Wednesday 8th September 2010 quote quote all
I've had 15K worth of bonds since Jan and got 4 prizes this month £100 and 3x£25.
Last month was £50 and a £25.
Previous win was £25 in April.

I was thinking of cashing some of them in, but with this month's wins...I'm keeping them a bit longer smile

nomisesor

666 posts

73 months

[news] 
Wednesday 8th September 2010 quote quote all
Tiggsy said:
onomatopoeia said:
Tiggsy said:
PB are a VERY cheap way of the government borrowing money from you....so if thats what you like doing (lending money to the gov at bargain rates) they are a good idea
Better alternatives for up to 30k where you can get at the money quickly without penalty are?

Given a projected 1.5% tax free, PBs are better than offsetting the mortgage at present and broadly comparable to instant access savings accounts after tax (usually only for the first year, then the bonus runs out and the rate drops to bugger all).
It's not 1.5% for all bonds - some people get huge wins so the average is far lower.
The large and medium prizes only account for 11% of the interest, so the effective interest rate is not far off 1.5% (1.5% is equivalent to 2.5% for a higher rate taxpayer) - formatting has gone in the table below, but you can see the original on the NS&I website.


Higher value
6% of prize fund
£1 million 1 prize
£100,000 4 prizes..
£50,000 9
£25,000 17
£10,000 43
£5,000 86

Medium value
5% of prize fund
£1,000 1,046
£500 3,138

Lower value
89% of prize fund
£100 30,720
£50 30,720
£25 1,676,963

Total value for
August 2010 £52.3 million 1,742,747

Somewhatfoolish

3,670 posts

72 months

[news] 
Saturday 11th September 2010 quote quote all
Is this thread serious?

Premium Bonds are for morons.

Mr E Driver

8,542 posts

70 months

[news] 
Saturday 11th September 2010 quote quote all
Somewhatfoolish said:
Is this thread serious?

Premium Bonds are for morons.
Living up to your user name eh? laugh

Somewhatfoolish

3,670 posts

72 months

[news] 
Saturday 11th September 2010 quote quote all
Mr E Driver said:
Somewhatfoolish said:
Is this thread serious?

Premium Bonds are for morons.
Living up to your user name eh? laugh
They are though smile

They make sense only when your investment objectives are essentially exactly the same as what a premium bond is, but they're bizzarely popular.

The reason is quite obvious, of course. People hate to take a notional loss, but a real loss is of no concern to them smile

mark387mw

1,909 posts

153 months

[news] 
Saturday 11th September 2010 quote quote all
But isn't it sensible to have low risk, medium risk and high risk investements? Surely putting "all your eggs into one basket" is for morons?
Where is the best low risk investment today? No one has answered this yet except to dismiss premium bonds.

Somewhatfoolish

3,670 posts

72 months

[news] 
Saturday 11th September 2010 quote quote all
Well it depends what one means by risk...

Burnham

3,010 posts

145 months

[news] 
Sunday 4th December 2011 quote quote all
Bit of a resurrection here. I sold my house in May and am living in what was my 2nd/bolthole property...not looking to upsize again until middle of next year so decided to plonk a lump of my savings into premium bonds.

Good idea? Looking at this thread, views are split on that. At the interest rate I get with the bank, and tax I have to pay on it, PB's could be a lot more fun at least.

I've gone for the full compliment of £30k, so will keep this updated with how I get on over the next few months!

OP, or anyone else, had any big wins?

RemainAllHoof

56,141 posts

168 months

[news] 
Sunday 4th December 2011 quote quote all
Never won anything more than the minimum in the 10 years I've had between £5k and £15k. It's not a view - it's reality. The current interest rate has "caught up" with the rate of return I was getting with Premium Bonds!

condor

6,638 posts

134 months

[news] 
Sunday 4th December 2011 quote quote all
I had about £15K in PBs and seemed to win every month - bought another £10Ks worth in March this year, and apart from a £25 win in May have won nothing since.
Rather surprised, but expect mine have been cursed.

eliot

5,995 posts

140 months

[news] 
Monday 5th December 2011 quote quote all
Burnham said:
Bit of a resurrection here. I sold my house in May and am living in what was my 2nd/bolthole property...not looking to upsize again until middle of next year so decided to plonk a lump of my savings into premium bonds.

Good idea? Looking at this thread, views are split on that. At the interest rate I get with the bank, and tax I have to pay on it, PB's could be a lot more fun at least.

I've gone for the full compliment of £30k, so will keep this updated with how I get on over the next few months!

OP, or anyone else, had any big wins?
Same situation for me too - need to park some cash for 6 months, looked around and all the accounts pay sod all. So decided on PB's too.
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