Premium Bonds - Not a bean for months now!!!!

Premium Bonds - Not a bean for months now!!!!

Author
Discussion

onomatopoeia

3,466 posts

181 months

Wednesday 8th September 2010
quotequote 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

148 months

Wednesday 8th September 2010
quotequote 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

10,261 posts

216 months

Wednesday 8th September 2010
quotequote 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

3,466 posts

181 months

Wednesday 8th September 2010
quotequote 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

8,674 posts

212 months

Wednesday 8th September 2010
quotequote 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

981 posts

151 months

Wednesday 8th September 2010
quotequote 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

3,879 posts

150 months

Saturday 11th September 2010
quotequote all
Is this thread serious?

Premium Bonds are for morons.

Mr E Driver

8,542 posts

148 months

Saturday 11th September 2010
quotequote all
Somewhatfoolish said:
Is this thread serious?

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

Somewhatfoolish

3,879 posts

150 months

Saturday 11th September 2010
quotequote 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

2,138 posts

231 months

Saturday 11th September 2010
quotequote 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

3,879 posts

150 months

Saturday 11th September 2010
quotequote all
Well it depends what one means by risk...

Burnham

3,636 posts

223 months

Sunday 4th December 2011
quotequote 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

71,543 posts

246 months

Sunday 4th December 2011
quotequote 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

8,674 posts

212 months

Sunday 4th December 2011
quotequote 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

9,396 posts

218 months

Monday 5th December 2011
quotequote 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.

mark387mw

2,138 posts

231 months

Monday 5th December 2011
quotequote all
eliot said:
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.
Same here, was going to buy another 10k last month and my bank said they'll call with some good alternative savings accounts. They haven't called so looks like I'll increase my PB holding and hopefully get some returns.

nomisesor

981 posts

151 months

Monday 5th December 2011
quotequote all
Monthly prizes:

Higher value (6% of prize fund)

£1 million 1 prize
£100,000 4 prizes
£50,000 10
£25,000 17
£10,000 43
£5,000 87
Medium value (5% of prize fund)
£1,000 1,064
£500 3,192
Lower value (89% of prize fund)
£100 31,259
£50 31,259
£25 1,706,155

Total value for June 2011
£53.2 million 1,773,091

If you've £10000 you should win on average £25 six times a year.

Larger (£5k or £10k wins) should come once in 230 years - the American Revolution was ~ 230 years ago.
You should win the big one once in 29000 years - agriculture was discovered about 10000 years ago.

Of course you could win in the next draw - someone does, but it probably won't be you!

Burnham

3,636 posts

223 months

Monday 5th December 2011
quotequote all
RemainAllHoof said:
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!
So no better off really than moving it all into a decent savings account right?...but you still have the PB's so that says something! I guess its like me with the National Lottery...its just nice to know you have the chance of winning.



condor said:
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.
That's not the first time I've heard this...for what's a 'random' process of selecting winners, there's an awful lot of people who seem to win in the first few months of getting them, then it trails off.



Eliot & Mark387mw - You both sound like your in the same boat as me then. I'm only looking at this as a short term thing (though I may gift £30k to my other half and get her involved also, so we double our chances). If the right property comes up next year I'll be cashing them all back in and its going, along with the proceeds of my apartment, into a deposit for a family home. Do let us know if you have any luck each month anyway!



nomisesor said:
Lots of sensible figures, and a small history lesson
That does put it into perspective! I guess the chance of winning is something at least. OK, I could get a guaranteed return in a savings account, but after I've paid tax on whatever small amount it would be anyway, I'd rather just have the opportunity to win big (not sure I can afford to wait 230 years though). I think the tax free side of its the nice bit.


RemainAllHoof

71,543 posts

246 months

Monday 5th December 2011
quotequote all
Burnham said:
RemainAllHoof said:
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!
So no better off really than moving it all into a decent savings account right?...but you still have the PB's so that says something! I guess its like me with the National Lottery...its just nice to know you have the chance of winning.
Well, just £5k now. But am considering pulling it and putting it into football. Yes, I am serious!

Burnham

3,636 posts

223 months

Monday 5th December 2011
quotequote all
RemainAllHoof said:
Burnham said:
RemainAllHoof said:
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!
So no better off really than moving it all into a decent savings account right?...but you still have the PB's so that says something! I guess its like me with the National Lottery...its just nice to know you have the chance of winning.
Well, just £5k now. But am considering pulling it and putting it into football. Yes, I am serious!
Theres a subject I know nothing about...good luck!