Had enough of Premium Bonds... where to go next?
Discussion
Hi guys,
So I've some money in Premium Bonds for quite a few years now, but had them maxed out (£50k) since Spring '21 - I've just added up my total and have won about £1,500 which isn't terrible, and I guess you're paying for the dream of winning 6 or 7 figures. However I've just hit my third month of winning absolutely nothing, which seems like a terrible return... enough's enough!
The money is only ever going to be used for when we move next (7-8 years away) or in the possibility we don't move, a loft conversion or something major. My default idea is just to chuck it away into a fixed saving account for 5 years, which'll bring me around £2k a year I believe? Before I lock it away, I just thought I'd ask for other options, if there are any viable ones. Reading through MSE is helpful, but thought I could get some real world experience here
Thanks all.
So I've some money in Premium Bonds for quite a few years now, but had them maxed out (£50k) since Spring '21 - I've just added up my total and have won about £1,500 which isn't terrible, and I guess you're paying for the dream of winning 6 or 7 figures. However I've just hit my third month of winning absolutely nothing, which seems like a terrible return... enough's enough!
The money is only ever going to be used for when we move next (7-8 years away) or in the possibility we don't move, a loft conversion or something major. My default idea is just to chuck it away into a fixed saving account for 5 years, which'll bring me around £2k a year I believe? Before I lock it away, I just thought I'd ask for other options, if there are any viable ones. Reading through MSE is helpful, but thought I could get some real world experience here
Thanks all.
My PB ROI has fallen off a cliff in the last 12 months.
Utter rubbish.
Cutting a lot of £25 of prizes has made the need to hold for a lifetime to get nearer the average rates more important.
You can get a bunch in ISA in the next 50 days so I’d go looking at ISAs… (assuming you’ve not used up allowances already)
Utter rubbish.
Cutting a lot of £25 of prizes has made the need to hold for a lifetime to get nearer the average rates more important.
You can get a bunch in ISA in the next 50 days so I’d go looking at ISAs… (assuming you’ve not used up allowances already)
If it genuinely was 8 years I'd probably consider equities, one of the life-strategy funds from Vanguard quite straight forward way of managing risk tolerance. Otherwise you're guaranteed to lose to inflation I'd have thought over 5 years in cash at 4% or so.
Depending on what you do with your isa allowance, and your income tax rate there may be a way of not needing to use it here by spreading the cash between you and your wifes name if basic rate payers.
https://www.gov.uk/apply-tax-free-interest-on-savi...
Depending on what you do with your isa allowance, and your income tax rate there may be a way of not needing to use it here by spreading the cash between you and your wifes name if basic rate payers.
https://www.gov.uk/apply-tax-free-interest-on-savi...
I'm with you on the feeling about the PB time may have passed, If you are already covered with a good emergency money fund should something happen to family income ....I would also be tempted by a stead equity related fund to try and keep inflation at bay . The one in millions/ billions odds of big wins is not a sensible reality and a monthly euro millions ticket covers that unlikely odds itch at lower investment
Personally, as my holding ( its not quite max , but getting there ) was always a real emergency fund as because of my work type in past I was in a very volatile industry ( but lucky ) and even now I have early retired I still have this nagging feeling o wanting a big slush fund so premium bonds it was .
Having in the last year and a bit "beaten the average" in winnings , I am going to assume average means I'm due to loose now and bail from them now. Put half of it on deposit ( NS&I direct saver) as I want it to be near instant access , and rest into my general investment account ( I keep annual ISA max )
Emergency money pots can get out of hand
Personally, as my holding ( its not quite max , but getting there ) was always a real emergency fund as because of my work type in past I was in a very volatile industry ( but lucky ) and even now I have early retired I still have this nagging feeling o wanting a big slush fund so premium bonds it was .
Having in the last year and a bit "beaten the average" in winnings , I am going to assume average means I'm due to loose now and bail from them now. Put half of it on deposit ( NS&I direct saver) as I want it to be near instant access , and rest into my general investment account ( I keep annual ISA max )
Emergency money pots can get out of hand
Edited by PM3 on Thursday 2nd March 10:19
Thanks all.
To be honest right now I don't have a great emergency fund, but, I do have good credit and 0% credit cards are always coming my way... so not too bothered about that.
Now I've always had an ISA open, albeit with only a very small amount in there currently. I've never had a fixed ISA though, didn't know that was a thing. So is that the best way to go with those? I'd rather play with a well known name, and it seems Virgin do 3.95% on a 1 year. So I could put £20k now (almost) and £20k in next month. Is the key here that you're not paying interest, as to why it beats a non ISA fixed rate deal? Then what to do with the final £10k.
Finally, Vanguard. I've heard of these accounts, mainly on reading here before I think! I'll certainly read more into it, but is there a recommended way to go between shares/bonds percentage? Anything else I need to know about these?
To be honest right now I don't have a great emergency fund, but, I do have good credit and 0% credit cards are always coming my way... so not too bothered about that.
Now I've always had an ISA open, albeit with only a very small amount in there currently. I've never had a fixed ISA though, didn't know that was a thing. So is that the best way to go with those? I'd rather play with a well known name, and it seems Virgin do 3.95% on a 1 year. So I could put £20k now (almost) and £20k in next month. Is the key here that you're not paying interest, as to why it beats a non ISA fixed rate deal? Then what to do with the final £10k.
Finally, Vanguard. I've heard of these accounts, mainly on reading here before I think! I'll certainly read more into it, but is there a recommended way to go between shares/bonds percentage? Anything else I need to know about these?
steveo3002 said:
premium bonds should average out at 3.3% tax free ,
That's the mean average, including the big winners. If you hold £10K and win the million, that's a 9,900% return. the 3.3% average includes that 9.9K% return. Take away the big winners, and you're left with most people getting way less than 3.3%.
Edited by TwigtheWonderkid on Thursday 2nd March 19:47
TwigtheWonderkid said:
That's the mean average, including the big winners. If you hold £10K and win the million, that's a 990,000% return. the 3.3% average includes that 990K% return.
Take away the big winners, and you're left with most people getting way less than 3.3%.
That really puts things into perspective! Especially when nobody seems to know anyone who has won the million Take away the big winners, and you're left with most people getting way less than 3.3%.
Spidersleg said:
TwigtheWonderkid said:
That's the mean average, including the big winners. If you hold £10K and win the million, that's a 990,000% return. the 3.3% average includes that 990K% return.
Take away the big winners, and you're left with most people getting way less than 3.3%.
That really puts things into perspective! Especially when nobody seems to know anyone who has won the million Take away the big winners, and you're left with most people getting way less than 3.3%.
It’s a statistical nightmare understanding what you’ll likely get.
Someone should make a modeller where you put in your holding and press a draw button, and it gives you example winnings.
You could then hammer away and see what you’re likely to actually get.
In a years time I expect fast access cash ISAs will be yielding 4.5-5%
PBs need to start offering more £25 prizes, not less… no one plays for the middle ground so much imo… it’s either a good tax free ROI or the really big wins.
HustleRussell said:
Surely premium bonds is what you do if you want no risk and you're already maxing out your personal savings allowance.
Yes.I only use it as it is the last tax free thing available to me after ISA/pension etc. And its near instant, so works well as emergency fund which I'd always hold in cash anyway.
CrippsCorner said:
The money is only ever going to be used for when we move next (7-8 years away) or in the possibility we don't move, a loft conversion or something major. My default idea is just to chuck it away into a fixed saving account for 5 years, which'll bring me around £2k a year I believe? Before I lock it away, I just thought I'd ask for other options, if there are any viable ones. Reading through MSE is helpful, but thought I could get some real world experience here
I regard PBs as effectively cash, with a small possibility of winning a small prize. https://www.moneysavingexpert.com/savings/premium-...It's a game of chance, but then amusingly, so is every other 'investment'. The difference is that other investments give you a chance of 'winning' more than 3%. A lot more.
I wouldn't have more than 10% of my portfolio in cash/PBs, usually 5%. Cash is just instant tax-free liquidity to invest for gains somewhere else. What you won't be used to, I suspect, is the 'may go down as well as up' bit. The Simpo Millions have taken a biff on the nose from Covid in 2020 and Ukraine in 2022, but things bounce back. As the Lottery fans say, 'you have to be in it to win it'. Except they're happy to lose their entire stake, time after time.
It always comes back to the risk/reward ratio, and where you feel comfortable on it.
If you have a job/regular salary then I'd suggest you can afford to take higher risk, as you can replace losses.
Mr Whippy said:
And they’ve been cutting the £25 prizes.
It’s a statistical nightmare understanding what you’ll likely get.
Someone should make a modeller where you put in your holding and press a draw button, and it gives you example winnings.
You could then hammer away and see what you’re likely to actually get.
In a years time I expect fast access cash ISAs will be yielding 4.5-5%
PBs need to start offering more £25 prizes, not less… no one plays for the middle ground so much imo… it’s either a good tax free ROI or the really big wins.
Yes, they've cut the number of £25 prizes, but they've increased all the other prizes by the same amount.It’s a statistical nightmare understanding what you’ll likely get.
Someone should make a modeller where you put in your holding and press a draw button, and it gives you example winnings.
You could then hammer away and see what you’re likely to actually get.
In a years time I expect fast access cash ISAs will be yielding 4.5-5%
PBs need to start offering more £25 prizes, not less… no one plays for the middle ground so much imo… it’s either a good tax free ROI or the really big wins.
You still have the exact same chance of winning, only now you have more chance of winning more.
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king thumbsnap logo 
the total of prizes is the same.https://www.moneysavingexpert.com/news/2023/02/nsi...
If you can get 4% interest somewhere then you can fully utilise your £1000 personal savings allowance with a sum of £25k. Anything over and above £25k needs to be in tax free savings- ISAs or PBs.
That is unless you are a higher rate tax payer, in which case your allowance is lower.
That's my strategy anyway, ensure I'm using up my allowance with steady interest based savings and then try and put the rest somewhere I won't pay tax on the proceeds.
That is unless you are a higher rate tax payer, in which case your allowance is lower.
That's my strategy anyway, ensure I'm using up my allowance with steady interest based savings and then try and put the rest somewhere I won't pay tax on the proceeds.
HustleRussell said:
Surely premium bonds is what you do if you want no risk and you're already maxing out your personal savings allowance.
It's a myth to say there's no risk. The risk is the interest on the money. It's just a gamble and your interest is your stake money. On £10K, that's about £400 (less tax if you have no savings allowance left).TwigtheWonderkid said:
HustleRussell said:
Surely premium bonds is what you do if you want no risk and you're already maxing out your personal savings allowance.
It's a myth to say there's no risk. The risk is the interest on the money. It's just a gamble and your interest is your stake money. On £10K, that's about £400 (less tax if you have no savings allowance left).Risk is the difference between the projected performance and the actual performance of the same investment.
deja.vu said:
TwigtheWonderkid said:
HustleRussell said:
Surely premium bonds is what you do if you want no risk and you're already maxing out your personal savings allowance.
It's a myth to say there's no risk. The risk is the interest on the money. It's just a gamble and your interest is your stake money. On £10K, that's about £400 (less tax if you have no savings allowance left).Risk is the difference between the projected performance and the actual performance of the same investment.
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