Premium bond help.

alm721

Just wondered if anyone can help. My mil has decided that rather then buy any of the granchildren birthday /christmas presents she is now going to buy them premium bonds. She has made this decision based on the fact that her (very rich) friends who hold the maximum amount possible have told her that they have won several times.

Now the problem is none of the children are especailly keen and the grandchildren far less so. Her intention is that its 'saving' for their future and they might win a fortune! While admirable I have tried to suggest that its probably not the best way to save and that she'd be better of putting it in a high paying savings account (I know shares may be better but Im trying not to confuse the issue). The grandkids all have savings accounts although it would'nt matter if she opened new ones.
It all came to a bit of a head when they told my daughter she was getting a premium bond (shes 9 and really doesn't understand). She was a bit put out as it seemed a bit like she wasn't getting a present and my hubby got a bit upset with my mil and things all got a bit tense.In the end they did give her some money however they intend to stick to this premium bond idea from now on.
Just wondered if anyone had any advice or thoughts on the matter. Im all for them saving (although Im quite capable of ensuring my kids understand the value of money myself) but I just don't think its a very good way to do it. I also think that its a bit like gambling and Im not really sure that I want my kids to start thinking that its a good way to manage money iykwim.
Is there any was that the kids can cash them in to put in their savings account or would my mil have to be with them since she bought them. Any advice would be great. Not looking forward to upset kids/arguing families on Christmas day.
Thanks

Lokolo

If I were you, let them have the premium bonds then when they are old enough to understand, let them make the decision.

maz_student

To the original poster: Im no expert but in any case this is what I would do if I were you... if possible, tell your mother in law that both you and your husband have given this a lot of thought and have spoken to a finance manager at a local bank and would like her to write a cheque instead (Obviously saying it in a more politcally and politer manner!).

The thing is, unless your MIL has decided to give your kids tens of thousands of pounds, then yes, her logic would make sense. I don't know you, so I dont know the amount she's given... mbut generally speaking, I wouldnt imagine this being the case.

I was reading something online a couple of weeks ago, and basically, the article was saying that its too risky to put money in the Premium Bonds in hopes of winning a huge amount. Youre guaranteed to get interest accumulating in a high-interest bank account. If you put a few hundred pounds in the premium bonds, the chances of you getting a big jackpot are extremely slim, so your money is sitting there doing absolutely nothing at all...:o

Furthermore, apparently, children's bank accounts have high savings. I was browsing some sites a couple of weeks ago.

Am I making any sense? ;-)

alm721

Thanks yes you are making total sense as this is what we have been trying to tell her. Savings rates are especially good for children as they don't pay tax either. (unless they have loads of money). The difficulty is that she doesn't want to write a cheque, she wants to buy premium bonds because thats what her friends do (honestly you couldn't make it up). Whan you try and explain why though I sure she thinks we are just being silly. She justs sees the possibility of winning a big prize and you can't get any furthur then that!

alm721

Lokolo wrote: »

If I were you, let them have the premium bonds then when they are old enough to understand, let them make the decision.

The only problem with that is that my son is a baby and I figure that if I wait until hes say 16 then he will have a couple of thousand pounds by then that will have earn't no interest.
I know I could see it as it better then nothing but as inflation goes up the money will just depreciate in real terms and Im trying to encourage them to save etc and teach them the benefits of putting money in the building society etc so that it earns interest. So this just seems like such a waste

Lokolo

Yeh its pretty lame but what can ya do to keep ya family happy eh!

maz_student

alm721 wrote: »

Thanks yes you are making total sense as this is what we have been trying to tell her. Savings rates are especially good for children as they don't pay tax either. (unless they have loads of money). The difficulty is that she doesn't want to write a cheque, she wants to buy premium bonds because thats what her friends do (honestly you couldn't make it up). Whan you try and explain why though I sure she thinks we are just being silly. She justs sees the possibility of winning a big prize and you can't get any furthur then that!

In that case, then, its best to keep the peace within your family and just accept. It is kind of her to do so in the first place! :A

Also, think of it like this: Remember that at the end of the day, the money belongs to the child, right? So within a few years, he/she will be able to do whatever he/she pleases (more specifically, to take out the money and put it elsewhere into another bank )

maz_student

Hmm... i just read your other post (saying that the amount is about £1000-£2000)...
I can see your point of view now. I thought the amount was much less, say, in the region of £500 or something.
Tricky situation

alm721

Yes I guess it will be a case of just going along with it to keep the peace. It just seems a bit pointless to me when they could be earning interest on the money :rolleyes:. Thanks for the replies.

SouthCoast

I am a great fan of Grandparents buying Premium Bonds. It is easy, has no costs, and any winnings are tax free.

Primrose

Difficult dilemma for you because I can see the financial sense of what you're saying. However, when your children are being given a financial gift of whatever kind, I think it's churlish to have an argument over it. Your mil has a perfect right to dispose of her money how she wishes and at least she will be putting money aside for her grandchildren in the future. All I ever got from one of my grandparents at Christmas was a recycled gift from somebody else - usually with the original donor's gift card still attached, so your children shouldn't be whinging too much. And in the unlikely event that they actually do win a reasonable sum, they certainly won't be whinging at all.