Savings

steven74

Hi All

I have £20,000 to save/invest i have topped up my and my wifes ISA's for this year in april so cannot put more there.HSBC (who i bank with)are offering 8% gross on The Regular saver,so my question is do i put in savings or shall i put it in premium bonds or do half and half.Cannot pay any off mortgage as on fixed rate but can overpay slightly.

Thanks in advance

Steve

Lokolo

Premium Bonds aim to give 3.8% gross... so upto you.

LongTermLurker

How about NS&I index linked savings certificates? Locked up for 3 or 5 years, interest is guaranteed to beat RPI (don't know the rate) and is tax free.

Milarky

Usually advise people not to hold premium bonds at all - or only £100 minimum.

However. There is a case for holding bonds for a short-time (eg 6 months) in order to maximise the chance of a return. The theory would be that prize winning is subject to maximum variance at the beginning and gradually approaches the long term average. Now that 'average' is rather poor - and is in any case a kind of metaphyiscal average (outside most people's actual experience) due to the low probabilty/high weight of the big prizes.

In other words. If you haven't won with 'more than average luck' in (say) six months - eg you haven't won anything - then you cut your losses and go back to earning (taxable) interest on deposit. On the other hand, it is 'equally likely' that you have won (if not 'big' then 'above average') during the six months - and you should now expect your 'luck' to diminish as time passes and the law of averages starts to catch up. Either you are nursing a small loss or a tidy profit (compared to savings) but it is then time to exit (leaving £100) from PBs and apply your money to more certain things.