Premium Bonds - are they a good investment?

ericthekidstoner

must admit i agree with cheerfulcat, even tho I have a small number of PBs myself

if you have 30k then you really should consult a pro or at least evaluate other options beyond just PBs e.g. a porsche?

meanmachine_2

kristian wrote:

go for PBs, Ive got 30k and win somthing every month. you will win far more in prizes than intrest in any back account!

That's poor advice, sorry.

As cheerfulcat and others explain, if you're investing over 24K, then you should look at it as a variable account offering between 0% and 3%.

If you've got less to invest (and are not a top rate taxpayer), forget it. You'll only be supporting those with the maximum holding.

It's also a fun way to start the month - albeit with the inevitable let down when you fail, yet again, to win anything meaningful.

Currently I'm getting a return of around 3.5%. Not brilliant, but not disastrous.

You also lose two months' interest, so winnings over 10 months need to be calculated as a full years' return.

chesky369

I really think all new possible investors should be discouraged - which would leave more in the kitty for me!

Seriously, I do think you should only buy premium bonds if you've already got money in a savings account, maximum ISAs, pension etc. etc. then, if you've got something left over, go ahead and buy but it's very hit and miss. My first month I won £500 + 2 x £50 and thought 'wow, this is it'. But I'm afraid it wasn't. I also agree that the shift from £20k to £30k had a very noticeable affect on wins.

Paul_Herring

meanmachine wrote:

You also lose two months' interest, so winnings over 10 months need to be calculated as a full years' return.

Not entirely accurate - you lose the first and last month over the duration of a holding; if you only hold for a year, your statement is true, but if you hold for (say) 2 years, winnings over 22 months need to be calculated as 2 years return (equivilant to 11 months on a year.)

Gordon_the_Moron

chesky369 wrote:

I really think all new possible investors should be discouraged - which would leave more in the kitty for me!

Not true, they pay a percentage of total bonds held, the more held the more prizes there are.

miaxmia

meanmachine wrote:

That's poor advice, sorry.

As cheerfulcat and others explain, if you're investing over 24K, then you should look at it as a variable account offering between 0% and 3%.

If you've got less to invest (and are not a top rate taxpayer), forget it. You'll only be supporting those with the maximum holding.

It's also a fun way to start the month - albeit with the inevitable let down when you fail, yet again, to win anything meaningful.

Currently I'm getting a return of around 3.5%. Not brilliant, but not disastrous.

You also lose two months' interest, so winnings over 10 months need to be calculated as a full years' return.

Interesting reply - I think I would be very unlucky with 30K holding to earn 0% interest and there is a possibility of earning a lot more interest - somebody does! The first paragraph here implies poor return and then the third paragraph implies if you hold over 24K then you are likely to get a return. Thank you - your reply is helpful. In earning 3.5% yourself, do you have the maximum holding and, bearing in mind I have ISAs and a regular saver account paying 7% interest (limited as to how much you can invest), can you point me in the direction of somewhere else that I can earn more than the 3.5% (other than stocks and shares).

miaxmia

Gordon_the_Moron wrote:

Premium bonds are a form of gambling, people might tell you otherwise that you can always get your money back so it isn't gambling like a lottery. IT IS, you are gambling the interest, it is no different to putting it in a savings account and buying lottery tickets with the interest.

BUT you wouldn't do anything in life - I don't smoke (People might just as well set fire to a tenner, although I guess they get more pleasure from smoking) and I am not much of a drinker. By purchasing 30K worth of premium bonds, I would lose around 1K in a normal building society account, but chances are I will win something and it could be £500 or it could be £5000 pounds - people waste a lot more money on cigarettes and beer or whatever. I think "gambling" is a bit strong - it's not like going to the bookies and spending all your wages as soon as you get it!!

Lillys_mum

I have £10 in bonds which was bought for me when I was born and in the almost 31 years I have had them I have not won a penny!!! Maybe one day.
Even though I have not won anything on these if I had some spare cash I would buy some more.

miaxmia

Lillys_mum wrote:

I have £10 in bonds which was bought for me when I was born and in the almost 31 years I have had them I have not won a penny!!! Maybe one day.
Even though I have not won anything on these if I had some spare cash I would buy some more.

My husband was given £2 worth when he was a boy (he still has them) - he didn't win anything for about 25 years, but then won £50. We worked out at the time (and that was probably about 10 years ago) that if the £2 had been invested in a building society and the interest just left to accumulate over the years, it wouldn't have been worth anything near to £50 BUT it is a long time to wait for a return and they haven't paid out since.

ericthekidstoner

if you've got bonds bought ages ago for less than £50 (the new minimum unit as far as I know) then you've effectively got a cheap(er) lottery ticket!

and what happens if you wanna sell... do u get £50 for it? good deal if you do