Premium bonds

Secret_Wookie

I hold £100 of premium bonds purley for fun.

Its not a major part of my range of savings and investments and frankly I
don't care that i haven't yet one a prize. It is purely there to provide me with the slight opportunity of winning a big prize. I will leave the money in their for the rest of my life.

Yes the odds are small but you have to be in it to win it. If you can afford £100 to put in their and like the idea of giving yourself a chance then go for it.

If you want to anyalise the logic behind it then it will always say not to bother. I wouldn't personnaly put all my money in to Premium bonds but as part of balanced range of savings and investments it is an interesting alternative.

Gorgeous_George

My feeling is that Premium Bonds are gambling.

Gambling is for mugs and has no place on a Money Saving website.

I have held £500 worth of PBs for almost 2 years. Haven't won a penny.

I estimate that this gambling has cost me over £50 (I could have had the money offset against my mortgage).



GG

dunstonh

That is incorrect.

Premium bonds are better than the lottery.

How? Both options are only any good if you win.

If you then bought £41 of lottery tickets, you would expect to get £20.50 back on average, as the lottery pays back 50% of ticket price as prizes.

This would leave you with on average
£1020.70

Premium bonds pay 3.15% as prizes, so you would expect to have on average
£1031.50 at the end of the year

Which just highlights that you are better off with a savings account or proper investment.

you'd be much better off with a slot machine on the internet, paying 90%+, rather than a game paying only 50%

or some online poker game maybe?

There is a place for premium bonds as part of an investment portfolio, and for higher rate taxpayers the expected returns are hard to beat.

Im a higher rate taxpayer and wouldnt go near them. I prefer to get 12-15% a year average return after tax then an average return of around 3.15% with no tax.

A regular savings account of 10% (or 6% net for HRT) is still better after tax unless you get double the average on premium bonds.

whambamboo

dunstonh wrote:

How? Both options are only any good if you win.




Which just highlights that you are better off with a savings account or proper investment.



or some online poker game maybe?



Im a higher rate taxpayer and wouldnt go near them. I prefer to get 12-15% a year average return after tax then an average return of around 3.15% with no tax.

I wouldn't touch them either, but it's unfair to compare them with the tax on the stupid that is the lottery, and you can't get 12-15% average return without risking your initial capital.

They really aren't as bad as all that.

nigelF

Aren't you guys taking this a bit too seriously....

The bottom line is that you/I/we wouldn't recommend premium bonds to anyone if they wanted a fixed return from their savings. You would invest in other well-documented savings plans giving you 4.9-5.25% - some guaranteed, some subject to change.

If you fancy taking a gamble and investing your hard-earned cash into premium bonds with a chance of getting 3.15% return, or even more if you happen to be one of the lucky ones that reaps a bigger prize, then surely it's up to the individual.

I agree this isn't the place to glorify gambling under the banner of a savings plan, but premium bonds puts a bit of fun into saving without the risk of losing your capital outlay.

Lighten up and live a little...

exel1966

Gorgeous_George wrote:

My feeling is that Premium Bonds are gambling.

Gambling is for mugs and has no place on a Money Saving website.

I have held £500 worth of PBs for almost 2 years. Haven't won a penny.

I estimate that this gambling has cost me over £50 (I could have had the money offset against my mortgage).



GG

Having said youself that you are a mug for holding PB's and they shouldn't be referred to on MSE , just why do you keep them and then mention them ?

exel1966

nigelF wrote:

Aren't you guys taking this a bit too seriously....

The bottom line is that you/I/we wouldn't recommend premium bonds to anyone if they wanted a fixed return from their savings. You would invest in other well-documented savings plans giving you 4.9-5.25% - some guaranteed, some subject to change.

If you fancy taking a gamble and investing your hard-earned cash into premium bonds with a chance of getting 3.15% return, or even more if you happen to be one of the lucky ones that reaps a bigger prize, then surely it's up to the individual.

I agree this isn't the place to glorify gambling under the banner of a savings plan, but premium bonds puts a bit of fun into saving without the risk of losing your capital outlay.

Lighten up and live a little...

Everytime someone mentions PB's on MSE you will get a host of people knocking them whether it has anything to do with the OP's question or not.

ReportInvestor

I think it would be a good idea to chill and live & let live.

I wouldn't touch PBs with a barge-pole and I've never bought a lottery ticket - that's my temperament and approach to money.

But there are worse ways for a higher rate taxpayer to invest their money & I don't campaign for the lottery to be closed down (even if it is New Labour's biggest counter-redistribution measure ever).

On average, PBs aren't the best "investment" for a basic rate taxpayer. But for a few basic rate taxpayers they could be the the best "investment" they ever made.

What more is there to say?

Horses for courses and why not have a bit of fun if you fancy?

Chrismaths

Premium bonds always remind me of the episode of Absolute Power when they manage to sell ID cards by having an ID card lottery! Lending your money to the Government at such pitiful rates of "interest" in the vague hope of winning big is a result of financial illiteracy.

ReportInvestor

Chrismaths wrote:

Premium bonds always remind me of the episode of Absolute Power when they manage to sell ID cards by having an ID card lottery! Lending your money to the Government at such pitiful rates of "interest" in the vague hope of winning big is a result of financial illiteracy.

Are you in investment manager, general philanthropist or control freak mode :rolleyes:?

It's nothing like as financially illiterate as buying War Bonds or Liberty Bonds from governments during past wars.

At least you can exit from PBs with your original stake intact once reality sets in & you realise your possible mistake.

Why not cut people a bit of slack?

And the rates aren't that pitiful when you compare them to the average savings account, rather than the best on offer on MSE.

shazkhan111 wrote:

Is the Sun's article correct??

Not if you employ the "whole truth" standard of correcteness. But when did that ever trouble the Sun ?

shazkhan111 wrote:

If it is we should all have £100 worth ....you never know!

No. It's not for me. I prefer to go for more proven ways of growing my capital, so that there is more certainty that I can retire earlier.