Premium Bonds Question

Mikeyorks

In order to legitimately keep Gordon Brown away from some of my money - I put £30k each into PBs for my OH and myself during last tax year.

In the last 6 months - my £30k has returned exactly 10%pa (£1500). My wife's £30k has returned 3.33%pa (£500). None of the prizes won exceed £100.

The Bonds were all purchased in the same transaction and are near consecutive numbers - in 5000 blocks.

Proving? That you pays your money and takes your chance?

I had intended to cash them all in during April and put the money into something 'more sensible'. But their performance to date, tax free, has earned them a stay of execution.

ReportInvestor

oxters wrote:

Does anyone know a comparison between savings of say K20 @ 6% against likely (average) return from Ernie for the same sum?

It's 6% v 3.15% for a non-taxpayer e.g. a child = £1,200 v £630
4.8% v 3.15% for a basic rate taxpayer = £960 v £630
3.6% v 3.15% for a higher rate taxpayer = £720 v £630

That's the mean average.

The median average will be lower (on Ernie) because of the effect of the top prizes.

This is hypothetical, right, oxters? You don't know anywhere giving 6% on a lump sum, do you? You haven't had a sneak preview of the Landsbanki Wednesday announcement, have you :j ?

Perhaps we should buy premium bonds as presents for 40 year olds, rather than 0 year olds?

£100 in a building society account at the moment for a child pays up to 5% gross and also comes with a bigger chance of a £50-£100 windfall than Ernie offers.

nsandiexpert

£100 at 5% isn't that much money, tax free or not. With PB's its the risk you take.

At the end of the day its a free gamble. You may or may not win and your money is 100% secure. Its tax free and you are entered into a monthly draw to possibly win a million pounds.
People win £50-£100 prizes more coz there are more of them.

In the last 6 months - my £30k has returned exactly 10%pa (£1500).

That is fab!

ReportInvestor

Don't get me wrong. PBs are fine in my book.

Different strokes for different folks. Some like the potential "red letter day" element.

At 5% interest on £100 over 18 years the account would add £140, so a child with £100 of premium bonds probably needs to win 2 or 3 £50 prizes (depending when they occur) to be ahead of the game.

ReportInvestor wrote:

What more is there to say?

I'll shut up now .

Enjoy your prizes, everyone!

nsandiexpert

Which probably isn't going to happen. Well it might but with £100 its doubtful.

Different strokes for different folks.

Deffo!
They're good if you're not bothered about interest. Over 18 years you could invest and get £140 at the end....or have 216 entries into a draw and maybe win a prize. Its the risk you take

Cypher

The gamble is if you don't win, your money has actually decreasing in value, so technically its not 100% secure.

You may put £100 in and get a £100 out years later but it won't buy you what it once would have done.

nsandiexpert

PB's are 100% secure and it states in the Terms and Conditions that it is not guaranteed you will win. Anybody buying bonds should know that they may not win and they are taking a risk.

it won't buy you what it once would have done.

Thats true but again, its if you choose to gamble. If not then they're not for you

skiddy2k

All you loose is your intrest from your savings account where you would have put the money if you didnt buy bonds. I'v lost £20 so far but no pain, no gain... am still going to sit on it

oxters

ReportInvestor wrote:

This is hypothetical, right, oxters? You don't know anywhere giving 6% on a lump sum, do you? You haven't had a sneak preview of the Landsbanki Wednesday announcement, have you .

Sorry RI - didn't mean to excite anyone, but yes I do have an insider at Landsbank. I was thinking ahead with possible base rate rise later this year. (My friends at the Monetary Policy Committee give me advance notice, you see) You can get pretty close to 6% though with some of the loyalty accounts or bonds with the BS's and you increase your chances of a decent windfall of they go plc (although fixed sum mergers are more fashionable just now)

With my luck, I'll go for the bonds, just when Nationwide announce de-mutualisation. Or will it be one of the others.....?