premium bonds

Paul_Herring

Found one post..

http://boards.fool.co.uk/Message.asp?mid=9029593

[In relation to holding 30,000 in PB's and 30,000 on 5.45% deposit to buy lottery tickets with the interest...] If you're a basic-rate taxpayer, the likelihood is that both will be beaten by the 31,260 pounds you would expect to end up with after earning a year's interest at 5.25% on 30k and having tax deducted; if you're a higher-rate taxpayer, the extra 315 pounds of tax you have to pay brings the return down to 30,945 pounds, which is probably fairly close to the amount you would get from the PBs with average luck and more than the amount you would get from putting the interest through the Lottery, again with average luck.

Seems there's little difference between the two, and both are crap compared to just saving the money.

cheerfulcat

But it's more complicated than that, including the fact that luck comes into it; as Gengulphus says in that post,

"Depends what you're after...

If it's maximising your (tiny) chances of winning a life-altering sum, the deposit account and Lottery is a good move.

If it's maximising the amount of money you're likely to have after a year, just use the deposit account - or if you're a higher-rate taxpayer and fancy a bit of a gamble, the PBs are about as good. "

The subject is discussed in this post/thread as well -

http://boards.fool.co.uk/Message.asp?mid=8720935

And here -

http://boards.fool.co.uk/Message.asp?mid=8966220&sort=whole#8977217

HTH

Cheerfulcat

joesan

heres what i think..

investment of 30k

in Pbs 30k you would average 1 prize a month.
= (presuming min prize) 50*12 =600

in bank with 5% interest rate
= 1500 interest
if you invested all of it into lottery you would win on average (1in 56 chance)
270 pounds (presuming min prize.)

jus a basic calculation obviously other factors.

deemy2004

1500 at 40% tax is £900 net so P. Bonds are a good choice for higher rate tax payers for surplus savings beyond the tax freebie accounts.

I personally would not touch the lottery with a barge poll