Is it worth investing in Premium Bonds?

geek84

Hi Folks

With interest rates quite low, I was thinking of putting money away in Premium Bonds - there is always a small chance that I could win some big money!

But seriously, do you think it is worth investing in Premium Bonds? Surely, with the fact that interest rates are low, most people would be thinking of investing money elsewhere e.g. Premium Bonds, making the chances of a windfall less ands less for individuals?

What are your thoughts?

Thanks in advance for your response.

Lokolo

PBs have an average return of approx. 1.5%. So they aren't worth it with plenty of better options out there.

But I guess if you are feeling lucky....

geek84

Hi Lokolo

Thanks for your reply.

What do you mean by there are plenty of options out there?

globetraveller

My parents( both in their 70s) took their savings out the bank a couple of years ago, as the returns were dismal. Mum was just moaning to me the other that they had had no wins that month- phoned back the next day to say they just had a £25 win. They get £50 almost every month. Only got one £100 win. However, at this moment in time, the wins average out far higher than leaving the money in the bank.
(They won't invest money anymore as they lost thousands on Black Monday in 19870

Lokolo

geek84 wrote: »

Hi Lokolo

Thanks for your reply.

What do you mean by there are plenty of options out there?

ISAs, regular savers, NS&I etc. all give better returns than PBs.

staffie1

globetraveller wrote: »

My parents( both in their 70s) took their savings out the bank a couple of years ago, as the returns were dismal. Mum was just moaning to me the other that they had had no wins that month- phoned back the next day to say they just had a £25 win. They get £50 almost every month. Only got one £100 win. However, at this moment in time, the wins average out far higher than leaving the money in the bank.
(They won't invest money anymore as they lost thousands on Black Monday in 19870

How much did they invest in PB's?

dunstonh

What do you mean by there are plenty of options out there?

Investments.

Using interest on a product to pay for an entry into a prize raffle is not investing. Your capital is losing money in real terms and the average rate of return (if you get average wins) is just 1.5% which is also below inflation.

They won't invest money anymore as they lost thousands on Black Monday in 1987

How did they manage that? You only lost money in that if you were 100% equity and pulled out before the recovery (which only took 18 months). Even if you take a much bigger crash like the one that occurred two years ago, people are back in surplus and balanced portfolios are beating cash. The 1987 crash was pretty typical in what you expect in a crash.

CLAPTON

geek84 wrote: »

Hi Folks

With interest rates quite low, I was thinking of putting money away in Premium Bonds - there is always a small chance that I could win some big money!

But seriously, do you think it is worth investing in Premium Bonds? Surely, with the fact that interest rates are low, most people would be thinking of investing money elsewhere e.g. Premium Bonds, making the chances of a windfall less ands less for individuals?

What are your thoughts?

Thanks in advance for your response.

You are simply gambling

Your stake is the interest you are sacrificing.

You may wish to consider putting the money in a saving a/c and using the interest to 'invest' in the national lottery

Annisele

There's a fairly detailed analysis of premium bonds on the main site.

tl;dr version: unless you're a higher rate taxpayer who's used up your cash ISA allowance, they're not worth it.

On average you'd do better putting your money into a savings account, and using half the interest to buy lottery tickets. But (on average) you'd do even better than that if you just put your money into a savings account and left it there.

Cash-Cow_3

Play the reverse lottery instead. This is how it works.

Pick 6 numbers for the lottery. If your numbers don't come up, you've won a pound. If they do come up you've just 'lost' £3m.

I'm about £700 up at the moment.

Cash-Cow_3

globetraveller wrote: »

(They won't invest money anymore as they lost thousands on Black Monday in 19870

Did they sell all their holdings on Tuesday?