Short term investment for highest yield

nickdidsbury

Hello all - I am about to sell a house and walk away with around £50K and a 4 month gap before I complete on my new house. I have heard that Premium bonds may provide a good return, that I can buy them for a short period and get all my money back - I am aware that I will not accrue any interest. Just wanted to guage opinion basically on how best to invest this money for 4 months

bobbyron

the most you can buy is £30k. you must then wait a full calender month before you are entered in the first draw, so if you bought them tomorrow your first draw would be may ! my wife and i hold the maximum £60k between us in 33 draws we have won £4,550.

dunstonh

premium bonds do not provide any return. If you put £10k in you get 10k. You also have to wait until you entered into the draw so you can knock a month off that as well.

You may get lucky on the draw, you may not. You would almost have to average twice the average payout rate to beat a decent savings account.

Cook_County

dunstonh wrote:

premium bonds do not provide any return. If you put £10k in you get 10k. You also have to wait until you entered into the draw so you can knock a month off that as well.

You may get lucky on the draw, you may not. You would almost have to average twice the average payout rate to beat a decent savings account.

What I think the OP is saying is that he is willing to gamble with the interest lost from "a decent savings account" because it is only a short period.

ManAtHome

Savings account would get you around £950 before tax, PBs anything between £0 and several million tax-free (assuming you win all the million quid prizes - including the extra top prizes either June or July this year).

jamesd

Premium bonds may provide a good return, if you win one of the big prizes or are very lucky with the rest. People can and do go years with 30,000 in premium bonds and no income at all. The expected return is about inflation.

Placing the money in a high interest savings account is your best bet. You will beat inflation and if the money is not in the name of a higher rate tax payer you'll do a bit better.

bobbyron, thanks. Your expected return from savings accounts paying 5% over 33 months is 8615 before tax, 6890 after basic rate tax, 5170 after higher rate so you're at least 620 worse off than if you'd used savings accounts. In reality you could do better than that through the use of regular saver accounts.

cheerfulcat

jamesd wrote:

Expected return from savings accounts paying 5% over that time is 8615 before tax, 6890 after basic rate tax, 5170 after higher rate. In reality you could do better than that through the use of regular saver accounts.

??? Have you added an extra zero to the OP's £50,000 or am I missing something?

jamesd

cheerfulcat, was bobbyron's example, 60,000 over 33 months. Editing my post to make that a bit more clear.

cheerfulcat

Ah, OK. Thanks for that, thought I'd lost the plot!