Advised to put £10k into premium bonds, am I right to disagree?

grey_gym_sock

yes, fixing for as long as 5 years would be risky when you have a tracker mortgage, even such a good 1. because if base rate rises, you could be stuck paying more interest than you're receiving.

and if the money's locked away, it's not available as an emergency fund.

jimjames

ellies_angel wrote: »

taken out for a loan on an extension. The extension was delayed by around 6 months so she put it in premium bonds. She had a couple of £50 wins and then a big one £25,000.

I'm sure people have won the lottery with only one ticket ever bought. That doesn't mean the lottery is a good investment either.

bigadaj

The drawbacks of premium bonds have been discussed but is there a danger of comparing apples and oranges. PBS offer a government guarantee on capital, a likely low return and they aren't cash or shares so should they be compared with bonds or more specifically gilts? Similar rate of return in many instances, and less likely to get a capital loss on withdrawal?

MrsCautious

grey_gym_sock wrote: »

yes, fixing for as long as 5 years would be risky when you have a tracker mortgage, even such a good 1. because if base rate rises, you could be stuck paying more interest than you're receiving.

and if the money's locked away, it's not available as an emergency fund.

Thank you, this is the thought process I have had to go through. My particular circumstances are that I have other money to use as emergency funds, I have split life assurance money into four different accounts with varying maturity dates and interest rates. I have put some away for 5 years but not a major part.

MrsCautious

atush wrote: »

Yes, I thought of that for my twins, but they ended up at different Uni's a hundred miles from each other. So probably wont now.

I think this will probably be the case with mine as well, buy to let when they go to uni does appeal but like anything worthwhile I stand a serious chance of underestimating the work involved.