In shock I just recieved £23,500.00 In Premuim Bonds

inshock1092

for my 21 st Birthday!!! My Parents and Grandparents had been saving the bonds for me over the years! I can't stop thinking about the money. I am only 21 should I leave the money In Premium Bonds for 7 years do you think it could reach 30k by then? I might add £3000 soon .

What else could I do with the money I had an exam yesterday and kept thinking about it. I just wanted to lock up the certificate and ask my parents to change the password on the account so I can't access it. I want to spend it ? Help Thanks.

[Deleted User]

Hi,

leave it where it is and enjoy any winnings, if you have £3000 soon, then that's enough readies.

Why are you thinking 7 years?

Have a look here, see what you might win.

inshock1092

Thanks. I don't need the money yet so was looking to keep it locked away for a while.

pqrdef

You can expect to get about £300 a year tax-free in small prizes, though they'll come in fits and starts. That's at present rates, which might not last much longer.

HappyMJ

Premium bonds in my opinion aren't very good.

The odds of winning £25 in any one month is 1 in 24,000....so you should if lucky win just under £300 over a year.

Personally I'd cash them in and invest them elsewhere where you will definitely earn/win £500 a year and if you are a gambler put the excess monthly interest into something which has a much better chance of winning....with £200 extra interest a year you could buy 4 lottery tickets each week and have a 1 in 10,000 chance of hitting the jackpot over the 7 years (13,983,816 odds of winning a 6 from 49 lottery/(200 chances * 7 years)) as opposed to 1 in 23,000 of winning a million with P.bonds (45 billion/(12 chances times £23,500))....or of course you could just keep the extra interest and not gamble at all.

Over 7 years you should get £2,100 with P.bonds.

Compounding the interest in a savings account should get you over £3,500...if you manage it well by starting by maxing your ISA allowance now and each year moving an amount from your savings accounts to your ISA to max your ISA allowance each year.

Weird_Nev

That is a house deposit sorted and your life in the future madfe a huge amount easier through the planning and dedication (and self sacrifice) of your parents and grandparents.
All I can say is DO NOT squander it on a car or something of that nature.

You seem to be well adjusted though, so good luck with your ongoing investment!

FatherAbraham

inshock1092 wrote: »

I can't stop thinking about the money.

Start looking at how much a flat or small house will cost you when you need one (whether you buy or rent). Thinking about your future likely expenses will help to put this lump sum into perspective, and to realize what financial demands you'll have to face as you become independent.

If you really want to go into shock, start thinking about how much income you'd need when you stop working, in just forty years' time.

inshock1092 wrote: »

I am only 21 should I leave the money In Premium Bonds for 7 years do you think it could reach 30k by then? I might add £3000 soon .

What else could I do with the money I had an exam yesterday and kept thinking about it. I just wanted to lock up the certificate and ask my parents to change the password on the account so I can't access it. I want to spend it ? Help Thanks.

Premium bonds, a terrible investment for most people, especially the young. Little inflation protection, and random returns (technically, "high risk" investments).

Consider splitting your capital between cash deposits and equity funds. For example, think about putting 75% into high-interest savings accounts, and 25% into a low-cost index-tracking equity fund. Get as much as possible of the cash deposit sheltered from tax in an ISA. Use an ISA shelter for some of the equity part too, unless the extra charges make it uneconomic for the relatively small sums involved (stocks-and-shares ISAs have few benefits for small-scale investors who pay only basic-rate income tax).

The reason for this split is to give a balance between longer-term inflation protection (the equities part) and your likely capital-consumption needs in the near future.

Remember, it can be dangerous to listen to financial advice from the older generation, because they experienced different economic conditions, and are rarely up-tp-date with modern products or legislation. However, some of what they say will be useful.

Warmest regards,
FA

anotheruser

Max out your ISA for this year, put the rest in a Santander 123 account for the 3% interest rate.
Then start looking at house prices and thinking about where you may want to live.

nrsql

Ask your parents what they think or would like you to do with it?

As you can add £3k soon it presumably means you are maxing ISAs? If not I would probably look at about transferring some to an ISA and leaving some in premium bonds.

duchy

If you think you'd be tempted to spend it then either keep it in the bonds or lock it into an account that needs notice to withdraw so you can't withdraw impulsively . It might be worth "treating" yourself to something special (couple of thousand max) if that would stop you lusting after a massive spend

padington

Buy a flat, ideally in London now or when the governments new help to buy scheme in jan 2014 comes out. Move fast though, get everything prepared.

In the meantime if you want to invest read the investment thread.

Either way think of it as a seed, don't eat the seed, you need to grow it first. Look after that seed very carefully, might be the only one you ever get to grow a bean stalk and have the biggest adventure of your life.