premium bonds

lara_croft_2

Am i better buying them than putting my money in a savings account?

opinions4u

lara_croft wrote: »

Am i better buying them than putting my money in a savings account?

It depends if you win or not. And how much you win.

PB prize pot is 1.3% tax free. That number may help guide your decision.

dunstonh

Am i better buying them than putting my money in a savings account?

Would you put the money in a savings account and then draw the monthly interest to buy lottery tickets? If yes, then premium bonds are for you. If not, then they are not.

ColdIron

A savings account unless you get very lucky which you probably won't

ChesterDog

If you do the lottery, why not put just a little into premium bonds instead? In effect it costs you nothing to enter draws indefintely. They are not a good investment per se, but at least your money is safe, your capital preserved and you have the very small chance of a big win.

Minrich

Depends on what other savings/investments you have , if you have others then why not put a bit in pb's ? The money is safe and every month a chance to win big at no cost to you .

dunstonh

The money is safe

Not quite. It is safe from failure. However, it is subject to inflation risk

and every month a chance to win big at no cost to you .

It does come at a cost. The lack of interest is the cost. The odds are lower than the savings interest rate.

ukflippy

This is how I view it:

- the more you have in PBs, the more likely you are to achieve the baseline rate. You need £1923 in a premium bond account to give you an evens chance of winning a single £25 prize in a year (1.3% of 1923 = 25).

- It's tax-free, so if you're a higher rate taxpayer, it's more likely to work out well for you. (1.3% tax-free = 1.625% at 20% tax = 2.16% @ 40% tax)

- It's more interesting than plain savings.

- I've had 3.8% from Premium Bonds in the last year, but that means absolutely nothing - it just illustrates the random nature of them.

Caveat - I've just done these sums myself, and I'm incredibly rusty; I'm happy to be corrected

FatherAbraham

lara_croft wrote: »

Am i better buying them than putting my money in a savings account?

There's no free lunch in Premium Bonds.

Warmest regards,
FA

CLAPTON

ukflippy wrote: »

This is how I view it:

- the more you have in PBs, the more likely you are to achieve the baseline rate. You need £1923 in a premium bond account to give you an evens chance of winning a single £25 prize in a year (1.3% of 1923 = 25).

- It's tax-free, so if you're a higher rate taxpayer, it's more likely to work out well for you. (1.3% tax-free = 1.625% at 20% tax = 2.16% @ 40% tax)

- It's more interesting than plain savings.

- I've had 3.8% from Premium Bonds in the last year, but that means absolutely nothing - it just illustrates the random nature of them.

Caveat - I've just done these sums myself, and I'm incredibly rusty; I'm happy to be corrected

there is the certainty that some people with 30,000 will win nothing in a year

ukflippy

CLAPTON wrote: »

there is the certainty that some people with 30,000 will win nothing in a year

The odds of that are the same as the odds of someone with 30k in winning £200,000 in a year.

I guess the question is .. do you feel lucky?