Thought I was doing the right thing with my money

JohnRo

saver861 wrote: »

Not sure the PB's are that negative!...

...Not banking on a big win as such but an occasional £500 among the smaller prizes would make that year a good return year.

Has it ever happened to you?

It obviously does happen to some people but I had what was the maximum £20K in PBs for several years when the minimum prize was I think £50 and the sum total of all my prizes any larger than that minimum was perhaps one, of £100.

I also had the phenomenon where I was receiving prizes regularly each month at the start and they slowly dried up to almost nothing, which is what prompted my switch at the time to interest bearing accounts.

I know it's anecdotal and random but I have heard others mention the same thing.

As for the OP and doing the right thing, my biggest regret financially is that I didn't switch on to and engage with investment and saving 25 years ago.

ColdIron

DaveTheMus wrote: »

I think the Government will match a certain amount, so if you invest £3000 into a SIPP then the Government will stick in £600

The government won't match anything, what they will do is rebate basic rate tax on contributions, you can reclaim higher rate tax if applicable. A £3,000 SIPP contribution will have been £3,750 before BR tax so the pension provider will reclaim £750 from HMRC. However since the OP is retired the maximum annual contribution would be £2,880 (£3,600) so may be of limited use

saver861

JohnRo wrote: »

Has it ever happened to you?

Yes - from memory I have had certainly one or two £500 prize.

JohnRo wrote: »

It obviously does happen to some people but I had what was the maximum £20K in PBs for several years when the minimum prize was I think £50 and the sum total of all my prizes any larger than that minimum was perhaps one, of £100.

I also had the phenomenon where I was receiving prizes regularly each month at the start and they slowly dried up to almost nothing, which is what prompted my switch at the time to interest bearing accounts.

Our returns were better before they changed it to the smaller £25 prizes. I think the 'average luck' percentage dropped from 1.5 to 1.3%.

Of course you have to calculate the returns over a defined 12 month period to get a true picture. It does depend on each individuals requirements though - whether they are relying on an income from the investment, tax payers particularly higher rate, access to capital etc etc.

I think anybody investing for the 'big win' are probably misguided. Sure, if that happens that is a mega mega bonus. In practical terms, to get some return without any risk given the poor rates of other options, it is worth consideration.

Of course if someone is particularly unlucky and get no return then they would feel hard done by. However, if they are that unlucky they might equally invest in an alternative that loses some or all of their capital!!

xylophone

What about your state pension?
Are you receiving NI credits?

https://www.gov.uk/new-state-pension/overview

https://www.gov.uk/national-insurance-credits/eligibility

JohnRo

saver861 wrote: »

However, if they are that unlucky they might equally invest in an alternative that loses some or all of their capital!!

That's less down to luck and far more to do with ignorance and/or catastrophic risk taking and panic selling. A sensible, balanced, diversified portfolio, even with all the interpretations of what that should look like, would be expected to provide an inflation beating return in all market conditions over a suitable timescale.

saver861

JohnRo wrote: »

That's less down to luck and far more to do with ignorance and/or catastrophic risk taking and panic selling. A sensible, balanced, diversified portfolio, even with all the interpretations of what that should look like, would be expected to provide an inflation beating return in all market conditions over a suitable timescale.

Yeah - and thats what happens most of the time - but definitely not all the time.

Indeed I recall buying £4,000 of Railtrack shares on floatation. Something like a year later the holding had doubled and was worth £8000. I sold at that price. Something like just over a year later the same holding would have been worth £20,000. Sold too early I thought!!!!

However, something like another year later they went into administration and the same holding would have been worthless!!! ... Phew I thought, glad I sold!!!

JohnRo

Lucky escape then but you're talking about taking a punt, roulette style. That's potentially catastrophic risk taking where that sum represents the whole of your capital.

I'm talking about a broad collective investment portfolio across several asset classes and regions. If that ever became worthless we'd all have bigger things to worry about than investment returns.

jimjames

JohnRo wrote: »

Lucky escape then but you're talking about taking a punt, roulette style. That's potentially catastrophic risk taking where that sum represents the whole of your capital.

I'm talking about a broad collective investment portfolio across several asset classes and regions. If that ever became worthless we'd all have bigger things to worry about than investment returns.

That's exactly it. There seems to be an assumption in some quarters that investing is gambling but if you structure it right as you've suggested it's nothing of the sort.

I would certainly look to gave a large proportion of that premium bind money in a balanced portfolio, to keep as cash for what could be 40 years of retirement just seems destined to lose value over that time.

kidmugsy

You've got about £39k which has to see you through until your State Retirement Pension begins. In your shoes I'd go for high-interest current accounts as your main place to store it: while they exist, exploit them. It might also be worth putting £2880 p.a. into a personal pension of some sort; it might prove a particularly deft choice if a future government continues the policy of the present coalition, of increasing the personal tax allowance far faster than inflation. Once you are 55 the money in a personal pension is pretty much available with the same flexibility as an ISA. So you probably want to make your pension contributions late in each tax year, so that you surrender as little flexibility as possible until you are 55.

saver861

JohnRo wrote: »

I'm talking about a broad collective investment portfolio across several asset classes and regions. If that ever became worthless we'd all have bigger things to worry about than investment returns.

Probably getting a little bit away from the OP's question. However, you are referring to a general concept - at some point the investor has to select the specific strands/funds etc to put the hard cash into. The performance of these specifics then defines the wisdom of the investments.

As stated earlier though, it still depends on the individual requirements as to the investment area. The OP at 50+ and retired on ill health may have somewhat different requirements to say a 25 yr old starting out on his/her career.

Growth v accessibility v risk v income ... etc etc

At the moment, I don't see a better option than the high paying current accounts that allows me to store the money there at 3%+ and, if and when, a better option comes along I can just move it at the push of a button.