Where would you invest 45k?

FIRSTTIMER

I have 45k in premium bonds earning around £50-£100 per month. I will need this money in say about 12ish months for a house deposit.....shall I just leave where it is?


Thanks

atush

Have you considered interest bearing current accts earning 3-5%?

bowlhead99

Based on previous posting history he's already got the TSB classic account paying 5%, which he's going to close to grab a switching bonus somewhere else. Also seems to have had Santander in the past too.

I guess if you are happy getting an expected return of 1.35% on premium bonds, instead of shopping around for the top current accounts that pay 2-5% on limited amounts of cash, the product is fine.

Of course, that 1.35% rate is one which assumes you play it long enough to win all the prizes including the million pounds jackpot - something that would happen every 27.5 billion months for each bond you hold, but with 45000 bonds it would only take 51,000 years.

As you are only proposing to do it for one year and not 51,000 years, your £45k is unlikely to win the jackpot. The odds of one of your bonds coming up in a particular month for any prize at all is 1 in 26000, so with 45000 bonds its probable that you'll win more than one prize but less than two, each month, for 20 prizes a year. 98% of the prizes are £25, so it's likely that all the 20 prizes will just be £25, for £500 total return which is 1.1%.

If you had £20k in a Santander 123 current account it would pay £600 a year gross interest, which is not far off that £500 after tax, and you would still have £25000 to save or invest somewhere else for the year.

So, holding premium bonds is probably a terrible idea unless you've already maxed out all the high-interest current accounts and are a high rate taxpayer who really values the tax-free nature of premium bond winnings over other forms of income.

bigfreddiel

To be absolutely clear your talking about savings and not investments, because over such a short period the risk of investing is too great even in a 'safe' tracker fund or ETF.

So to keep it simple use Santander 123 accounts and two of those should take care of your sum and return between £1300 to £1100 depending on your tax position.

Cheers fj

colsten

bigfreddiel wrote: »

So to keep it simple use Santander 123 accounts and two of those should take care of your sum and return between £1300 to £1100 depending on your tax position.

Santander terms now only allow 1 sole and 1 joint 123 account. So two might not work.

http://www.santander.co.uk/uk/current-accounts/123-current-account
You may only hold a maximum of two 1|2|3 Current Accounts, one in your own name and one in joint names.

BTW, how would you make £1,300 in interest from 2 Santander 123 accounts? Isn't it more like max £1,184 gross, £947 after BR and £710 after HR tax? Minus £24 in all cases unless you have relevant cashback DDs.

OP, other accounts are available, and it is possible to earn interest on up to £50,000 in sole current accounts, as has been discussed numerous times on the forum. Plus, there are all the regular savings accounts which seem ideal for the monthly savings.

Pincher

Well, £45,000 x 3% = £1,350.

If the OP puts the left over £5,000 in Regular Savers, or Tesco current account, it's ~£1,300.

Buy some Euromillions tickets. A premium bond jackpot is not that life changing these days. £100million is more like it.

FIRSTTIMER

cheers for this guys...I am reluctant to open so many current account to be honest - as I want to secure my credit score....plus I have just opened and closed tsb/m&s and my hsbc will stay open as my direct debit account....what about 1 year bonds?

bowlhead99

FIRSTTIMER wrote: »

....what about 1 year bonds?

What about them? If you can afford the inflexibility of locking the money up for a year, and you don't want to get a higher rate via current accounts, and the return after tax is better than you expect to get from the premium bonds, then do a 1 year deposit.

As the rates are not particularly special for that short a fix, I wouldn't do it myself.

Archi_Bald

I have invested in Moli spam buttons.

Eco_Miser

Archi_Bald wrote: »

I have invested in Moli spam buttons.

Seems to have worked, the spam's vanished here.