Premium bonds for kids

bigadaj · 14 February 2016 at 6:14PM

Dallybally wrote: »

Not that I've got too much time on my hands or anything, but.... According to the MSE calculator £50k of bonds over 5 years has 9633/1 chance of winning the million. If you divide that by 3 as I could have 3 lots of 50K, that's 1 in 3000 chance of winning a million. If you take it up to 10 years (using my dodgy calculations as the MSE calc only goes to 5) I make it 1 in just over 1000. Not great granted, but better than the lottery.

Not only that, there are other big prizes, I make it roughly 1 in 300 chance of £100k, 1 in 130 of £50K, 1 in 20 of £10k. Factoring in the fact I'm virtually guaranteed to earn more than in a savings account (again according to MSE calc) as I'm a higher rate taxpayer and I like the idea.

Doesn't sound too logical to me. It is advantageous to an extent if you are a higher rate taxpayer, but the odds are pretty low, your losing out to inflation, and over five years and certainly ten, then investments are far more likely to give you a better return.

Not even sure your calculation about being better than a savings account, once you strip out the bigger prizes which you're unlikely to win then returns for most people are barely above 1%. Ignoring the current account tricks you can get 1.4% on instant access and seeing as you're looking at holding for 5-10 years then rates of 2.5% plus would be comparable.

Dallybally · 14 February 2016 at 6:24PM

I'm basing it on the calculator on this website, it says I've only a 1% chance of being worse off than a savings account. I've already maxed Santander, the others are like 5k here and there, wouldn't touch a big sum. Granted if interest rates rise then I'll be worse off, but right now I like the idea. Plus there's no comensation limit to worry about in ns and i. I actually put 50k in premium bonds a few months ago in the wife's name, she's running at the equivalent of 4% so far.