Premium Bonds v Savings Accounts

LHW99

I think I would rather put my £450+ per year into PB's rather than the lottery - at least I know the money will be there even if I don't win much (and I wouldn't expect to win much from the lottery either, and that money just pays profit for Camelot).

Reckless_Saving

I did PB for 18 months, see if I could get better than the ultra low rates from the banks. Strangely I was winning 5 times more often from my 10k pots than from my 5k pots. Over the period my return was 1.35%, too low for me so decide to go high risk and switch to stock market with a feeling of getting a brexit vote bargains Been very lucky that it's doing well, investment up 25% in 5 months, with 5%+ dividends per yr expected.

Eco_Miser

LHW99 wrote: »

(and I wouldn't expect to win much from the lottery either, and that money just pays profit for Camelot).

Don't forget all the good causes that the lottery supports.

Keep_pedalling

Tuesday_Tenor wrote: »

For some things you have to think long term: I definitely include PBs in that category.

For long term you would be far better off in equities, in the shape of well diversified funds.

Tuesday_Tenor

Keep_pedalling wrote: »

For long term you would be far better off in equities, in the shape of well diversified funds.

That's a hope, or possibly an expectation, maybe even a probability. It's not a fact, though. There's no guarantee, more than that, there is a risk to the capital.

Such complacency irritates me.

The story of my family has shown that you can lose everything you own as the wheels of history turn. Therefore I am very risk averse.

I actually do have a minuscule % of my savings in a long-term S&S ISA. Only the amount I would be prepared to lose. That would be through gnashed teeth but without a major impact on my life. That's enough exposure to high risk in the hope of higher gain, for me.

My Major Emergency Fund can't be risked and needs to be accessible.
So, no, it wouldn't be 'better' in equities.

My support for renewable energy is idealogical (and common sense) rather than profit-motivated. I am distressed by, and ashamed of, the long-term nuclear toxic waste legacy that my generation will leave behind.
It just happens to be providing returns on a par with some other investments. Which is better than not doing so.:)

Tuesday_Tenor

bigadaj wrote: »

Wind turbine returns are primarily politically determined, so long as it's expedient to subsidise uneconomic 'green' forms of energy then all may well be fine. At least until maintenance costs start adding up as parts start to fail.

I'm all in favour of renewables NOT relying on subsidises.
AS LONG AS
- our nuclear industry isn't subsidised (as it is in so many ways, with key costs such as waste management farmed off so they aren't included)
- our coal supplies aren't subsidised by the low production costs in places like Colombia where so little is spent on health and safety issues, and great swathes of the jungle have been left devastated by the open cast mines and large populations of indigenous people forced to move off their traditional homeland. I know - I've been to the Cerrejon mine!! It was 25 years ago, and it's even worse now.

bigadaj wrote: »

until maintenance costs start adding up as parts start to fail.

That particular issue is, of course, factored into the business plan for the lifetime of the project. We've just done the once-in-project-lifetime replacement of the gearbox, with reserves built up for just that purpose.
Also factored in is building up the funds to replace the turbine at the end of its life. Returns to Members (currently 5%) are only made AFTER the reserve requirements have been satisfied.
What, in our case, was unexpected was the number of totally random problems experienced at/near the beginning of the project - yes, there was a contingency fund, but nobody anticipated a lightening strike of the cabin (not the turbine itself), AND an armed siege at the factory when new cabin was to be delivered, AND ....AND .... Honestly, you couldn't make it up!! But all that's many years ago, we survived, and things are going fine now.

bigadaj

It's fine to 'invest' in renewables, but it's not a sustainable project without subsidy.

Your opinion of subsidy will vary, you seem to have taken some odd examples.

Open pit coal that is uk sourced is a cheap fuel source, nothing to do with any the third world exploitation of indigenous tribes, but it's deemed to be not green. Of course no one considers the source of the materials within the 'green' options, where do the metals and other materials come from, these certainly don't come form Europe and do probably come from exploitative operations in Africa, Asia or South America.

Your returns are explicitly supported by political subsidies, this is money diverted from other sources, it's nothing to do with the energy that is produced or its market value. Interestingly what is the design life or useful operational life of the turbine you are using?

Still if you are happy with the situation that's fine, I just find it unpalatable that money is being diverted to assuage middle class guilt about nasty things happening and is a bribe to risk averse, generally elderly voters, who feel hard done by with low interest rates and aren't prepared to risk money in capital markets to allow companies they invest in to produce soemthing of use.

Still we are all different.

Risk of course isn't an on/ off thing, why are you happy to invest in a single renewable project with political risk and not in say a large diversified fund with holdings across the world in thousands of companies? Seems strange to me.

Keep_pedalling

Tuesday_Tenor wrote: »

That's a hope, or possibly an expectation, maybe even a probability. It's not a fact, though. There's no guarantee, more than that, there is a risk to the capital.

Such complacency irritates me.

The story of my family has shown that you can lose everything you own as the wheels of history turn. Therefore I am very risk averse.

I actually do have a minuscule % of my savings in a long-term S&S ISA. Only the amount I would be prepared to lose. That would be through gnashed teeth but without a major impact on my life. That's enough exposure to high risk in the hope of higher gain, for me.

My Major Emergency Fund can't be risked and needs to be accessible.
So, no, it wouldn't be 'better' in equities.

My support for renewable energy is idealogical (and common sense) rather than profit-motivated. I am distressed by, and ashamed of, the long-term nuclear toxic waste legacy that my generation will leave behind.
It just happens to be providing returns on a par with some other investments. Which is better than not doing so.:)

Complacency has nothing to do with it, which is why I said well balanced funds which contain sufficient diversity to ride out the financial downturns when they inevitably come along. I used to hold most of my saving in cash ISAs until interest rates went south in 2008 and I switched them to S&S ISAs.

In real terms your £30k in premium bonds is worth no more than it was in when you first purchased them, £30k invested in medium risk equities should now be woth double that.

polymaff

Keep_pedalling wrote: »

In real terms your £30k in premium bonds is worth no more than it was in when you first purchased them, £30k invested in medium risk equities should now be woth double that.

Not your finest paragraph, KP.

Apodemus

Two things I find interesting from Tuesday Tenor's posts:

Firstly the renewables investment, on the face of it, sounds like it might have better long-term prospects than the ones I have looked at. The local ones that I would have been able to subscribe to have been offering returns around 10% per annum for 25 years, but with no promise of being able to get your capital back, either at the end of life or at any point during the 25 years.

Secondly, I find the "family history" aspects of risk tolerance interesting and each family will be different in this regard. I had one set of relatives who lived entirely off share dividends after the farm was sold around the time of the First World War and the daughters continued to live off the dividend income for the following 70 years. In contrast, the other side of the family invested in a tenement property, living in the ground-floor flat themselves and renting the rest of the building (this was quite a common retirement strategy at the time). The introduction of the rent control act in 1915 led to a steady decline in both the income and the capital value and little was left by the time of the Second World War.

Needless to say, I have shares, but not been tempted into the BTL market!