what to invest in?

delriogw

my gran (bless her soul) has given me 500 pounds to buy premium bonds, but i'm wondering if there's a better way to invest this money.

any suggestions?

Aegis

Stick it in a savings account instead?

Or add it to something you've already got

munk

Like Aegis says you'll have better returns investing in a good high interest savings account like icici's hisave(?) (they have a new guarantee to beat the bank's base rate by at least 0.3% until 2009 iirc, currently it's at 6.41%).

However of course if you haven't used up your ISA allowance for this year then definitely use that first. To beat the best ISA rates (like NS&I at 6.3%) by investing in savings accounts only you'd have to be getting well up over 7% pa, so they're definitely worth investing in before anything else.

There's an article on this site that details how premium bonds really aren't worthwhile:

http://www.moneysavingexpert.com/savings/premium-bonds

An interesting statistic I found (actually in an article written by Martin Lewis in this month's Moneywise magazine) was that your chances of winning the premium bond jackpot of £1 million with a single bond is 18 billion to 1! And that's compared to just(!) 16 million to 1 with the national lottery.

Generally though the 'interest' you gain from premium bonds (ie your winnings) aren't even enough to keep up with inflation, so your money is effectively decreasing in value over time in PBs. You're much better off investing it in a decent high interest savings account (preferably ISA).