£40K sitting in non-interest bearing account

firestone

Jon12345 wrote: »

What to do with it? I think I should be earning some interest, before inflation whittles it away!

Jon

if you are not one for chasing the best rate Octopus cash act as a middle man and offer a 1 year (paying 1.81%) and also 35 day account using 6 challenger banks to source a % rate and i believe they will roll it over to their best rate after a year if wished for less fuss but give you a month to decide

DrEskimo

Paul_DNAP wrote: »

With the prize pot being so skewed, in particular the big jump up between the top prize and the second to top prize, then nobody will trend towards earning the 1.4% return rate. Nearly everybody will be earning below that, averaging about 1% return, who will be subsidising the millionaires who are getting a million percent uplift on a £100 bond.
The only way to get 1.4% would be to own every single premium bond out there by yourself. Even if you let someone else have just one, they could win one of the £million prizes and make a serious dent in your returns (even if they won a £25 it would drop your return below 1.4%, but you'd have to go to a lot of decimal places to see it).

Yup makes sense. And looking at the premium bonds thread, it would appear it's as you say, closer to the 1% rather than 1.4% mean. A positive skew would support that.

Its common for advertisers to use the mean in these situations, as it obviously gives a better rate than the median, despite it not being truly representative...

As they say, a picture paints a thousand words, and this graphic does a nice job demonstrating the difference in means and medians depending on the data distribution....not that anyone asked for it

Jon12345

Just to throw something else into the mix, the fact there are outliers of £1M or whatever may in fact be a red herring when trying to judge a "typical" rate of return.

Let's take an example. Say the probability of a £1M prize was 1 in a trillion trillion. Under these circumstances, the "typical" rate of return would be closer to 1.4%, since the outlier is so unlikely, that the bulk of the data will be weighted towards the more common prize likelihoods.

Yes, I know that is not the probability of the £1M prize. But the principle still holds. How much you decide to reduce the 1.4% down by does depend on the odds for the £1M prize.

Terry_Towelling

DrEskimo wrote: »

Sorry to be pedantic, but it almost certainly is not equally likely...
.

I'm quite happy with pedantry. If you look at what I said, I didn't say it was 'equally likely'; I said, 'equally'. Perhaps I should have been more careful with my choice of words. I meant 'equally' as in 'on the other hand'. And when you say it is 'almost certainly' not equally likely, just how certain is that? 90%, 50%, 99.999%:)

As far as 'probability' and 'chance' are concerned they are not really the same. 'Chance' says, 'here are the available options; they are random but one of them will definitely happen'. Probability attempts to tell you how likely each one of those random options are. There is a 100% chance that I may roll a 6 on die three times in a row, but the probability of that happening is 1 in 216. Semantics? Maybe.

What is the probability you will disagree with me?

Jon12345

I notice that the Post Office are doing online bonds fixed for one year at 1.7%.

https://www.postoffice.co.uk/savings-accounts/online-bonds?campaignid=AG_OB_4000

Does that mean I do not get access to my capital within that year, or does it mean that I do have access, but if I withdraw, I lose the 1.7% interest?

ColdIron

Answers in the link you supplied

• Can I withdraw money? You can't make withdrawals before the bond matures, so you need to be sure you won't need access to your money during the fixed term. However, we may allow you to close your account during the fixed term, at our discretion, in exceptional circumstances.

• If you need to close your Account after the end of the 14 day cancellation period, due to exceptional circumstances, then a Bond breakage fee may be applied. This is detailed in the Terms and Conditions.