Should I buy premium bonds? (No, seriously)

Oliver1191

I like the idea of premium bonds as a store of wealth...that said, when it comes to buying property, every penny counts. Depending on where you live in the country, your inheritance could be a small (e.g. london) or big house deposit. If you might be waiting up to 3 years, if you can grow your money by more than 1.4% per year after tax, i would.

verybigchris

If you do go ahead and buy Premium Bonds, make sure you use your Tesco debit card. A £50,000 transaction will give you 6,250 Clubcard points, worth £187.50 if you boost them.

MDMD

verybigchris wrote: »

If you do go ahead and buy Premium Bonds, make sure you use your Tesco debit card. A £50,000 transaction will give you 6,250 Clubcard points, worth £187.50 if you boost them.

That won’t work - I’ve tried it before. Per the Tesco website:

Other transactions where points can’t be collected:

If you use your debit card to pay for bills at banks or other financial institutions

https://www.tescobank.com/current-accounts/rewards/

kar999

I've worked out my annualised return ("interest rate equivalent") on my prizes and for 2017 it was 1.19% and for 2018 so far it is 1.53%.

Nothing stellar but I'm happy with that.

Terry_Towelling

Careful with your calculations for the expected return on £50K in PBs. The interest rate used by NS&I to calculate the total prize fund is 1.4% (I think).

With the maximum holding you might expect to average out at 2 prizes per month in the longer term. Of the 2.9 million or so prizes each month, 2.8 million are for £25. This means that any prizes you do get will most likely (96% probability) be £25. This effectively means your most likely annual return (in the long run) will be about 1.25% tax free (equivalent to about 1.56% in a taxable environment). You could get a little more but you could get less.

I do of course acknowledge the fact that there are other prizes in the draw and you could receive one or more of these or even the top prize but you could also get nothing some months.

verybigchris

MDMD wrote: »

That won’t work - I’ve tried it before.

That's odd, because it works for me. Only thing I used my Tesco debit card for was Premium Bonds:

Terry_Towelling

verybigchris wrote: »

That's odd, because it works for me. Only thing I used my Tesco debit card for was Premium Bonds:

It is odd because the exclusions also say you won't get points for gambling transactions. I wonder what the SIC/MCC is for a PB purchase by card, because if it is attracting Clubcard points it must be appearing as something other than 'cash', 'quasi-cash' or 'gaming'.

Masomnia

Thanks all.

Point taken regarding the higher rates in 1 year fixes, but I really don't want to fix in case I need the cash to buy somewhere. It's not imminent but if something came on the market that I was interested in I would go for it. It's not just the tax aspect it's also the easy access in case I do need the money at short notice.

I've had a help to buy ISA for a while and that's being topped up. LISA I will decide by April, I'm not sure about it and I'm wondering if something will come out of the Budget in a few weeks time about them. I know there have been calls for them to be phased out.

From reading the MSE guide, if you have the top amount invested in PBs then chances are you will make the headline rate, so I'm comfortable enough with that. I'll have a think.

davemorton

To the OP, this is what I have just done after selling my house and waiting for my new purchase to go through.
About the Tesco points, I wish I know this before (although I dont have a Tesco current account). So.....could you not buy/cash in/buy /cash in once a week, hence making a good few hundred worth of points a month? Now that could be good!!

Masomnia

So I've bought £50k's worth. If the prizes were taxable then I wouldn't bother, but since they're not I should (probably) be better off as the income would be taxable in a normal savings account.

I'll let you know what I do with the £1,000,000.