Should I buy premium bonds? (No, seriously)

Masomnia

Oops, sorry I meant get the headline rate were it taxable, ie I could put the money in the top savings account at 1.4% or PBs at 1.4% and chances are the PBs would work out better.

polymaff

Masomnia wrote: »

Oops, sorry I meant get the headline rate were it taxable, ie I could put the money in the top savings account at 1.4% or PBs at 1.4% and chances are the PBs would work out better.

Pretty rough and ready. Use the 90% rule

For tax payers, this means that for a basic rate savings tax payer 1.575% is the notional break-even point. For a higher rate savings tax payer it is 2.1%.

louloubelle79

Just bought my first ever premium bonds; grand total of £100 worth 😂let’s hope I get lucky 🍀

Masomnia

louloubelle79 wrote: »

Just bought my first ever premium bonds; grand total of £100 worth 😂let’s hope I get lucky 🍀

Well it would take you a few years to make £25 in interest on £100, so as long as you're realistic about your odds of winning that in PBs. But then you might just win a million........ that's how they get you!

polymaff

Just don't hold your breath.

louloubelle79

Yeah I’m realistic; will add monthly but that’s the max can afford a month. Let’s hope I get lucky ��

polymaff

As long as you realise that with Premium Bonds the typical returns are not proportional to the size of your holding.

Depends if you are playing with your head or your heart, I guess

Terry_Towelling

louloubelle79 wrote: »

Yeah I’m realistic; will add monthly but that’s the max can afford a month. Let’s hope I get lucky ��

My maths has deserted me for the moment but I think the probability of winning a prize with a £100 holding is once in every 250 draws - or once every 20 years. With £1000 held expect a prize every 2 years, £2000 held, expect a prize every year.

Chance is another a matter and you could win a million in your first draw. Remember though, the 1.4% value is the interest rate NS&I uses to calculate the size of its prize fund - it isn't what you should be expecting to get back. Consider also, 2.8 million of the 2.9 million prizes are just £25.

You might be better off trying to use a 5% regular saver for a year and then put the proceeds of that into PBs - or better still, do another regular saver.

I wish you the best of luck whatever you do!

louloubelle79

Many thanks Terry Towelling, I have a 5% monthly saver with Santander-good idea about investing gains.
Maybe I'm trying to be too eager to improve my financial situation with too little in too many pots, I'm not sure. With my poor income each month as a nurse of £800 month (26hr week) I don't have a lot spare cash but wanting to make the most of what I have for my kids. Not sure if PBS right path but will keep on trying and reading this website for tips :money:

LHW99

Masomnia wrote: »

Well it would take you a few years to make £25 in interest on £100, so as long as you're realistic about your odds of winning that in PBs. But then you might just win a million........ that's how they get you!

Stll better than the lottery IMO, at least your capital isn't at risk!