Different Viewpoint on Premium Bonds

dcweather

Whilst I fully understand most of MSE is targeted at the less well off and maximising their resources there will also be quite a number like myself who have only a modest pension income but quite high savings due to maybe a redundancy payment or a pension lump sum or perhaps inheritance. We often however choose to try and protect this so we can cover future care or healthcare or look out for our kids, grandchildren etc.
So, I have almost £40k invested in Premium Bonds, This means I actually have been getting the 1.4% p.a because I have enough for even luck over a year. Now I have only had one £100 and a few £50 wins but I do have a small chance of winning bigger amounts because obviously some do. With current other instant access accounts no more than 1.8% at best I think that loss of maybe £150 per year is well worth the gamble on a bigger win.

eskbanker

I'm not sure that's actually a different viewpoint on them as such - in general those who hold them consider them worth the gamble whereas those who don't hold them (while possessing savings) obviously prefer alternatives....

P.S. Where do you see instant access accounts at 1.8%?! (for £40K)

Alexland

I have never considered MSE to be generally for the 'less well off' and see people from all situations participating.

Given the prize pot is 1.4% total including the big winners then you have been above average lucky to be getting a rate of small prizes at that level and so shouldn't plan for that to continue.

Alex

dcweather

It does but the big winning amounts are a very small amount of the total pot.

poppy10_2

Alexland wrote: »

Given the prize pot is 1.4% total including the big winners then you have been above average lucky to be getting a rate of small prizes at that level and so shouldn't plan for that to continue.

On average, someone with £40,000 invested is more likely that not to win £500 or more a year, a 1.25% rate of return. That's not bad in today's market.

londoninvestor

If you pay 40% tax and have exceeded your £500 PSA - or indeed if you're a 45% rate taxpayer and don't have a PSA! - then they still come off pretty well compared to instant-access alternatives, and even to 90-120 day notice accounts.

Alexland

poppy10 wrote: »

On average, someone with £40,000 invested is more likely that not to win £500 or more a year, a 1.25% rate of return. That's not bad in today's market.

Yes not bad but still less than inflation and there are likey better options depending on the OPs circumstances.

justjohn

i am in same boat. bank interest rates are naff. We keep most of our savings in premium bonds.


Hopefully one day we will get a decent sized win. Only had a few hundred pound per year in wins.

stephenadarglas

You have to be in it to win it as they say

jimjames

poppy10 wrote: »

On average, someone with £40,000 invested is more likely that not to win £500 or more a year, a 1.25% rate of return. That's not bad in today's market.

"Not bad" doesn't seem very good when you can get 1.5% guaranteed

jimjames

londoninvestor wrote: »

If you pay 40% tax and have exceeded your £500 PSA - or indeed if you're a 45% rate taxpayer and don't have a PSA! - then they still come off pretty well compared to instant-access alternatives, and even to 90-120 day notice accounts.

If you have that much cash then I'd certainly be looking at investments for a portion of it