Premium bonds for daughter

Tasha86

Hi iv recently opend an account for my daughter with £50 bonds, I just wanted something we could forget about and possibly win money which iv chose to be reinvested to bonds, and obviously a little something for her when she’s abit older, I’m now doubting myself as to if I should of just opened a savings account?? But then I think of it like her also being in a lottery draw for a substantial amount! What’s your views on premium bonds??

Tasha86

I will be adding funds only if and when possible also

Wildsound

How old is your daughter and is she involved in this (from an educational point of view)?

For the latter point, I find that premium bonds might perhaps bring about the wrong behaviours (i.e. gambling) as opposed to savvy saving or learning about the benefits of long term investing.

Tasha86

She’s 13 and No she’s doesn’t know, this was just a secret thing I wanted to put aside and forget about to be honest, that is a good point you mention about the gambling factor!!

eskbanker

If you experiment with the MSE PB prize calculator linked at the foot of each page, you'll see that the expected winnings for small bond holdings are practically negligible - £250 worth of bonds would be expected to win nothing over five years with average luck, for example.

So, no harm in doing this if you're treating it as a lottery (but with your stake retained), but if it's with a view to accumulating some sort of return then better to look at savings, or even investments (depending on timescales) - is your daughter young enough to benefit from a Junior ISA?

xylophone

At age 13 she should have a CTF?

https://en.wikipedia.org/wiki/Child_Trust_Fund

https://www.gov.uk/child-trust-funds

It may have been switched into a JISA.

If not, it could be.

Best cash rate currently available from Coventry BS.

Below may be worth a look.

https://www.skintedmintedmum.co.uk/minted-blog/how-to-transfer-a-child-trust-fund-ctf-to-jisa-with-a-double-scoop-of-tax-allowance.html

Tasha86

Thanks guys great info and brilliant point regarding ctf! I am going to look into this