Premium Bonds as Income?

Sailtheworld

I recently won £25. The fun we had!

polymaff

Twointhebush wrote: »

My wife likes the idea of Premium Bonds, and we know several people who keep getting regular monthly cheques from NS&I. One person even won £500 a few months ago. My wife thinks Premium Bonds would be a good way of paying for monthly treats and fun? Is she right?

If "fun" means a "flutter", then why not? As this is MSE, not MFE, though, the savers' stance is that Premium Bonds typically return 90% of NS&I's published rate, which currently is 90% of 1.4%. That's where the 1.26% comes from.

The second issue is tax. You can easily beat 1.26% if you don't have to pay any income tax on the interest received. If you will pay tax on the interest received then Premium Bonds are more attractive.

The third issue is the less obvious one that the return you get will be greater, the more bonds you have. This isn't because there are tiered rates of interest. If other savings accounts only paid out in rounded-down multiples of £25, they'd exhibit this same effect.

Thrugelmir

Use my PB's as instant access account. More so as current account deposit rates are heading down and down. Another base rate cut and I think that the banks will use it to remove the incentive entirely.

strawb_shortcake

We've chosen to put a portion of our savings into PB's going up to the max, we may need it in 3 years times and looking at fixed bonds the interest rates were pretty poor so it doesn't feel much of a risk. We do have other savings which we're just deciding between Coventry and Co-operative.
Any winnings we get will either go into the other savings account or go towards something fun but I wouldn't be expectant on this being a regular boost to our income.
If we choose not pay the mortgage off in 3 years times then we'll reassess how best to use this money.

Rickster1978

My premium bond journey has been a disaster. £47k invested this year and won £50 in total lol. Last 4 months have been zero return.

I’m going to give it until the end of the year but think I’ll be moving it somewhere else.

Richmc

I've got the maximum holding of bonds off and on and seem to have above average luck with a return of just over 2.0% so I'm happy. I use the account to pay for home improvements etc. and top it up like a savings account, because there's always the chance of a bigger win, it's like playing the lottery for free. I also have just moved my other savings from a TSB account that is dropping to 0.2% soon to a Goldman Sachs Marcus account that pays 1.5% for the time being, it's easy to access on line. So £50 a month goes to each, PB prizes automatically reinvested and any excess income (fit payments etc.) going equally to both. Works well for me!

capital0ne

Buy a lottery ticket for fun, buy PB's only if you can't get a better return of 1.25% tax free.

Murphybear

I moved my £6000 savings into Premium Bonds earlier this year. First draw they were entered was April

Prizes

April - June £0
July 2 x £25
August 2 x £25

Just checked Septembers
1 x £25

So far the return is good. I get the prizes reinvested and it’s a bit of fun checking my prize app every month

AnotherJoe

annabanana82 wrote: »

We've chosen to put a portion of our savings into PB's going up to the max, we may need it in 3 years times and looking at fixed bonds the interest rates were pretty poor so it doesn't feel much of a risk.
.

You could have got close to 2x the PB rate with a 3 year account

AnotherJoe

Murphybear wrote: »

I
So far the return is good. I get the prizes reinvested and it’s a bit of fun checking my prize app every month

It has been, but that does mean that because your luck has been good there will literally have been dozens of people who won nothing at all. That's how it works.

They aren't posting here though thus giving a false impression the prizes are rolling in for people who buy.