Premium bonds worth cashing in and putting in bank?

elise33

Hi

I recieved £1000 in premium bonds as a gift when my daughter was born.

After reading the information on this site about them and the return they offer I am wondering if it is worth cashing them in a paying them into her bank account.

The bank account is a HSBC child trust savings account opened with the £250 voucher they give you.

Would I get a better return for her putting the money in this or is there a better way to invest it.

Any advice much appreciated.

regards.

Elise

trademark

You would probably get a better return in the long term but as they were gifted as bonds would the person giving the gift mind.

just think ... you could be denying your daughter 1 million £'s ..... id let her grow up with them and make her own choice.

elise33

Hi trademark

Wise words it has made me think and you're probably right to leave them as bonds.

regards.

Elise

Ian_W

On the other hand ...

If your daughter doesn't become a millionaire and is unlucky enough not to win any prizes - the £1,000 gift will actually have the buying power of about £770 in 10yrs time if inflation according to the RPI is the same as for the last 10. I'm sure she'll take great comfort in the fact that she's made an interest free loan to the government!

If you want certainty then a decent paying savings account should beat inflation, if you are prepared to take some risk [which is what you're doing with PBs] then something stock market related would, if long term history repeats itself, provide an even better return over the longer term. Niether will likely make her a million, but then again, how likely is it with PBs?

elise33

Hi Ian

Thanks for your reply, do you have any personal advice on a stock related scheme.

I've been looking at FTSE 100 trackers.

As well as the premium bonds I'm looking to invest a little each month for her. Maybe upto £50. I already have a mini cash ISA.

Any advice much appreciated.

regards.

Elise

Milarky

Try dabbling with different periods of time on the online calculator on this site - intended to give a 'realistic' extimate of what you could win. If it were me I would either take them all out or leave the minimum stake of £100 and get interest off the £900 - that way the ''don't know'' alternative (where you won't know if you would have won if you have taken out the lot) is satisfied - you don't have much less of a chance on a £100 as £1000 as ten times very low odds is still very low odds. However you can definitely get 90% of the maximum interest this way - and the difference between the best and worst savings accounts is much more than 10%

I think the CTF deposit account is a good enough idea for an alternative but make sure you are looking at the best there.

Upto 8% currently available (but Hanley BS is only available if you live near a branch) see here for details

Ian_W

elise33 wrote: »

Hi Ian

Thanks for your reply, do you have any personal advice on a stock related scheme.

I've been looking at FTSE 100 trackers.

Hi elise,
The only advice is - don't listen to me when it comes to stock market investing!! :rotfl:
I don't personally like trackers for a number of reasons but others do for equally valid reasons [in their view] but I think with in excess of 10-15yrs [I'm guessing?] to invest an FTSE 100 one might not be the best, with higher returns likely elsewhere - if you can live with higher volitility along the way.
There's a table of trackers HERE you can use the different timespans to look at PAST performance, obviously you have to make your own judgement about future performance. Mine would be that Far East and possibly Europe are better bets than the UK over the next 5yrs - but health warning above applies!
What Investment magazine has a supplement this month about savings & investments for children if you can get hold of a copy. It's not on their website ATM but there is a page HERE with some freeby brochures from providers that might give you some ideas.
BoL whatever you decide.

elise33

Hi

Thank you both for your answers.

Grabbing a hot chocolate to read through the links you posted.

I may leave a little in pb's and invest the rest as you suggest. This way my daughter will get the best of both worlds and could get that million!

http://www.savingforchildren.co.uk is great, I've just sent of for the Baillie Gifford Free guide.

regards.

Elise

cheerfulcat

elise33 wrote: »

Any advice much appreciated.

Hi, elise,

Not advice, just a suggestion - investment trusts are IMO an excellent way to invest for the long term, especially the " portfolio in a share " types like RIT Capital and Witan. Many ITs offer regular investment schemes.

maypole

They were given as a gift to your daughter. I would leave them at that, she can cash them in when she is older and in the meantime she might win the big prize.

jamesd

Elise, I'd switch to the F&C child trust fund, share option. Foreign & Colonial were founded back in 1868 as the first managed fund in the UK and today they offer a good range of investment trust choices that should comfortably outperform savings accounts over the 18 year timespan for children's investing.

In addition to the 50 you're planning to add you could start switching 50 a month from the Premium Bonds.

For investments within the trust you might consider 25 each a month (the minimum) into:

Foreign & Colonial Investment Trust
British Assets
Pacific Assets
European Assets