Do Premium Bonds make sense?

eskbanker

ratechaser said:

I've been trying to persuade Mrs RC for a while now on PBs - all our unwrapped cash is in accounts in her name (because 40% tax is a bit better than 45%...), and she's getting no better than 0.6% net interest, whereas you'd realistically double that via PBs. 

But no. Because it's not a fixed/guaranteed rate. And "it's a bit like gambling isn't it". So on we plod... 

Convince her to come on here and be persuaded by the MSE massive, we'll recognise her by the appearance of someone called 'rateevader'

Thrugelmir

BML said:

When I look at what Barclays and most other banks charge on Credit cards and their other money making schemes I resent they pathetic amount they pay in interest to money I have in their care. Bearing in mind I’m risk averse can anyone suggest where to place £5,000?

If only banking were that easy. Then you expect a return for absolutely no risk to yourself. That's why shareholders should benefit first. As it their money that's at risk. 

quirkydeptless

eskbanker said:

Convince her to come on here and be persuaded by the MSE massive, we'll recognise her by the appearance of someone called 'rateevader'

or darthevader

ratechaser

quirkydeptless said:

eskbanker said:

Convince her to come on here and be persuaded by the MSE massive, we'll recognise her by the appearance of someone called 'rateevader'

or darthevader

Good job I didn't have a mouthful of coffee when reading this 

Obviously I love her dearly, but whilst I have generally succeeded in getting our
money into the right places over the years, it's sometimes like arguing with an internal auditor!!

The other front I'm fighting is her urge to sell up on about £100k of VLS80 in an ISA - because the current dead cat bounce has run its course and the markets are about to fall off another cliff. I'll never hear the end of it if that turns out to be the case!

badger09

bowlhead99 said:

badger09 said:

I haven't won a single prize in the 63 years I've held PBs.

CBA doing the maths for the 'tipping point' on my £18 holding though

Well with average luck based on the current odds you should expect to get a prize every 1341 months. If you've been waiting 63 years, only 50 more to go!

Of course, the odds have not always been 1 in 24500 and at some points they were better, so given you still didn't win then you have perhaps used up some bad luck and have better luck to come

Although, ERNIE doesn't remember which bonds he picked in the past so you're no more or less likely to win this week if you've never had a prize than if you had won every month to date.

If you get the million next month can I have your old car? It's my birthday next month...

I got quite excited when you said 'only 50 more to go' as I thought you meant months. But you meant years didn't you.

If I win the million next month, of course you can have my old car for your birthday.

Would you like the 14 year old one, or the almost 7 year old late-mid-life-crisis-what-the-hell-girly one   Both have had one careful lady badger owner

EthicsGradient

If you use the MSE calculator to find the 'average' prizes (ie 50% of people with that holding are as lucky as that), putting in the longest time period (5 years) and maximum amount (£50k) to get it as accurate as possible, it's £3,250 - which is 6.5% over 5 years, or 1.27% compounded.

That is now attractive, even for people not paying tax on savings, compared to a new instant access account, but it's not as flexible - you have to have the money in for a full calendar month to be eligible for a prize, so effectively that's "no interest on a deposit until the end of a month, and no interest from the start of a month on a withdrawal". If you intend to move money in and out a lot, a proper instant access account would do better, if you don't pay savings tax.

But for some emergency money, it could be worth it - more so, if you pay tax on your savings. The less you have in it, the closer it is to a flutter, of course.

bowlhead99

badger09 said:

Would you like the 14 year old one, or the almost 7 year old late-mid-life-crisis-what-the-hell-girly one   Both have had one careful lady badger owner

IIRC, I'll take the mazda (?) and wrap or respray it to make it less girly while letting a specialist do something to the engine and drop the centre of gravity...

Richmc

A couple of silly questions.
1). If the BOE interest rate goes negative, and premium bonds follow that, will that mean they run the draw and demand payment from the "winning" numbers, with two poor souls owing £1million?
2). Does anyone know the odds of an investor with £50,000 in bonds winning both £1million prizes in one month? I guess this will involve a lot of zeros!

Richmc

eskbanker said:

ratechaser said:

I've been trying to persuade Mrs RC for a while now on PBs - all our unwrapped cash is in accounts in her name (because 40% tax is a bit better than 45%...), and she's getting no better than 0.6% net interest, whereas you'd realistically double that via PBs. 

But no. Because it's not a fixed/guaranteed rate. And "it's a bit like gambling isn't it". So on we plod... 

It's absolutely NOT like gambling, when you play the lottery you don't get your money back if you don't win!

zagfles

PBs look like a no-brainer at the moment. Best easy access account according to MSE is 1.16%. PBs pay 1.4% mean, and 1.2% mean even if you ignore all the prizes above £25. Someone with £10k+ should get a regular flow of £25 prizes.