Where to move my money too?

baarrow

How and where do I invest £20,000 In current climate. I even thought of putting it in premium bonds. Help

barnstar2077

The main questions will be.  When do you want to access the money? (are you saving for a house purchase for example.)  How old are you?  What is your appetite for risk?  Do you have a pension?  Do you have any debt?  Do you have an emergency fund?

dunstonh

How and where do I invest £20,000 In current climate.

What has the current climate have to do with anything?  Nothing is really different at the moment.

I even thought of putting it in premium bonds.

That isn't investing and PBs are really only suitable for higher rate taxpayers who have used up all the other allowances first.

Apart from that, you haven't given us very much to go on.  

coachman12

baarrow-----we cannot really progress with any helpful discussion and opinions until you post gain and tell us what your financial circumstances are, whether you want to save the money and for how long, whether you want to invest, etc etc. I don't think any of us can help much until you tell us a bit more please. But great news that you have £20,000 to "play with"-----gives a nice warm glow in the present climate ( and a pun too 

eskbanker

dunstonh said:
PBs are really only suitable for higher rate taxpayers who have used up all the other allowances first.

Not sure that's really true at the moment, given the unusual current circumstances where the expected return is better than all easy-access savings accounts, even without the tax-free status coming into play....

bowlhead99

eskbanker said:

dunstonh said:
PBs are really only suitable for higher rate taxpayers who have used up all the other allowances first.

Not sure that's really true at the moment, given the unusual current circumstances where the expected return is better than all easy-access savings accounts, even without the tax-free status coming into play....

But the context which you snipped away when quoting was that the OP wants to 'invest', and their terminology, 'even thought of' using PBs, implies they were perhaps considered as a last resort having thought of other things first.

dunstonh's comment was: 'That isn't investing...' , because it is a cash-based product with the interest gambled, rather than being an 'investment' in real assets or conventional financial instruments where you hope to generate growth or income with the risk of investment loss. 

The rest of the sentence following on from that '...and PBs are only really suitable for...' is part of the exploration of whether/why they could be useful as 'investments'. For example, they may be of use if you have exhausted all your investment tax allowances first such as pensions and ISAs etc, and find yourself in a situation where you would face high tax bills from conventional investment returns such that the net returns you can get from investments are lower than they are for the average person.

In that situation the rationale for using them would include the fact that your alternative investment options would have a worse ratio of reward to risk than would be experienced by people who did have tax allowances available when using those alternative conventional investment options.  That might lead someone who was looking for a low volatility 'investment' to use a cash-based product such as PBs instead, even though they had really wanted an 'investment' in the conventional sense of the word rather than a (national) savings product.

Out of context as a soundbite, you are right that it would be strange to say that PBs are only suitable for higher rate taxpayers because they can currently give you a better return than other easy-access savings products, whether or not you are the type of person who needs to pay tax on bank interest.  They can of course be quite suitable for anyone wondering about substitutes for conventional easy access cash savings or bank deposits which don't have risk of loss.

But on this forum we do make the distinction between on the one hand, savings, and on the other, investments. And it's when you are evaluating the potential returns from PBs as an investment versus other types of investments, that they lean towards being suitable more for those people who pay high rates of tax and don't have allowances, relative to how useful they are for people who can already receive tax-free income, dividends, capital gains by using allowances and exemptions and tax wrapper products.

eskbanker

Just to be clear, I certainly wasn't looking to distort or deceive by quoting what I did - it did (and does) seem like a generalised comment to me that stands on its own rather than only applying within a specific context - but maybe your interpretation is what dunstonh had in mind.  Perhaps I was being unduly influenced by the fact that I've made similar remarks before (about limited applicability of PBs) and now see that perspective as less valid in the current low-interest environment, but stand by my observation that OP shouldn't be steered away from PBs on flawed grounds.

mjd2020

First time poster so please be gentle with me... I have a possibly similar question. I have had around £25,000 in Premium Bonds since the start of the year and received I think four or five £25 payouts, such that I've been pretty happy with with this as a return. I'm aware that the quoted "interest" rate of 1.4% for PBs is not entirely accurate. I have another £10,000 in a 1.75% interest rate fixed rate bond that ends in a couple of weeks, and the building society is offering woefully reduced rates for their current bonds, around 0.65%. So, my question is, is there any way to work out whether I'd be better off adding the £10,000 to the existing Premium Bonds account at an inaccurate return rate of 1.4%, or if I'd better opening an NSI Income Bonds account at a definite interest rate of 1.15% ? I'm a standard rate taxpayer and all of this money is set aside for major renovation work on my house which has been postponed by the virus situation until an indeterminate time next year when I am fully back to work.

eskbanker

mjd2020 said:

I'm aware that the quoted "interest" rate of 1.4% for PBs is not entirely accurate. I have another £10,000 in a 1.75% interest rate fixed rate bond that ends in a couple of weeks, and the building society is offering woefully reduced rates for their current bonds, around 0.65%. So, my question is, is there any way to work out whether I'd be better off adding the £10,000 to the existing Premium Bonds account at an inaccurate return rate of 1.4%, or if I'd better opening an NSI Income Bonds account at a definite interest rate of 1.15% ?

The average premium bond return is distorted by a very small number of very large prizes, so the median average (more like 1.2-1.3%) is a more realistic expectation than the mean (1.4%).  You can play about with the numbers at https://www.moneysavingexpert.com/savings/premium-bonds-calculator/ to weigh up your chances, but treat the results with caution (check the full odds not just the headline expected return figure) and remember that the returns are hugely variable....