NS&I Income Bonds Vs Premium Bonds ?

eskbanker

bp5678 said:

RG2015 said:

bp5678 said:

I have almost £30k in a Goldman Sachs Marcus account. Due to interest levels dropping, I want to move my money to either NS&I Income Bonds or Premium Bonds.
Which would you recommend for maximising the amount of money I receive back (either as interest or from "winning" in the case of premium bonds)?

Are you feeling lucky?

Hmm not sure. I'd like to make my decision based off stats rather than gut feel. I appreciate I could be very lucky or unlucky with premium bonds, but mathematically-speaking, on average would I expect to make more from premium bonds or NS&I income bonds?

Given the distorting effect of a very small number of very large prizes, it's more normal to consider the average return from premium bonds as being the median (circa 1.25%) rather than the mean (1.4%), but it is crucial to understand the variability of PB returns, which is more noticeable for smaller holdings and/or smaller periods of time.

Holding £30K of PBs for a year, the median return will be 1.25% (£375), but there is about a 20% chance of winning less than 1%, but also about a 20% chance of winning more than 1.6%.

Holding that £30K for five years, you'd still expect circa 1.25% per year on average, but the chance of winning less than 1% (or more than 1.6%) drops to below 3% over that longer period.

So to answer your question, with average luck Premium Bonds (circa 1.25%) should beat Income Bonds (1.16%) even if you don't pay tax on savings....

colsten

RG2015 said:

coachman12 said:

bp5678 said:

I have almost £30k in a Goldman Sachs Marcus account. Due to interest levels dropping, I want to move my money to either NS&I Income Bonds or Premium Bonds.
Which would you recommend for maximising the amount of money I receive back (either as interest or from "winning" in the case of premium bonds)?

Your decision,bp,of course, but I am biased by my long association with Income Bonds and I will stick with them as opposed to Premium Bonds. Of course, you can split your savings between the two options. Whatever you choose, I wish you lots of luck ( that you'll win a Premium Bond prize ; or  that the Treasury does not decide to cut the present Income Bond's 1.6%    ). 

You'll get some stick for the 1.6% typo.

Once it's a typo.

Second time it's not.

coachman12

colsten said:

RG2015 said:

coachman12 said:

bp5678 said:

I have almost £30k in a Goldman Sachs Marcus account. Due to interest levels dropping, I want to move my money to either NS&I Income Bonds or Premium Bonds.
Which would you recommend for maximising the amount of money I receive back (either as interest or from "winning" in the case of premium bonds)?

Your decision,bp,of course, but I am biased by my long association with Income Bonds and I will stick with them as opposed to Premium Bonds. Of course, you can split your savings between the two options. Whatever you choose, I wish you lots of luck ( that you'll win a Premium Bond prize ; or  that the Treasury does not decide to cut the present Income Bond's 1.6%    ). 

You'll get some stick for the 1.6% typo.

Once it's a typo.

Second time it's not.

So what is it called a second time, colsten ? Human ? Forgetful? Wishful thinking ? Punch-drunk from writing the same old figure hundreds of times over recent weeks/months ?  Missing out a single digit when everyone knows what the actual figure should be ? Poor keyboard number skills ?The end of the world ? A chance to make petty little insults?  Bringing out the best in those really happy MSE posters who are always understanding ? Or is it something that a normal person would just pass over as a typo x 2.  Please tell us all. I'm sure you'll find someone who's interested.

wizzards

coachman12 said:

bp5678 said:

I have almost £30k in a Goldman Sachs Marcus account. Due to interest levels dropping, I want to move my money to either NS&I Income Bonds or Premium Bonds.
Which would you recommend for maximising the amount of money I receive back (either as interest or from "winning" in the case of premium bonds)?

Your decision,bp,of course, but I am biased by my long association with Income Bonds and I will stick with them as opposed to Premium Bonds. Of course, you can split your savings between the two options. Whatever you choose, I wish you lots of luck ( that you'll win a Premium Bond prize ; or  that the Treasury does not decide to cut the present Income Bond's 1.6%    ). 

1.16%  If it was 1.6 % we'd be doing rather well  

coachman12

wizzards said:

coachman12 said:

bp5678 said:

I have almost £30k in a Goldman Sachs Marcus account. Due to interest levels dropping, I want to move my money to either NS&I Income Bonds or Premium Bonds.
Which would you recommend for maximising the amount of money I receive back (either as interest or from "winning" in the case of premium bonds)?

Your decision,bp,of course, but I am biased by my long association with Income Bonds and I will stick with them as opposed to Premium Bonds. Of course, you can split your savings between the two options. Whatever you choose, I wish you lots of luck ( that you'll win a Premium Bond prize ; or  that the Treasury does not decide to cut the present Income Bond's 1.6%    ). 

1.16%  If it was 1.6 % we'd be doing rather well  

Sorry wizzards, but you're a bit behind the postings on this thread. Should I make fun of you for that or make a snide remark ?  No thanks----we're all too busy waiting for colsten's definitive view. 

wizzards

coachman12 said:

wizzards said:

coachman12 said:

bp5678 said:

I have almost £30k in a Goldman Sachs Marcus account. Due to interest levels dropping, I want to move my money to either NS&I Income Bonds or Premium Bonds.
Which would you recommend for maximising the amount of money I receive back (either as interest or from "winning" in the case of premium bonds)?

Your decision,bp,of course, but I am biased by my long association with Income Bonds and I will stick with them as opposed to Premium Bonds. Of course, you can split your savings between the two options. Whatever you choose, I wish you lots of luck ( that you'll win a Premium Bond prize ; or  that the Treasury does not decide to cut the present Income Bond's 1.6%    ). 

1.16%  If it was 1.6 % we'd be doing rather well  

Sorry wizzards, but you're a bit behind the postings on this thread. Should I make fun of you for that or make a snide remark ?  No thanks----we're all too busy waiting for colsten's definitive view. 

I didn't know you could have a definitive view on such a "complex" comparison.   Gotta have some fun !   I wouldn't wait too long as NS & I will put the rate down once enough cash is in ?

coachman12

wizzards "I wouldn't wait too long as NS & I will put the rate down once enough cash is in ?"
You're absolutely right wizzards-----wait till we all grovel for a high of 0.2% to keep us inflation-proofed for life