NS&I to cut premium bond rate and other accounts

soulsaver

fly-catchers said:

Why are people closing their NS&I accounts before the interest has even dropped? 

Some still have 1.2% elsewhere and can avoid the possible stampede next week..

Sasahara

polymaff said:

maman said:

polymaff said:

maman said:

Yes, but I think I'll leave them to the last minute as the current rates are better than the 1.2% I have elsewhere at the moment. 
Not sure about the Premium Bonds. They're a bit like raffle tickets. 🤣

Well, you wouldn't - maybe you couldn't, anyway. ...

Treat the new Premium Bond rate as 0.9% tax-free and you won't go far wrong.

Thanks. Put like that, 0.9% sounds a really good bet. 😁

That 0.9% is not a guess, by the way. It is how the new rate will deliver for 4 to 5-figure holdings - less the fraction of £25 you never win. ... 

Just, don't expect it to last.  Premium Bonds are too high-profile for NS&I to kill them off - as per Income Bonds.

They'll be steadily cut - hoping that nobody notices - I reckon. ...

I did some calculations and the rate will be 0.85% Tax-Free as you need above average luck to get a single prize higher than £25 even with the maximum holding in a single year.

The prize breakdown is: (December estimate)

Prize - number of prizes - % value of total prize pool - Time to win with £50k holding (Any point from start to end, average)

£1,000,000 - 2 - 2.45% - 81,577 Years

£100,000 - 4 - 0.49% - 40,788 Years

£50,000 - 9 - 0.55% - 18,128 Years

£25,000 - 16 - 0.49% - 10,197 Years

£10,000 - 14 - 0.50% - 3,979 Years

£5,000 - 84 - 0.51% - 1,942 Years

- (Higher Tier value 5% Total) -

£1,000 - 1,631 - 1,99% - 100 Years

£500 - 4,893 - 2.99% - 33 Years

- (Medium Tier value 5% Total) -

£100 - 26,500 - 3.24% - 6.15 Years

£50 - 26,500 - 1.62% - 6.15 Years

£25 - 2,777,791 - 85.13% - 17 Wins per year = £425

- (Low Tier value 90% Total) - (Note excess funds drop down to lower tiers and £100/£50 have equal number of prizes)

I have rounded the figures to 2 decimal places so they might not add up to 100%, they do on the spreadsheet.

If you were to hold for just over 6 year with dead average luck then 0.9% would be the rate, if the rate remained the same.

To look at it another way for each £2,937 invested you would get 1 £25 win per year with average luck.

polymaff

Sasahara said:

I did some calculations  <snip>

Let's wait and see. My much, much simpler approach - albeit qualified - has been validated again and again.

clive0510

I'll be taking my premium bonds out and putting them into a high income fund I have. but rather than draw the income I will have it reinvested back into the same account. because its a high income fund its also classed as high risk. but I've had the fund for about 20 yrs and its allways performed ok. 

badger09

You're all wasting your time.

One of my £18 worth of PBs held since January 1957 is bound to scoop the jackpot, any time now..... and will wipe out your 0.85%/0.9%

Sasahara

polymaff said:

Sasahara said:

I did some calculations  <snip>

Let's wait and see. My much, much simpler approach - albeit qualified - has been validated again and again.

But wrong.  And validated by who?

zagfles

The average (mean) return from premium bonds is 1% (the prize rate) for everyone.

The median return for those with a full holding over a year is £425, as the median will be 17 prizes of which all will be £25 (as 98% of prizes are £25), so 0.85%. For someone with a small holding eg £1000 the median will be zero.

Over a longer period the median will increase (although in a lumpy way) as higher value prizes will be won at the median. The longer the period and the bigger the holding the closer the median gets to the mean. You'd need about 80,000 years at max holding for the median to reach the mean...

maman

Thanks for all the fascinating maths. I've decided to keep my premium bonds for the time being as a sort of raffle ticket.😊

Sorry this is a bit off topic, just looking for an opinion and Regular Saver thread seems very long and involved.

I have 3 linked  Regular saver accounts which are all  coming to an end soon. 
The Lloyds one (£400 per month max) is offering 1% fixed for next year.  I'm inclined to go with this 'bird in the hand'  option as my 1.2% Coventry account is variable so could be pulled any time. Does that thinking make sense to you experts?🤔

Notepad_Phil

maman said:

I have 3 linked  Regular saver accounts which are all  coming to an end soon. 
The Lloyds one (£400 per month max) is offering 1% fixed for next year.  I'm inclined to go with this 'bird in the hand'  option as my 1.2% Coventry account is variable so could be pulled any time. Does that thinking make sense to you experts?🤔

Well it makes sense to me and is what I'm currently intending to do when my current regular savers mature at TSB, BOS, First Direct, Lloyds, etc.

quirkydeptless

I'm just sticking with my £25 in premium bonds and the squillion to one shot