NS&I savings to ...where?

lisyloo

I am thinking of premium bonds. Anyone else?

hollie.weimeraner

lisyloo said:

I am thinking of premium bonds. Anyone else?

The prize rate is 1.4% (dropping to 1% from Dec), but with average luck you won't even earn that - taken from Martins view of Premium Bonds

mrkds

hollie.weimeraner said:

The prize rate is 1.4% (dropping to 1% from Dec), but with average luck you won't even earn that - taken from Martins view of Premium Bonds

It depends how much you have in the account. Playing with the calculator, anything less than 1500 you expected yearly returns will be zero. With £15,000, expected yearly returns will be £175 (equivalent to a rate of about 1.16%). £20,000 will get you £250 (1.25%). But strangely, maxing out with £50,000 will get you £500 (equivalent to just 1%). Either way, even if you optimise how much you deposit, you're only beating the prize rate by a slight amount. Most would consider it not worth the effort.

That said, the (tiny) possibility of hitting one of the big prizes may make it a slightly more attractive option than leaving it an easy access account with a rubbish <1% rate.

eskbanker

mrkds said:

hollie.weimeraner said:

The prize rate is 1.4% (dropping to 1% from Dec), but with average luck you won't even earn that - taken from Martins view of Premium Bonds

It depends how much you have in the account. Playing with the calculator, anything less than 1500 you expected yearly returns will be zero. With £15,000, expected yearly returns will be £175 (equivalent to a rate of about 1.16%). £20,000 will get you £250 (1.25%). But strangely, maxing out with £50,000 will get you £500 (equivalent to just 1%).

The way they present that £50K headline figure of £500 is highly deceptive, as the full odds list makes it clear that the expected return would be more like £625 (1.25%) - the calculator only presents a subset of data points and doesn't show anything between £500 (87% chance of winning at least this) and £750 (24.8%), so the median 50% mark would be roughly halfway between those points.

mrkds said:
Either way, even if you optimise how much you deposit, you're only beating the prize rate by a slight amount.

The expected 'average luck' return can't beat the published prize rate!  The typical current expected rate of circa 1.25% compares with the nominal 1.4%, and once the published rate drops to 1% the expected return will be more like 0.9%.

lisyloo

eskbanker said:

mrkds said:

hollie.weimeraner said:

The prize rate is 1.4% (dropping to 1% from Dec), but with average luck you won't even earn that - taken from Martins view of Premium Bonds

It depends how much you have in the account. Playing with the calculator, anything less than 1500 you expected yearly returns will be zero. With £15,000, expected yearly returns will be £175 (equivalent to a rate of about 1.16%). £20,000 will get you £250 (1.25%). But strangely, maxing out with £50,000 will get you £500 (equivalent to just 1%).

The way they present that £50K headline figure of £500 is highly deceptive, as the full odds list makes it clear that the expected return would be more like £625 (1.25%) - the calculator only presents a subset of data points and doesn't show anything between £500 (87% chance of winning at least this) and £750 (24.8%), so the median 50% mark would be roughly halfway between those points.

mrkds said:
Either way, even if you optimise how much you deposit, you're only beating the prize rate by a slight amount.

The expected 'average luck' return can't beat the published prize rate!  The typical current expected rate of circa 1.25% compares with the nominal 1.4%, and once the published rate drops to 1% the expected return will be more like 0.9%.

But 0.9% is still higher than the 0.75% you can get elsewhere with instant access isn't it?

What could you get in savings?

Put the money in the top savings account paying 1.05% and you'd earn £252 (assuming monthly-paid interest).

How do Premium Bonds compare?

With the same amount in Premium Bonds, there's a 1.2% chance you'll earn less than this.

We're maxxed out on pensions and ISAs (yes I know, nice problem to have).

eskbanker

lisyloo said:
But 0.9% is still higher than the 0.75% you can get elsewhere with instant access isn't it?

Yes, of course, but remember that you're not guaranteed to get 0.9%, that's just the average and most will get either more or less than this!

lisyloo said:

What could you get in savings?

Put the money in the top savings account paying 1.05% and you'd earn £252 (assuming monthly-paid interest).

How do Premium Bonds compare?

With the same amount in Premium Bonds, there's a 1.2% chance you'll earn less than this.

Where is this taken from?  That 1.2% chance of earning less than 1.05% on PBs doesn't sound right to me....

Edit: I can see where that's from now, it's allowing for higher rate tax being paid on the savings, so it's effectively comparing PB expected returns with a 0.63% net return on savings.  If you're a higher rate taxpayer then that does indeed strongly favour PBs versus taxable savings accounts....

Sailtheworld

lisyloo said:

unkle said:

Retireby40 said:

whitesmith said:

...or have your central  heating on for 20 milliseconds less a week ...

Correct. The interest rates these days arent worth the hassle moving around. Best thing can do is reduce spend by about 1% and that will make the difference. See people asking about swapping £1000 in an account paying 0.01% to something 0.03%. For the hassle involved what is the point.

Only worthwhile if you've 100's of 1,000's - otherwise I agree, 

I always "do the maths".

So for example 0.5% on £40K is £200 which I'd consider worthwhile for say 30 mins effort.

If people really do want to hold lots of cash they may as well keep true emergency money in instant access and forget about the rate. Then lock the rest away in 1, 2 year accounts etc. Every 6 months or so check what's available and make adjustments as necessary - that's a true 30 minutes effort.

I get the feeling though that, for a lot of people, it's a more time consuming hobby involving daily trawls of best buy tables and additional research. It's a waste of headspace apart from anything else.

Sailtheworld

Eco_Miser said:

Retireby40 said:

Eco_Miser said:

Retireby40 said:

People get caught up on opening 10 different accounts and moving money around and trying to make the most of things but for what you gain youd just be better drinking a bottle of beer less a month.

Can you please explain how to drink minus one bottle of beer?

If you dont drink beer then a coke less, or a footy bet less a week. Or a takeaway less.

Don't do any of those things. All a waste of money.

whitesmith said:

...or have your central  heating on for 20 milliseconds less a week ...

In a typical week, that's 20 milliseconds of negative time required, but winter is coming, so maybe.

Retireby40 said:

you could have literally just done an hour overtime in work and made the same.

Difficult for me as I'm retired, but even when I wasn't, overtime wasn't available.

The point of my posts is to point out that these alternative ways of making the money available by chasing the best interest rates are NOT available to everyone.

I'll also mention that I've stopped chasing the rates, just making the best use of the accounts I've already got; but rather than trying to replace any such foregone gains by reducing my standard of lining, I'm just accepting a lower income.

There are bound to be people who have super optimised spending patterns where there's not a penny to be shaved off outgoings, central heating is optmised to perfection, there's zero chance of earning more and drink only tap water. I think you're the first I've met though.

HUMBUG

I'm primed and ready to invest 10k in a low cost tracker once another national lockdown happens (which I think is imminent).  What's the point in these piddly interest rates on offer ? Its only going to get worse with the question being asked by BOE about negative rates. Further,  I think the only way the government are going to get some spare cash (apart from printing more out of thin air)  is by hitting savers pretty hard and maybe a big hit on IHT in the near future.  Can also see the end of ISA's happening too !
Tax .. Tax...Tax. for the foreseeable future and terrible times for the youngsters and maybe even social unrest  (they don't call me Humbug for nothing).
PS.
From a really personal point of view , I think we all need to realise that there are millions out there without food/water and even 'hope' . Thank our lucky stars we still have the choice to eat , drink and have a roof over our heads (for the moment anyway). 

mrkds

eskbanker said:

The expected 'average luck' return can't beat the published prize rate!  The typical current expected rate of circa 1.25% compares with the nominal 1.4%, and once the published rate drops to 1% the expected return will be more like 0.9%.

Ok i see. I didn't realise the calculator was still using the old 1.4% prize rate. So I thought 1.25% was beating 1% prize rate. So expected  returns are even worse than I thought!