Premium bonds for emergency fund?

ranciduk

Bare in mind that there have been rumours lately that Ns&i may possibly consider the need to lower the ‘interest rate’ again 

[Deleted User]

Thanks all. I've just found a video of Martin Lewis explaining the odds. I think I'm going to ditch the idea and keep looking at other options. 

MX5huggy

I think Martin is a bit negative about them really, for a simple place to keep a decent chunk of money (£10k) for a few months plus you will probably equal or beat the best easy access savings account currently. Yes there are some offers around for regular saving and tied to current accounts etc but these need work to open an look after for just a few more pounds gain. Your better off spending that time reading up on investing and working your investments harder. 

stephenadarglas

Wife and I have circa 65K in PBs.  We also have 10K in cash in a bank account for everyday stuff credit cards, flights et al.  As an example only we won £100 this month which was reinvested.

arealhighlander

Aug 19 I put in £11k. I then won £50 in Oct 19 and then nothing till £25 in Jul 20. I then increased to £24k and for Aug-Jan 21 I won a total of £200. I increased in Jan 21 to £39k and have won £50 in Feb and in April. Its easily accessible, its difficult to calculate a return rate due to the different amounts in at different times but I feel I amn't missing out on having it in a 0.5-7% instant access and there is always the chance of larger prizes. You do need tens of thousands in it to get a decent return.

onthebench

I think PBs are pretty much as good a place as any to keep some "emergency money", unless emergency means "Must have the cash this second." As others have said, you can access the funds within a few days, and although there is no fixed interest rate, if you have a reasonable amount in there (say at least £15k-£20k) then you will probably overcome the randomness and win close to the expected amount each year, which compares pretty well to other savings accounts.

With £34,500 invested, you "should" with average luck win a prize each month (and if you do then it will almost certainly be £25), meaning you win £300 a year, or 0.87%.

maisie_cat

Some of our easy access savings are in premium bonds, our experience of NS&I is that while cash isn't immediate it is quick. We also have a bit in a savings account with the bank for instantaneous access and a few 1yr/2yr/3yr savings accounts.

Aceace

arealhighlander said:

Aug 19 I put in £11k. I then won £50 in Oct 19 and then nothing till £25 in Jul 20. I then increased to £24k and for Aug-Jan 21 I won a total of £200. I increased in Jan 21 to £39k and have won £50 in Feb and in April. Its easily accessible, its difficult to calculate a return rate due to the different amounts in at different times but I feel I amn't missing out on having it in a 0.5-7% instant access and there is always the chance of larger prizes. You do need tens of thousands in it to get a decent return.

Is fairly easy to calculate an accurate annualised return if you are competent with spreadsheets. You need to use the XIRR function (this essentially gives you an annualised figure that can be compared to the APRs quoted by banks and building societies). Assuming that you reinvested your prizes, and made your specified investments on the 15th of the stated months, it gives an XIRR of 1.07%. So you've fared slightly better than an average PB investor/saver.

eskbanker

Aceace said:

arealhighlander said:

Aug 19 I put in £11k. I then won £50 in Oct 19 and then nothing till £25 in Jul 20. I then increased to £24k and for Aug-Jan 21 I won a total of £200. I increased in Jan 21 to £39k and have won £50 in Feb and in April. Its easily accessible, its difficult to calculate a return rate due to the different amounts in at different times but I feel I amn't missing out on having it in a 0.5-7% instant access and there is always the chance of larger prizes. You do need tens of thousands in it to get a decent return.

Is fairly easy to calculate an accurate annualised return if you are competent with spreadsheets. You need to use the XIRR function (this essentially gives you an annualised figure that can be compared to the APRs quoted by banks and building societies). Assuming that you reinvested your prizes, and made your specified investments on the 15th of the stated months, it gives an XIRR of 1.07%. So you've fared slightly better than an average PB investor/saver.

The 'average luck' expected (median) return was in circa 1.25% territory up to December 2020 and has been about 0.9% since then, so an annualised 1.07% since mid 2019 is below par....

Aceace

eskbanker said:

Aceace said:

arealhighlander said:

Aug 19 I put in £11k. I then won £50 in Oct 19 and then nothing till £25 in Jul 20. I then increased to £24k and for Aug-Jan 21 I won a total of £200. I increased in Jan 21 to £39k and have won £50 in Feb and in April. Its easily accessible, its difficult to calculate a return rate due to the different amounts in at different times but I feel I amn't missing out on having it in a 0.5-7% instant access and there is always the chance of larger prizes. You do need tens of thousands in it to get a decent return.

Is fairly easy to calculate an accurate annualised return if you are competent with spreadsheets. You need to use the XIRR function (this essentially gives you an annualised figure that can be compared to the APRs quoted by banks and building societies). Assuming that you reinvested your prizes, and made your specified investments on the 15th of the stated months, it gives an XIRR of 1.07%. So you've fared slightly better than an average PB investor/saver.

The 'average luck' expected (median) return was in circa 1.25% territory up to December 2020 and has been about 0.9% since then, so an annualised 1.07% since mid 2019 is below par....

Fair point.  I was mistakenly comparing it with just the currently expected 0.9%.