Inheritance of £40k

sammyjo1979

Hi, 
I have just received an inheritance of £40k. A friend has suggested I buy premium bonds with it.  I thought they were joking but apparently not.  Would this be a good idea?
We don't have debts or a mortgage.  Married with 3 kids.  
Thanks.

eskbanker

Premium bonds give a better average return than normal savings accounts, so if you want to keep the money in readily accessible cash form then they're a tempting proposition.  However, we don't know whether they're right for your circumstances, so you may be better off putting some or all of the money into pensions or other investments, etc....

sammyjo1979

We would like the money accessible.  We already have £20k (£60k total with inheritance) and our aim is to add to it to save to buy a small property abroad. 

DragonCapsule

Depends on your timescale and risk. Premium bonds are safe, but the return is lousy. How much risk are you willing to take and how long do you want to tie the money up for? Me, for a fairly low risk, buy Amazon, Facebook and Google shares. I don't consider this risky at all.

MX5huggy

DragonCapsule said:

Depends on your timescale and risk. Premium bonds are safe, but the return is lousy. How much risk are you willing to take and how long do you want to tie the money up for? Me, for a fairly low risk, buy Amazon, Facebook and Google shares. I don't consider this risky at all.

I think your definition of Risky may be on a different scale to the vast majority of people. 

El_Torro

If you’re planning to spend all the £60k on a property abroad within the next few years then Premium Bonds is a good idea. Buy £30k each as the limit is £50k per person.

Whether the money would be better spent on investing for retirement or for your kids’ futures (help towards house deposits for example) is a different matter.

grumiofoundation

DragonCapsule said:

Depends on your timescale and risk. Premium bonds are safe, but the return is lousy. How much risk are you willing to take and how long do you want to tie the money up for? Me, for a fairly low risk, buy Amazon, Facebook and Google shares. I don't consider this risky at all.

Sadly the fact you don’t understand the risks of owning shares doesn’t make them less risky.