Premium bonds

formerchef

Thé person who said premium bonds were neither savings nor investment was probably right. I’ve always had some premium bonds and the reasons are these:
I had an account opened for me as a child and there’s always been a little there. As a teenager in the 1960s I won a prize and was delighted. 

It’s a place to park any money I might have for a few months, knowing I’m going to spend or invest it somewhere else. It’s uncomplicated and any gains are tax free. 

The sheer thrill of checking the prize draw each month easily balances the fact I’m probably losing a little potential. But as I’m not putting huge amounts in, nor for long, and the original sum is protected, I don’t see the harm. I’ve won enough over the years to keep that thrill alive - many £25 prizes and once £500!

I see people spending tens of pounds every week on lottery tickets and scratch cards. I guess they do this for the thrill and/or for hope - everyone needs a little hope. I think of premium bonds as lottery tickets, where you buy into the draw every month, but whether you win or not, you always get your ticket money back to try again, or spend on something else. 

Grandmama

Recently a friend tried to tell me that  buying premium bonds was a waste, you never win anything. With great joy I informed them that the amount I had invested in premium bonds would have only received £6 , yes six pounds in my savings account this year, my lovely bonds have gained me £175, one hundred and seventy five pounds since last Xmas.  
Ok, I know next year it might be zilch, but my capital is still.intact, and it could make me a million!!! Here's hoping!

Band7

Grandmama said:

Recently a friend tried to tell me that  buying premium bonds was a waste, you never win anything. With great joy I informed them that the amount I had invested in premium bonds would have only received £6 , yes six pounds in my savings account this year, my lovely bonds have gained me £175, one hundred and seventy five pounds since last Xmas.  
Ok, I know next year it might be zilch, but my capital is still.intact, and it could make me a million!!! Here's hoping!

Congratulations! Sounds like you have been extraordinarily lucky, getting 29 times the amount you would have got in a decent savings account. As with average luck, you'd get just 2.2% annual return from PBs, roughly half of what a currently available 1-year fix term savings account would pay.

RG2015

Glad this thread got bumped as I missed it first time round. Very entertaining, and that's without all of the deleted posts.

There is no doubt that Premium Bonds are Marmite but they remain popular.

I believe that if they are judged purely on the level of return they will lose out to savings accounts for basic rate taxpayers. I have not done the maths but higher and additional rate taxpayers may well be better off with Premium Bonds. This is not currently an issue for me.

I agree that winning £25, or £50 and even once £100 gives me a buzz, but I recently reduced my holding to get a better return in a fixed savings account.

Ironically, the £100 win came after halving my Premium Bonds holding.

I still though, cannot for the life of me, see why people get so argumentative over them. Even if they are poor value they still make a worthwhile contribution to the Government coffers (which is our money don't forget).

eskbanker

RG2015 said:

I still though, cannot for the life of me, see why people get so argumentative over them. Even if they are poor value they still make a worthwhile contribution to the Government coffers (which is our money don't forget).

Paying income tax on savings interest also makes a worthwhile contribution to Government coffers but is anathema to most on here and generates plenty of discussion!

Brie

I went ahead a month back and deposited a miserly £1k each for myself and the OH.  I was asked why which surprised me.  I know he had some PBs as a child whereas I didn't even know they existed.  (foreigner, I had CSBs instead which were completely different).  But as I said to him it was just a bit of spare cash we didn't need right now and that I thought I'd tuck away for when we did need it.  I'll be adding a bit more as the ££ become available.

RG2015

eskbanker said:

RG2015 said:

I still though, cannot for the life of me, see why people get so argumentative over them. Even if they are poor value they still make a worthwhile contribution to the Government coffers (which is our money don't forget).

Paying income tax on savings interest also makes a worthwhile contribution to Government coffers but is anathema to most on here and generates plenty of discussion!

Cannot argue with you here. That said, I can always choose to have my “contribution” returned to me.

My claim on Government funds is more limited to their current policies. I am though doing okay at the moment, especially with the SP triple lock, EPG and cost of living handouts.

chucknorris

Pagala said:

Why would anyone buy premium bonds? Are they just a means of preying on the vulnerable and non-neurotypicals?

I hold premium bonds for a number of reasons:

I'm on the fringe of the 60% tax band and PB's are tax free, it's one of many things that keeps me out of that 60% tax band.

I also hold them for some diversity too, although I hold the max allowed it is still less than 1.5% my overall wealth, so it isn't a big deal.

Also it's a bit of fun once a month too.