Are you max out on a premium bond?

Thumbs_Up

Hopefully interest rates will tick up again soon. Say you had a fair wedge of money in a NS&I income bond and you are max out on premium bonds £50k. Would you have a trigger point to transfer some of the £50k premium bond money to the income bond currently at 0.50% wishfully  going to 0.75% soon. Yes technically you get about 1% (tax free) with the premium bond but is your patience running thin to winning the big jack pot.

lisyloo

For me it would depend on the actual return. Ours has been between 1% and 1.5% so I’m happy to leave it there.
would change it when it looks like there could be a loss (in return) worth worrying about taking income tax into consideration.

why does it matter what anyone else does?

refluxer

It depends on your luck, I guess. My Premium Bond winnings over the past 12 months equate to an interest rate of 1.1%, so moving to a savings account paying less than that wouldn't make sense. For me, a chance at winning the jackpot is a bonus - it's not the sole reason I have Premium Bonds.

As for NS&I Income Bonds - unless you have huge sums of cash in excess of £85k that you want to keep in one place, then Income Bonds @ 0.5% are a poor choice when other instant access accounts are paying 0.75% (or even 1% with this new Virgin Money current account-linked savings account).

eskbanker

Thumbs_Up said:

Yes technically you get about 1% (tax free) with the premium bond but is your patience running thin to winning the big jack pot.

If you buy Premium Bonds in the belief that you'll win the jackpot (or even that there's a meaningful chance of doing so) then that really is a triumph of hope over expectation!  It's far more realistic to treat it as a 0.9% account (over multiple years), tax-free as you say, although when some (as above) are winning more than that then others will correspondingly be winning less....

EthicsGradient

From the calculator, 50.2% win £2,300 or more from a £50,000 holding over 5 years (at the current odds). Which is a median yearly rate of 0.92%. That 'likely' return should be your guide, rather than what you've personally won in the past (personally, my return works out at 0.75% pa, having held them for just over a year, though that doesn't include the draw happening today).

MX5huggy

I’m willing to “pay” premium for the chance of winning more (not just the big one). I think I would have to be able to get 0.5% more elsewhere in an instant access account before considering moving out of PB’s and probably more like 1%, I didn’t have them for years because they payed less than instant access savings. I have about 6 months salary in PB’s as our emergency fund. 

adindas

No I do not. I do not even have any. I prefer to spread my cash into several regular saving accounts that I could easily withdrawal or plan so I could have an easy withdrawal when I need cash.

Stubod

I guess it depends on what other savings / investments you have? We have maxed out on PB's, but as above treat it as an "emergency fund". But we also have NSI Index linked bonds, SIPPS, and S&S ISA's....

SusieT

I have a (very) small amount in there, but have not won anything for a long time. I dont expect to get a big win, but may one day get whatever the lowest amount is.
I see it as being an easy access emergency fund - although it could probably do with more going in than I am dripfeeding at te moment

kuratowski

The premium bond prize rate is adjustable, so you might need to reassess your trigger point in the light of any changes.

The tax-free status is important for some people in making these worthwhile vs alternatives.

As others have said, you (rationally) should not consider the chances of winning a jackpot prize, as well as your own previous experience of prizes from past draws.

Albermarle

Thumbs_Up said:

Hopefully interest rates will tick up again soon. Say you had a fair wedge of money in a NS&I income bond and you are max out on premium bonds £50k. Would you have a trigger point to transfer some of the £50k premium bond money to the income bond currently at 0.50% wishfully  going to 0.75% soon. Yes technically you get about 1% (tax free) with the premium bond but is your patience running thin to winning the big jack pot.

You would need to be very patient to win one of the two Million Pound prizes paid out each month .

Someone with the full £50K holding , could expect on average to win a Million once every approximately 90,000 years