Premium bonds

little_green

Sorry if this isn't the right place to post but Im looking for more info re premium bonds. 
Considering giving it a go. 
Questions:

Is it preferable to 1)savings account 2) ISA 
Let's say I have £100 a month to save (lay aside & not require access too) I have various options:
1) save in a regular savings account with a bank

2) put in into premium bonds where I have a chance to win big 
3) put it in an ISA 

At current I do option 1 then usually around new year I transfer what I've built up into an ISA , would it be more effective to just drop feed the money straight into an ISA each month instead? (Especially of stocks & ISA) 

Now I'm thinking I could "save" into the premium bonds so each month put the £100 in there let it accumulate for 10 months (increasiny my odds of winning) & then move it to ISA.

Which option would make my money work more for me? 

I suppose it's impossible to predict how much I would win on the premium bonds but it would comparing that figure with how much the money would potentially increase by if put into s&s ISA  for the same period. What we do know though is that in s&s isa I'd have no chance of big return in that time frame but putting it in premium bonds I could potentially  win big. 

Other alternative ideas also welcomed

Stubod

https://www.nsandi.com/products/premium-bonds

little_green

Stubod said:

https://www.nsandi.com/products/premium-bonds

Thank you. Have updated op with some questions 

Stubod

PB's work best if you can "max out" on them, ie stick £50k or as near as in them. The currrent headline rate is around 1.1%.

If you can only put in the odd £100 I would not bother as the chances of "winning big" are "really small"?...check out the probability graphs on the website....

https://www.moneysavingexpert.com/savings/premium-bonds-calculator/

eg...chances of wining anything on £1,000 worth of premium bonds in a year is zero...

If you want to save £100 per month you would be better off using one of the many regular savings accounts that are currently avilable..IMHO

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

Check out the Cambridge BS...?

little_green

Stubod said:

PB's work best if you can "max out" on them, ie stick £50k or as near as in them. The currrent headline rate is around 1.1%.

If you can only put in the odd £100 I would not bother as the chances of "winning big" are "really small"?...check out the probability graphs on the website....

https://www.moneysavingexpert.com/savings/premium-bonds-calculator/

eg...chances of wining anything on £1,000 worth of premium bonds in a year is zero...

If you want to save £100 per month you would be better off using one of the many regular savings accounts that are currently avilable..IMHO

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

Check out the Cambridge BS...?

Thank you I'll do some reading. What minimum monthly amount would you say would make it worthwhile? 

Stubod

I think your initial thoughts are the wrong way around, ie save into PB's and then take out a lump sum and put into an ISA, (would be better to do it the other way around as after a year in PB's the chances are you will not have won anything)

..I would not bother with a "monthly amount", better to build up a "pot" of (say), £20k then pay any "winnings" back into the pot if that is what you want to do,  but it really depends on what your savings / investment priorities are in terms of what you are looking to achieve and in what time scale.

eg building an emergency fund, saving for a house, saving for retirement etc?

strawb_shortcake

Personally, I'd likely give PB's a miss if I had less than £35k to put away. I have max holding and my returns have been pretty poor the last 6 months £125 and 3 months running with no prize at all. It does benefit me to have this money tax free, otherwise I'd probably be considering my options. 

The other benefit which is entirely not MSE is that it's been a little excitement once a month after a pretty pants couple of years

little_green

Stubod said:

I think your initial thoughts are the wrong way around, ie save into PB's and then take out a lump sum and put into an ISA, (would be better to do it the other way around as after a year in PB's the chances are you will not have won anything)

..I would not bother with a "monthly amount", better to build up a "pot" of (say), £20k then pay any "winnings" back into the pot if that is what you want to do,  but it really depends on what your savings / investment priorities are in terms of what you are looking to achieve and in what time scale.

eg building an emergency fund, saving for a house, saving for retirement etc?

So you think it would be more effective to continue saving into a regular savings account until built up a pot then put that as a lump sum into PBs rather than monthly amount ... Hmmm...  Currently I save into regular savings account but then put the sum of what I've saved over nyear into a s&s ISA (for long term)

I suppose if be looking at the PBs as a place to either hold money that needs to be accessible or as I said before use it as a holding place to accrue money before putting it into s&s ISA

I mean if I had an extra £50k to put in it & keep as accessable money is do that but right now I don't 
Though the money I put into PBs would be money I wouldn't plan on needing access to really though it's there if I did say in next 5 years. Money in s&s ISA is essentially for retirement/FI 

little_green

If I had 50k on the other hand in a savings account at a 1% interest rate I'd be guaranteed £500 interest for a year. Am I likely to win that much on PBs? 

In simple terms PBS sound appealing to me as I can keep money there risk free & possibly win reasonably big. 

I would use it alongside s&s isa not in place of. So it would be for money that can't go into s&s ISA either because I need quicker access, as a holding place until it can go into s&s isa or if I've exceeded the allowance (wishful thinking lol) 

Of course I suppose I don't need to use it for money related to isa at all I could use it like a savings account .... 

Albermarle

Money in s&s ISA is essentially for retirement/FI 

Normally contributing to a pension is better if you are saving for retirement , especially if you have earned income .
Or maybe a LISA is you are under 40 .

little_green

Albermarle said:

Money in s&s ISA is essentially for retirement/FI 

Normally contributing to a pension is better if you are saving for retirement , especially if you have earned income .
Or maybe a LISA is you are under 40 .

Could you elaborate why? 
I'm under 40. I wish to retire early so I suppose ISA is to fund me in the gap between "retirement" & pension access.