What do you think of Premium Bonds?

System

This discussion was created from comments split from: The Top Easy Access Savings Discussion Area.

patpalloon

Slight tangent, but what do people think of Premium Bonds? I like em and still dream of a decent payout. But on the whole they pay less than savings, particularly as rates have gone up. And I believe you have to have a NS&I savings account with min of £500 which pays poor interest - but correct me if I am wrong.

alternate

patpalloon said:

Slight tangent, but what do people think of Premium Bonds? I like em and still dream of a decent payout. But on the whole they pay less than savings, particularly as rates have gone up. And I believe you have to have a NS&I savings account with min of £500 which pays poor interest - but correct me if I am wrong.

You don't need a savings account - at least you didn't when I got mine.

Main advantage of PB is no tax on winnings, if you have maxed out ISA and your allowances.

I-LOV-MONEY

patpalloon said:

Slight tangent, but what do people think of Premium Bonds? I like em and still dream of a decent payout. But on the whole they pay less than savings, particularly as rates have gone up. And I believe you have to have a NS&I savings account with min of £500 which pays poor interest - but correct me if I am wrong.

I have PB but don't have a NS&I savings account.

PB are like the lottery.  You 'invest' in the hope that it maybe your 'turn' to win the big prize !!

mebu60

As alternate says above :-)

refluxer

As mentioned above, Premium Bonds can be a good option for those who pay tax on their savings. Currently, the Premium Bond prize rate is 2.20% which is equivalent to a savings account paying 2.75% for a basic rate tax payer who pays tax on their savings and 3.67% for anyone who pays 40% tax.

In reality, you could expect to get slightly under that prize rate but you'll need to be a 'big holder' (ie. hold tens of thousands) with 'average luck' in order to achieve it. 

patpalloon

alternate said:

patpalloon said:

Slight tangent, but what do people think of Premium Bonds? I like em and still dream of a decent payout. But on the whole they pay less than savings, particularly as rates have gone up. And I believe you have to have a NS&I savings account with min of £500 which pays poor interest - but correct me if I am wrong.

You don't need a savings account - at least you didn't when I got mine.

Main advantage of PB is no tax on winnings, if you have maxed out ISA and your allowances.

I don't know why I thought that. I have the NS&I Income Bonds account which needs a min of £500 to keep open so have just closed it. Thanks. I've still got the Premium Bonds.

Flugelhorn

I have just cashed in my 26K - had them a long time and don't really think I get that much back from them 

eskbanker

Jacob_Jones said:

I don't like them. 
Partly, because I don't feel that I have any control over my returns. 
With equities I can choose those companies that I have some confidence in. 

But how do you have any control over the returns from those equities (as opposed to selecting them and believing you're buying them cheaply in the first place)?

Albermarle

Jacob_Jones said:

eskbanker said:

Jacob_Jones said:

I don't like them. 
Partly, because I don't feel that I have any control over my returns. 
With equities I can choose those companies that I have some confidence in. 

But how do you have any control over the returns from those equities (as opposed to selecting them and believing you're buying them cheaply in the first place)?

I have some control over the capital gain in the share price.
If I buy oil majors when the crude oil price is low (eg March 2020) then it is likely the share price will increase as the oil price increases. It's not risk free, but it suits me. 

Similarly, if I buy defensive stocks when growth stocks are in favour, I know that sooner or later, when interest rates rise and the economy falters, tobacco will become more popular than Netflix. 

I also know that as I am not a fund manager, I don't need to worry about my quarterly performance. I can just sit and wait. 

I used to think that my approach was just common sense. 
But over the last few years, I have found that it is at odds with the mentality of most other people. 
However, I have the type of personality that is happy to ignore them and do my own thing. 

The thread was about comparing PB's with savings accounts. Not really sure it digressing within one page to a totally different topic, is helping the OP.

eskbanker

Jacob_Jones said:

eskbanker said:

Jacob_Jones said:

I don't like them. 
Partly, because I don't feel that I have any control over my returns. 
With equities I can choose those companies that I have some confidence in. 

But how do you have any control over the returns from those equities (as opposed to selecting them and believing you're buying them cheaply in the first place)?

I have some control over the capital gain in the share price.
If I buy oil majors when the crude oil price is low (eg March 2020) then it is likely the share price will increase as the oil price increases. It's not risk free, but it suits me. 

Similarly, if I buy defensive stocks when growth stocks are in favour, I know that sooner or later, when interest rates rise and the economy falters, tobacco will become more popular than Netflix.

OK, so you feel you have some control over the returns from those equities by virtue of selecting them and believing you're buying them cheaply in the first place?

Edit: previous post is correctly identifying this as off-topic, so best not pursue this digression any further....