What do you think of Premium Bonds?

Eco_Miser

Jacob_Jones said:

Eco_Miser said:

With Premium Bonds you need to see it from the other side.
ie What benefit is the UK government getting from this deal? 
Why are they offering you the opportunity to win these cash amounts? What's in it for them? 
They won't be doing it for your benefit. They will have their own agenda and incentives. 

Mostly they're doing it to encourage saving. They are diverting money that would be going on Football Pools (back in 1957) or the Lotto, or into betting shops into sort-of savings accounts for the punters. So when the punter has a financial emergency, they find they actually have an emergency fund.

Most of the time, though not right now, they could issue more gilts at a lower coupon than they pay into the prize fund.

I suspect the government is doing it to psychologically "butter up" the public in a subtle way. 
Offer nominal prizes a nominal amount. The public get used to trusting the government and lending them money. 

Then when something big comes along (eg a war), the government hits the public with their new request: 
"Hand over your silver for War Bonds".
Joe Public has been conditioned to trust the government, so he goes along with it... 

And that is a cynical opinion.

Remember that NS&I used to be the Post Office Savings Bank (when the Post Office was a government department), which was set up specifically to offer poor people the opportunity to save safely.

There's been a few wars in my lifetime, but I can't remember any War Bonds being issued, and if the previous war had been lost, the pound sterling would have been worthless anyway.

subjecttocontract

I pay higher rate tax on my savings so as p/bonds are tax free it makes perfect sense for me & between my wife & I we can find somewhere to put £100k of spare cash. We've had lots of prizes including a few up to £1000 and overall the returns are pretty good. Up until recently we have had a long run of low interest rates so it was always difficult to find somewhere suitable to put that money. Once you have both used your annual ISA allowance the choices become quite limited.

I'm not a gambler....never ever bought a lottery ticket or a scratch card but I also bought some windfall bonds from the Family Building Society. They were £10k each, it's a monthly lottery with odds better than p/bonds and they pay interest equal to the bank base rate. So, not to bad now they pay 3% and we stand a chance of one of the monthly prizes up to I think £50k.

diystarter7

We like them but if we think deep, its like throwing money down the dt=rain every week as we are not getting the returns. However, our children who are 40% taxpayers and two have max holdings and get interest from other savings they feel they are ok

Its the surprise that we anticipate that makes them ok.

lohr500

For me PB's made sense over the past couple of years when easy access and fixed ISA and non ISA savings rates were really low. Our £100k in PB resulted in £1750 winnings across a full two years rom Nov 2020 to Nov 2022 which I consider to be a good result compared to the comparable savings rates over the same period. 

Accepting that we may miss out on a jackpot, I think the £100k is now better off in a combination of 1 year fixed and easy access accounts. We have moved funds into the Santander 2.75% easy access, 4.6% UBI 1 year fix, 3.85% 1 year fix Virgin cash ISA and the 2.7% Ecology easy access ISA . It has been a busy past week or so setting all these up, but I am hopeful that our returns in 12 months time will better the "average" PB winnings. We've gone with a combination of ISA and non ISA accounts to avoid any tax on interest. 

Reddleman79

I like Premium bonds. When the banks were paying .05% savings interest my Premium bonds averaged at about 1.3% with the outside chance of a big one. The money is safe and they're tax free.

garyelder

We had to 2 lots of 50k I cashed one lot in now getting nearly 5% monthly interest for 3 years the other 50k won £100 last month this month £25  so December that will cashed in if don’t improve 

Malthusian

Jacob_Jones said:

Then when something big comes along (eg a war), the government hits the public with their new request: "Hand over your silver for War Bonds".Joe Public has been conditioned to trust the government, so he goes along with it... 

What silver? The only silver anyone in the UK owns who isn't a prepper is the trace elements in their mobile phone. Maybe a few aristos still have silver spoons, but most of them are too bankrupt to lend any money to the UK Government.

Jacob_Jones said:

The paper notes that were fiat currency may have become worthless. 
But the coins containing silver would not. 

No, the coins containing silver would have been merely near-worthless. Even Roman Empire coinage was debased.

If the UK had lost World War 2 and jackboots had echoed down Pall Mall, nothing much would have happened to the currency. Vichy France carried on using the Franc. The Nazis didn't temporarily take over most of Europe by pointlessly antagonising the local populations by replacing their currency with Reichsmarks.

DjangoUnchained

i started buying PBs about a year ago building up to the max £50k. won a handful of £25 and £50, a bit of fun. I treat them as my emergency fund, hoping i can cash them within a few days. I have an instant building soc account too for emergencies.

lohr500

DjangoUnchained said:

i started buying PBs about a year ago building up to the max £50k. won a handful of £25 and £50, a bit of fun. I treat them as my emergency fund, hoping i can cash them within a few days. I have an instant building soc account too for emergencies.

But £50k now would give you £1375 interest over a year with the best easy access savings account or easy access cash ISA. WithPB it is more of a gamble on what prize value you may get.

Albermarle

As for winning the million, while it's highly unlikely, the odds for a couple who both have the max 50k holding of winning the million is about 1 in 18,000 over the course of a year, and their odds of winning 25k or higher in a year is actually as low as 1 in 750.
I think 'highly unlikely' is an understatement. According to your figures , a couple with £100K between them would win a million every 18,000 years ( or once every 216,000 monthly draws ) and £25K or more, once every 750 years.