Is NS&I really worth investing with?

adindas

RhondaD said:

I've had £4,000 in premium bonds for a while but I'm starting to think I would get better returns elsewhere. In the last 15 months I've won absolutely nothing. Zilch. Every single month, nothing. I feel I've wasted 15 whole months which even in a savings account would have earned me more. It just seems pointless investing in premium bonds. They don't seem to win anything. I've even asked them if it's usual to not even win a fiver in 15 months and they just gave the usual guff about how every bond has the same chance of winning blah blah blah, but It seems like the 5,000 bonds I bought don't have any chance of winning.

RhondaD said:

So effectively I've not even made the expected return if I have made absolutely nothing in 15 months? I think I'm probably better with a guaranteed return from a savings account with the amount I'm investing. 

IMHO based on probability alone is not worthy. You might get a better risk / reward reward by investing.

Also why would anyone want to get a lower hypothetical interest if you could get much higher guarantee interest  with other saving products ? The exception is when you have maxed out all of the saving accounts paying similar or higher interest rates and/or for tax purposes.

Malthusian

IMHO based on probability alone is not worthy. You might get a better risk / reward reward by investing.

Not really a fair comparison - the risk of Premium Bonds is zero which is not the case with "investing".
A fair comparison would be taking the interest from a guaranteed savings account and investing it (giving you a random return with no risk to the original capital, just as Premium Bonds).

adindas said:

Also why would anyone want to get a lower hypothetical interest if you could get much higher guarantee interest  with other saving products ? 

For the same reason people play the lottery. 
If the only people who bought Premium Bonds were higher rate taxpayers who'd already maxed out all available sources of higher guaranteed interest, and were taking advantage of the boost to the effective net interest rate given by Premium Bonds' tax-free status, Premium Bonds wouldn't exist.

Albermarle

Also why would anyone perfectly rational want to get a lower hypothetical interest if you could get much higher guarantee interest  with other saving products ?

I have added to your comment in bold, to make the point that your average human being is not perfectly rational, far from it in fact.

People like checking if/what they have won each month. It brings them a small amount of pleasure if they win. They exchange the news of the win with family and friends, or even check on their behalf ( the NS&I app cleverly facilitates that) . The fact that they could gain an extra 1% in a boring savings account, is of little consequence ( even if they were aware of the fact, which many will not be )

RhondaD

Albermarle said:

Also why would anyone perfectly rational want to get a lower hypothetical interest if you could get much higher guarantee interest  with other saving products ?

I have added to your comment in bold, to make the point that your average human being is not perfectly rational, far from it in fact.

People like checking if/what they have won each month. It brings them a small amount of pleasure if they win. They exchange the news of the win with family and friends, or even check on their behalf ( the NS&I app cleverly facilitates that) . The fact that they could gain an extra 1% in a boring savings account, is of little consequence ( even if they were aware of the fact, which many will not be )

Or they just post about it on mse 🤣

jelajelavic

Cus said:

Unless you have the maximum and you are a additional rate tax payer then it might not be worth it.  If you are the above, I don't know any better more secure tax free place for that sum.

I think this is an important point that most people are missing. If you are a high rate tax payer and have a decent chunk to save then PBs are a really good option. Expected return is similar to current saving rates so the tax free element is a big positive 

Obviously they’re not a replacement for stocks and shares. 

But if you want to save, are a high rate tax payer and already earning £500 in interest, then the tax free return is decent. 

Also good for house deposits and things like that. 

And the added chance, albeit small, of a large payout!