Is it still worth having any Premium Bonds?

FlorayG

While the interest rate was dire I had all my savings in Premium Bonds and made a nice 3% return on investment. Most of that money I've since spent and now I can get 5% on a savings account I haven't been putting any more into PB but I do still have £1,000 in there.
I'm trying to decide between the (rare) chance of winning quite a lot (even £100 is 'quite a lot' on an investment of £1,000 and some people DO win thousands) or just closing the account and putting it into my savings account
I'm also thinking that money is sort of locked away; accessible but not instantly, so I'm unlikely to spend it unless i really need to
What have you done about PB that were a good investment for returns but now aren't so good?

kempiejon

For me PBs are still an OK place to hold cash. The amount is tax free, protected, quick access. but with £1000 you won't get the headline rate, you'd need to be pretty lucky to get anything so pop that into a 5%er. On a full holding you might get more average returns of the quoted 4%ish.

FlorayG

kempiejon said:

For me PBs are still an OK place to hold cash. The amount is tax free, protected, quick access. but with £1000 you won't get the headline rate, you'd need to be pretty lucky to get anything so pop that into a 5%er. On a full holding you might get more average returns of the quoted 4%ish.

Yes I realise that - when I had *everything I own* in there I regularly got £25 paid out, now I'm lucky to get a fiver every 3-4 months. But I'm also thinking, money I really can spare, maybe I should try to build it up slowly, maybe buy £100 a month - how quickly will the value of that £100 degrade with no interest paid?
I'm still thinking about that possible big win and I do at least have the sense not to buy lottery tickets lol

El_Torro

I think it's still true that Premium Bonds are good, as long as you would otherwise pay 40% tax on any interest. If you can save elsewhere either with no tax or with only 20% tax I wouldn't bother with Premium Bonds. 

subjecttocontract

Premium bonds pay an average 4.4% but it's tax free so a 20% basic rate tax payer would need 5.5% and a higher rate payer 7.3% before tax to get the same return. Those are the numbers that make them worthwhile once you have maxed out ISAs.

droopsnoot

I have money in premium bonds, and have had some decent returns this year in particular, but my ongoing average is around 1.5%. I'm happy for them to stay there on the off-chance of a big prize, but that's just my own specific situation. Wasn't there a recent big prize on a small bond holding that hadn't been owned for very long?

FlorayG

droopsnoot said:

 Wasn't there a recent big prize on a small bond holding that hadn't been owned for very long?

Yes, and a couple of years ago somebody won big with a single premium bond his mother bought him when he was born!

HSC_2

FlorayG said:

kempiejon said:

For me PBs are still an OK place to hold cash. The amount is tax free, protected, quick access. but with £1000 you won't get the headline rate, you'd need to be pretty lucky to get anything so pop that into a 5%er. On a full holding you might get more average returns of the quoted 4%ish.

Yes I realise that - when I had *everything I own* in there I regularly got £25 paid out, now I'm lucky to get a fiver every 3-4 months. But I'm also thinking, money I really can spare, maybe I should try to build it up slowly, maybe buy £100 a month - how quickly will the value of that £100 degrade with no interest paid?
I'm still thinking about that possible big win and I do at least have the sense not to buy lottery tickets lol

Are you thinking lottery?  The minimum prize for PBs is £25.  Definitely no "fivers" being paid out.

FlorayG

HSC_2 said:

FlorayG said:

kempiejon said:

For me PBs are still an OK place to hold cash. The amount is tax free, protected, quick access. but with £1000 you won't get the headline rate, you'd need to be pretty lucky to get anything so pop that into a 5%er. On a full holding you might get more average returns of the quoted 4%ish.

Yes I realise that - when I had *everything I own* in there I regularly got £25 paid out, now I'm lucky to get a fiver every 3-4 months. But I'm also thinking, money I really can spare, maybe I should try to build it up slowly, maybe buy £100 a month - how quickly will the value of that £100 degrade with no interest paid?
I'm still thinking about that possible big win and I do at least have the sense not to buy lottery tickets lol

Are you thinking lottery?  The minimum prize for PBs is £25.  Definitely no "fivers" being paid out.

Is it?Just goes to show how long it has been since I won anything ha ha

zagfles

FlorayG said:

droopsnoot said:

 Wasn't there a recent big prize on a small bond holding that hadn't been owned for very long?

Yes, and a couple of years ago somebody won big with a single premium bond his mother bought him when he was born!

Yes but it's very rare, that's why it makes headlines. With £1000 your chances of winning a big prize (anything over £100) is miniscule. Even a small prize would likely only happen every 2 years or so. 

Kim_13

It might be worth setting up Regular Savers and then when those mature, putting the proceeds into PBs. Deposit limits vary from £50 to £500 per month generally, though I would say the average is £250, so a fully funded account would give you a £3,000 lump sum plus interest to deposit (£3,250+ if the account is one of the calendar month ones that allows a 13th deposit.) You can have more than one Regular Saver at a time if you have the funds to do so.

From my experience, I have a £3,500 block that wins far more regularly than any of my smaller holdings totalling about the same combined, though obviously every £1 has statistically the same chance of winning a prize.