Premium Bonds or ISA?

scott_bristol

Hey, I'm 31. I'm saving for a home deposit/mortgage. 

I've so far managed to save £37,000.

I currently have all of that in premium bonds. In the last year, I have won around £1500. So not too bad. 

Someone told me though, I could probably get more interest if I put that into a savings account. The only thing with that is I may have to pay tax, plus I wouldn't have any chance of winning the £1m prize.

I mentioned this and the person said "but with the interest you get, you could buy a couple of lottery tickets per month and still be better off".

What is your thoughts on this? Better to stick with Premium Bonds, or do I put my savings into a high interest account, and buy a few lottery tickets?

I love the kind of excitement of viewing the NS&I app each month to see if I win. I just keep thinking to myself - what if I take the money out, and that could have been the month where I win big?

Inbetweeners

You have posted in the holidays forum!

Why not put what you can in a Lifetime Isa for the Government top up. You can put £4000 in per year and will get £1000 free. 

Newbie_John

Well it's all down to numbers..
Best fixed for 1 year ISA pays 4.7% so you'll get £1739, premium bonds average to something like 3.5 so per average £1300 yearly return.
As mentioned above, if saving for house LISA is probably best, as it pays few % plus government top up, £4000 put a year would definitely become £5000 towards your house, maybe little more.

ISA (all forms) is limited to £20k a year, so if I was you I would open one now, put £16k there, then open LISA, and put £4k there - after just one year this would generate already more than your premium bonds. The rest keep either in premium bonds for the thrill