Premium Bonds Vs ??

Mintyrose

We have 2 accounts one with £50k the other £6k only won on the £50k this month~ £25~ OH very disappointed and sad, we are saving for or 1st home, and every month he plans what to do with the ‘big’ win we are going to get 😔 I don’t think they are good anymore for his mental health ~ I enjoy the ‘gamble’ but is there a better way for us to progress our dream? Sick of paying rent fo 35 years, and neeed our own place before OH retires in 10 years, can’t do shares as we need a guaranteed return, help? 🙏 

Dazed_and_C0nfused

With £56k you can probably guarantee a "win" of ~£200-230 each month with the best savings accounts.

masonic

For a basic rate taxpayer, the return on a standard savings account after tax is competitive with Premium Bonds if you have average luck. So if the gambling aspect is problematic for MH reasons, it would be a simple switch and won't make the prospects of saving for a property materially worse than they are right now. It sounds like you won't be eligible for the Lifetime ISA unless you already hold one, but that is worth considering if I am wrong.

Flugelhorn

you honestly have to forget about PBs each month, I had them for decades and max I won any month was £100 

Sarahspangles

If you have only ‘average luck’ with premium bonds then you’re missing out on the slightly better interest rates available with other savings accounts. And the problem with any savings account is that you’re lucky if the rates keep up with inflation. Over the longer term investments typically out perform savings returns, but you’re at the mercy of the markets.

Are you really not in a position to buy with your current deposit plus the amount you spend in rent?

InvesterJones

Since the aim is to use the money in less than 10 years then you're correct shares are probably too volatile. Which leaves you with bonds, savings, and premium bonds as mainstream options.

Premium bonds rates are variable and adjusted much like current savings accounts to make sure they are not too competitive - on top of that the return is not guaranteed, so while they're a lot better than gambling, they're not suitable for something you need certainty over. A top rate savings account will likely beat them and be guaranteed - you could also consider a notice (e.g. 30 days) or limited access (e.g. single access) account since you will likely make a single large withdrawal after consideration.

You haven't mentioned tax status or whether you've used any of this year's ISA allowance - if not then you can shelter nearly all of it and maybe the rest could be organised to maximise the use of personal savings allowances for example. If you don't have any allowances remaining then premium bonds make a little more sense in terms of their ease of access.

I think the other thing that would be helpful would be to sit down and work out what your current trajectory is in terms of when you are likely to be able to buy - if it's really quite a distant (6-10yr) prospect then you could maybe consider a fund that blends shares and bonds.

Doonhamer

But you just never know when lady luck can call! 1957!

masonic

I left a quid in when I moved on a few years ago just to keep the account active should I wish to quickly buy more. No prizes as yet. I'll be sure to report any big win

Eyeful

Mintyrose said:

OH retires in 10 years, can’t do shares as we need a guaranteed return, help? 🙏 

1. Anything to do with money has risk attached, all that changes is the size and type of risk. 
(a) Low risk savings accounts and Premium Bonds are at risk of inflation. This means your money buys less & less over time because prices keep rising.
(b) Investments: You may get less out than you put in. Maybe lose it all.

2. If you need a guaranteed return, then why are you in Premium Bonds at all?

3. If you need a guaranteed return would not an annuity or a Fixed Rate Savings Account be a better option?
https://moneyfactscompare.co.uk/savings-accounts/

4. You are already gambling with the return rate by using PB's.
With a Global Multi Asset Fund over a 10 year period the chance of winning is at least 90%.
 May be you should look into that type of investment and consider if you might put some of your money into one and not touch it for 10 years.

Albermarle

Mintyrose said:

We have 2 accounts one with £50k the other £6k only won on the £50k this month~ £25~ OH very disappointed and sad, we are saving for or 1st home, and every month he plans what to do with the ‘big’ win we are going to get 😔 I don’t think they are good anymore for his mental health ~ I enjoy the ‘gamble’ but is there a better way for us to progress our dream? Sick of paying rent fo 35 years, and neeed our own place before OH retires in 10 years, can’t do shares as we need a guaranteed return, help? 🙏 

The problem here is that your OH is almost expecting a big win, when in fact they are pretty rare.
You have to think of Premium Bonds being more like a savings account, but with a very very small chance of a big win.
If you hold the full £50K then you can expect to win a Million on average every 100,000 years ( or something like that)
I have had varying amounts of them for decades, and my biggest prize was  £500 about 25 years ago.

Mintyrose

masonic said:

For a basic rate taxpayer, the return on a standard savings account after tax is competitive with Premium Bonds if you have average luck. So if the gambling aspect is problematic for MH reasons, it would be a simple switch and won't make the prospects of saving for a property materially worse than they are right now. It sounds like you won't be eligible for the Lifetime ISA unless you already hold one, but that is worth considering if I am wrong.

Unfortunately we are too old for the Lifetime ISA