NSI Premium Bonds

kempiejon

Well, facetiously, nothing is completely risk free. I thought the chat was weighing the relative advantages of PBs verses cash and having taxable interest. If one concludes fixed term cash savings do not offer a valid increment in rate/incentives then looking at other fixed interest markets like gilts would be interesting. Some gilts offer a better return after tax for tax payers especially those on higher rate, so could be worth further understanding, especially if one has filled ISAs, PBs, SIPPs and maxed out available cash interest tax allowances.

missile

Thanks for your comments. I do understand, but do not agree.

Please note in my original post I did state:

I am a basic rate tax payer and expect to pay tax on my savings

I have maxed my ISA for 2026/7

I am not interested in any risk / longer term investment

Many thanks for reading and appreciate any advice

kempiejon

https://forums.moneysavingexpert.com/discussion/comment/82114550#Comment_82114550

right-ho @missile, I did see you don't pay higher rate tax nor want long term investment and even referenced the full ISA you didn't grasp my point that's fine.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82114494#Comment_82114494

In sterling terms they're as risk free as you get and match the protection for Premium Bonds. The point is that capital gains on low coupon gilts are tax free and they'll make up the vast bulk of your return. The expected returns on quite short dated gilts exceed the expected returns on PBs.

Brokers like Scottish Widows Share Dealing nee iWeb offer gilts at £5 per trade and no holding costs. Freetrade, owned by IG, offers them at zero commission and no holding costs but the range it offers is very limited.

Use the 'low' filter:

https://giltsyield.com/bond/

missile

https://forums.moneysavingexpert.com/discussion/comment/82114581#Comment_82114581

Of course I grasped your point, but I don't agree with you

DRS1

I am reminded of a meeting I had with a lady in Britannia Building Society many many years ago. I think she was a FA. At one point she asked me what my risk appetite was on a scale of 1 - 10. My reply was 0. She then started explaining to me that there was more to risk than just investment risk. She talked about inflation risk. I was having none of it. Cash is King, if you put it in shares then the bottom could fall out of the market and all that. I feel quite sorry for her now.

kempiejon

Looking at the past 20 years inflation annualised has averaged under 3% over that period, can we remember 10% just a few years back, some of that time and certainly today a basic rate tax payer can pace inflation in the best savers or lose money in most current accounts. The idea that something was a tenner in 2006 would cost near double (~£17.86) today is a reminder.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82115524#Comment_82115524

Yes that reminds me back in 2006 you could get a savings account or a fixed term bond paying 7% or thereabouts. Now interest rates are knocking on the door of 5% but there was a long period in between when you would be lucky to get 1%. You can't rely on savings to keep pace with inflation (especially not if you pay tax on the interest or dare I say it spend the interest).

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82115469#Comment_82115469

Of course, she was right and you were wrong - it's your prerogative to consider a narrow personal definition of risk to only mean risk of capital loss, but from a regulated advisor perspective, she was obliged to highlight that this isn't the accepted definition and that there are other risks…

kempiejon

@DRS1 If we're looking for something one can rely on to pace inflation index linking government bonds I suppose best fit that brief. I want the chance to beat inflation with the majority of my pot so look elsewhere and use cash which can lag inflation for bills, shopping and so on.