Premium bonds as savings

ReportInvestor

The Sunday Times last week revealed that it is official Treasury policy to promote investments by advertising the tax breaks and then to claw back the difference through lower interest rates.

The ST got this info from minutes of 1998, using the Freedom of Information Act.

So I have little long term confidence in the returns on Ernie. National Savings recently increased the Ernie limit to £30K. They may wait to finish raking those top up extra £10K sums from higher rate taxpayers and then reduce the average return relative to base rates.

The revenue squeeze is on and Gordon's political career depends on postponing or minimising tax rises in the next four years, not dishing out prizes from Ernie.

dazzles

I would strongly advise against premium bonds......The chances of winning the big prizes are less than tiny. I bought the maximum at the time £20000 worth and held them for 3 years during which I won £1250 all in £50 prizes.... a poor return of 6.25% over 3 years. I have now invested the money in an instant savings a/c and "win " at least £65 amonth in interest....EVERY MONTH......NO CONTEST!!

chickpea

It's the sensible way to gamble, if gambling's your thing!

The way I work it is:

I used to buy £1 lottery ticket a week that's 52 quid a year, 520 quid over 10 years. BAD odds and you lose that cash for good.

Now I no longer do that. I have bought £500 of Premium bonds and intend to hold them over ten years. Same outlay as lottery, better odds and best of all - if I don't win - I get my stake back.

But my real savings are in ISAs and high interest savings, not premium bonds because you have to assume if the odds are against you, you won't win! (But keep a hopeful hand in anyway!)

Tayus

i have 1350 worth and buy 50 a month but still HAVENT WON A BEAN!!!!!!!

soolin

I've got about £2000 worth and win approx £50 per year. My husband on the other hand has about £6000 and wins quite a few £50 prizes a year. Last month he won 2 seperate £50 prizes. I come out slightly below the 'average' rate but my husband comes out well over it.

On the same subject did anyone see the press article about one of the August million pound bond winners? Apparently the bond was bought in June 2005 and entered for the first time into the draw on 1st August and won a million.

That's why I keep my premium bonds, I am an optimist at heart.

Soo

Stonk

Yep, a bond in its first draw won one of this month's millions.

The best result I have ever seen, though, was about a year ago, when someone with a total holding of £17 which they had held since the year dot suddenly went and won a million quid.

General rant:

The AVERAGE return is 3.25%, no matter how much you try to deny it. Granted, the vast majority of people won't receive 3.25%. The MEDIAN - i.e., the return that half the people will do better than and half worse than - is perhaps of more use. Incidentally, if you assume you're never going to win £5,000 or above, the effective interest rate works out at 3.055%, which is like 5.09% to a higher rate taxpayer. So, fairly competitive at the moment.

pattycake

I have a £1 bond bought for me by my mother when ERNIE was first introduced. That is 40 some years ago.

I have never won anything!! What a surprise.

MattyNeth

I have had £1500 since December 2004. I have won £50 twice and last month £100

fsdss

i also have a £1 premium bond bought in 1969 and won £50 recently-


happy days