Premium bonds/Savings-whats best

oysterman

My mum wants to invest £100 x 4(one off payment to each great grandchild).

She suggested premium bonds but i said she would be better off opening a savings account for each child. Which would be better? The oldest child is 18 months so looking for long term growth. Receiving the money when they are approx 21.

She wants me to look after the account/bonds. Are there any legal problems i should be aware of?.

Cheers in advance

Lokolo

Um from what I can remember reading on these forums, premium bonds don't get a decent return unless you have a lot of them. If I were you, stick it in a savings account.

My mum put £100 in premium bonds when I was really young, like 2 or something, now 19, and she doesn't know where she put the proof of having them.. lol...

neilp

Ordinarily I would say that the top instant savings accounts virtually always offer a better return than premium bonds. However, for £100 the amounts of interest involved would be so negligible that premium bonds actually may not be a bad bet, as there is a chance - albeit tiny - of winning a large prize.

I think it is fairly common for parents to hold bonds on behalf of children - no doubt there is info on the NS&I website.

westy69

savings equal a guaranteed return, PB's a bit of a gamble ie maybe no return (except your initial stake) or maybe a big win.

Toastie

oysterman wrote: »

My mum wants to invest £100 x 4(one off payment to each great grandchild).

She suggested premium bonds but i said she would be better off opening a savings account for each child. Which would be better? The oldest child is 18 months so looking for long term growth. Receiving the money when they are approx 21.

She wants me to look after the account/bonds. Are there any legal problems i should be aware of?.

Cheers in advance

There is a calculator on the site, http://www.moneysavingexpert.com/savings/premium-bonds-calculator/

One person said there is a negligable, remember that it is £400 pounds, your looking over 10years around 85% less chance in premium bonds earning what you could in a 6%ISA.

Savings would always be better, if compounding at 6% over 10years = £316 pounds worth of interest.

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#saving

To show what you can get at different interest rates (my calculations were in an ISA)