Why buy Premium Bonds when the Lottery is the same?

kmhtkmhtkmht

Why buy premium bonds when it seem's it just as silly as playing the lottery?!

nrsql

Not really.
With premium bonds you get your money back and should expect some return - think it's around 2.6%? Easy to do the calculations - only take into account the £50-£100 prizes - that's about what you should expect if you have a fair amount in them.

Less than an ISA but not too much less than savings account for high rate taxpayer.
And always the chance of a big profit - but don't expect it.

A bit of fun but much better value than the lottery imho.

trademark

No comparison .

geo555

Premium Bonds are an investment. Instead of interest you can win a prize and because they are tax free, you get a better equivelant interest rate.
Interest rate 3%
22% tax payer = 3.85%
40% tax payer = 5%

Mark7799

kmhtkmhtkmht wrote:

Why buy premium bonds when it seem's it just as silly as playing the lottery?!

Because the lottery doesn't give you your money back on tickets that haven't won

jezza1O1

lol - surely a wind up thread?

System

Whether or not its a wind up - i still agree the money could be invested better elsewhere. Thats just my opinion though.

mbamick

Judi wrote:

Whether or not its a wind up - i still agree the money could be invested better elsewhere.

I'm not convinced you'd be saying that if you'd won the £1 Million monthly prize, Judi.

However, I can understand your point of view. Me? I'm a higher rate taxpayer, with mortgage paid off and almost all of my "Gordon Brown" tax shelters used up. My annual return on premium bonds has been between 4%-5% tax free. So I'm happy with them. :T

Kantankrus_Mare

mbamick wrote:

I'm not convinced you'd be saying that if you'd won the £1 Million monthly prize, Judi.

However, I can understand your point of view. Me? I'm a higher rate taxpayer, with mortgage paid off and almost all of my "Gordon Brown" tax shelters used up. My annual return on premium bonds has been between 4%-5% tax free. So I'm happy with them. :T

Out of curiosity....how much do you have in bonds? I have some that my nanna bought me when I was a kid and have had one odd £50 prize I think though admittedly Its not a vast number of bonds.

And yes.....they do know of any changes of address

System

I'm not convinced you'd be saying that if you'd won the £1 Million monthly prize, Judi.

Fat chance of that!!!:rolleyes:

nrsql

geo555 wrote:

Premium Bonds are an investment. Instead of interest you can win a prize and because they are tax free, you get a better equivelant interest rate.
Interest rate 3%
22% tax payer = 3.85%
40% tax payer = 5%

see http://www.nsandi.com/products/pb/howitworks.jsp#prizes
Ignore everything above £100 as you are very unlikely to win those - and if you do you are in profit, you will be getting a lot more than the interest rate so it would be misleading.
Intrest rate for the prize fund is 3%.
£50 & £100 prizes are 89% making 2.67% which is the return you should expect on a large holding. You might be lucky or unlucky but should be somewhere near there.
The 3% rate is misleading as it includes the higher amount prizes which are not divided by the holding.