Premium Bonds
Comments
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In which case it's probably worth reading the article again, and in particular quotes likedont_use_vistaprint wrote: »My understanding from the article (and it was a little while ago I read it) was that:
> The conclusion was they are really not a good choice
> No discussion of luck, which is important in many investments, he focussed on just the statistical / probability analysis
> Mostly just compared them to savings , which they are clearly not. If you want a steady fixed return they are not fo you
That's mostly why I think my view is different to his.
andThe nearest thing Premium Bonds have to an interest rate is their annual prize rate, which is currently 1.4%. The interest rate describes the "average" payout, but it is just a vague watermark.
andAll my comparisons with savings products above are based on somebody who has average luck and indeed that is the sensible way to assess this. However it is impossible to ignore the fact that some will have better than average luck, and indeed that does need to be factored in to your decision.You're actually likely to get quite a lot less than 1.4%, and there's a negligible chance of winning a million. If you know and you're OK with this, then investing in Premium Bonds isn't a bad plan.0 -
I think lots of people hold them for the chance of winning a big prize, which is no different to those doing the lottery and people don't tend to bang on about that being stupid.
We've got a number of current accounts and regular savers earning decent interest and a S&S ISA each. So I feel quite comfortable holding a few thousand pounds in PBs and if I don't win, I'll live with that.0 -
I have a few Premium Bonds, for the miniscule chance of a big win, since I'm already got lots of investments and savings to provide an income supplement.I think lots of people hold them for the chance of winning a big prize, which is no different to those doing the lottery and people don't tend to bang on about that being stupid.
I like people who do the lottery. They paid my salary for six years, refurbished my local war memorial and now have guaranteed a group I belong to will continue another year. I wouldn't do the lottery myself though. That would be stupid.;)Eco Miser
Saving money for well over half a century0 -
I have regular savings accounts, plus current accounts, ISAs (cash & S&S), and use premium bonds as an easy(ish) access account to park cash waiting to move into fully subscribed other accounts. Usually have between 20-30k in there.
Return about 1.3% tax free, which is OK.0 -
dont_use_vistaprint wrote: »I disagree with Martin's thoughts on this. I like them as part of a balanced portfolio because the worst that can happen is you make no gains, unlike stocks,
Who was comparing them to investments in equities? I certainly wasn't, and I don't think anyone else was. They were being compared to savings products, however, which pay a guaranteed return.dont_use_vistaprint wrote: »the best that can happen is you get lucky and make killing, like the lottery or gambling, but for slightly smarter people,
Why do you think people who play the lottery aren't as smart as you? That seems a rather arrogant and conceited view.dont_use_vistaprint wrote: »and unlike bonds and savings which give no opportunity for decent gains.
The chance of gains is actually greater with a savings account, and it depends on the type of bonds you purchase, but even holding UK gilts still means that you will be paid the coupon, unlike premium bonds were you could easily end up with nothing, and a "stake" that is reducing in value.dont_use_vistaprint wrote: »I hold 10K and Im hoping for a bit of luck! If it was less I probably wouldn't bother and if I don't get a few £25's Ill shift them to real bonds.
Good luck.0 -
In which case it's probably worth reading the article again, and in particular quotes likeandand
I still disagree, it's all based on the statistical probability of winning, and banging on about crap interest rates.
People who hold them in anything but large amounts clearly don't believe they have much statistical probability of winning anything significant or think they have are comparable to high interest savings accounts.
Honestly, I find the article and some of the responses here against them insulting to anyone with even a slightest bit of intelligence"It is not the critic who counts..." - Theodore Roosevelt0 -
ValiantSon wrote: »Why do you think people who play the lottery aren't as smart as you? That seems a rather arrogant and conceited view.
I never said as smart as me. But why do I think people who invest in PB's are smarter than those who don't, and who also play the lottery ? I've never done the lottery but have always been interested in what motivates people I know who do. Its nearly always a desire to get rich without having to work for it or make wise decisions with finances. I asked my friends and work colleagues and people I know about PB's and this is what I found.
People who had cash in PB's = spending within budget, generally debt free = fairly wise when it comes to money, saving
People without Cash in PB's and who also play the lottery = No savings and lots of Credit cards / debts, often higher earners than above = not very smart decision makers with finances.
That's not arrogant or conceited , it's what I found"It is not the critic who counts..." - Theodore Roosevelt0 -
I'm not quite sure what you claim to be disagreeing with anymore! I was simply picking up on your assertion that by favouring PBs you're disagreeing with Martin's view as expressed in the article on MSE but I still don't see that article as being anti-PBs in the way you seem to be suggesting.dont_use_vistaprint wrote: »I still disagree, it's all based on the statistical probability of winning, and banging on about crap interest rates.
People who hold them in anything but large amounts clearly don't believe they have much statistical probability of winning anything significant or think they have are comparable to high interest savings accounts.
Honestly, I find the article and some of the responses here against them insulting to anyone with even a slightest bit of intelligence
Yes, it's written in the MSE house style, which largely echoes Lewis's dumbed-down and mildly condescending patter, which inevitably oversimplifies matters, but they're usually reasonably careful not to take sides and instead try to put the facts in front of readers to make their own minds up.0 -
dont_use_vistaprint wrote: »I never said as smart as me. But why do I think people who invest in PB's are smarter than those who don't, and who also play the lottery ? I've never done the lottery but have always been interested in what motivates people I know who do. Its nearly always a desire to get rich without having to work for it or make wise decisions with finances. I asked my friends and work colleagues and people I know about PB's and this is what I found.
People who had cash in PB's = spending within budget, generally debt free = fairly wise when it comes to money, saving
People without Cash in PB's and who also play the lottery = No savings and lots of Credit cards / debts, often higher earners than above = not very smart decision makers with finances.
That's not arrogant or conceited , it's what I found
So you're basing it on statistically invalid anecdotal evidence. Most prejudices are formed in this way.
Conversely, I know a number of people with well-ordered finances and no debt who also play the lottery. This is anecdotal and statistically invalid too.
Buying premium bonds are not an investment (as you claim), and nor are they a savings product. Premium bonds enter you into a lottery in which your stake is not at risk.0 -
PB's can be a useful tool for some people.0
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