Bank Acc or Premium Bonds for a few months?
Senseicads
Posts: 204 Forumite
Hi Everyone,
We are about to remortgage so that we can do some building work around the house(new extension and what not). We will have around £70k sitting about doing nothing for a few months until we can get builders and planning permission etc all going. We don't really want building work over the winter, so it might be that we have the money sitting there over the winter too until next year. My initial thought was to put £50k of it into premium bonds. When I worked out some of the savings rates we would only be looking at around £50-£60 a month return(if my calculations are right) as interest and as we intend to spend the money investments are not really appropriate anyway as I understand stocks and shares are only suitable if I was going to lock it away for a number of years. At least with premium bonds there's a chance, albeit a small chance that we could win something bigger than any potential returns we could have had, and then just put the rest of the money away into a savings account. If we manage to get all our ducks in a row and get the work done this year then we would obviously need to have easy access to it also, so that rules out some of the fixed term savings accounts. Just wondering what peoples thoughts are on this. Is this the best use of this money whilst we are doing this? is there any other ideas that people have for what to do with the money whilst we do the work?
thanks everyone.
We are about to remortgage so that we can do some building work around the house(new extension and what not). We will have around £70k sitting about doing nothing for a few months until we can get builders and planning permission etc all going. We don't really want building work over the winter, so it might be that we have the money sitting there over the winter too until next year. My initial thought was to put £50k of it into premium bonds. When I worked out some of the savings rates we would only be looking at around £50-£60 a month return(if my calculations are right) as interest and as we intend to spend the money investments are not really appropriate anyway as I understand stocks and shares are only suitable if I was going to lock it away for a number of years. At least with premium bonds there's a chance, albeit a small chance that we could win something bigger than any potential returns we could have had, and then just put the rest of the money away into a savings account. If we manage to get all our ducks in a row and get the work done this year then we would obviously need to have easy access to it also, so that rules out some of the fixed term savings accounts. Just wondering what peoples thoughts are on this. Is this the best use of this money whilst we are doing this? is there any other ideas that people have for what to do with the money whilst we do the work?
thanks everyone.
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Comments
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Perhaps have a read of this first. One thing you should be aware of is that you won't be entered for the draw until a full calendar month after your deposit so that's August for you
https://www.moneysavingexpert.com/savings/premium-bonds
You might get lucky but you probably wont, have a play with the PB calculator
https://www.moneysavingexpert.com/savings/premium-bonds-calculator/
If this was my money I'd stick it in an easy access savings account but that's just me
http://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html0 -
I have held £50k in Premium Bonds starting with the February draw and have so far won £150 which is a 0.3% return. Obviously luck will vary, and you could well get luckier than me but chances are you would be looking at a similar amount won over the time you hold them. The thing is with Premium Bonds is that you could get lucky and win up to £1million, beating any savings account, or you could win nothing or barely beat a savings account.0
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yeah tried the calculator. It says with average luck, I would expect to get £250 for 6 months. this is about £50-100 less than an easy access saver...roughly. I don't necessarily need that extra £50-100 and as someone pointed out there is a very small chance I could be super lucky. I think I will go with the premium bonds. At worst I've lost out on maybe £300(if I keep it in that long), and at best I might win a big pile.0
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chances are you would be looking at a similar amount won over the time you hold them.
No, the chances are that he'll win prizes at a rate of about 1.25% p.a. for the months that he's in the draw i.e. starting in August. The other 0.15% of the fund interest goes on the big prizes. Chances are that he won't win one of them.
If he can find a saver paying better than 1.25% then it would probably be the better option because it will start earning interest straight away. Would the OP be prepared to use a 3 month notice account? That typically bumps up the interest rate.Free the dunston one next time too.0 -
Tesco are offering 1.30% on their Internet Saver, that's a (more or less) guaranteed £325 on £50,000 for six months
https://www.tescobank.com/savings/flexible/internet-saver/index.html0 -
I'd probably agree that a notice account might be best. Just checked and Paragon are still doing a 120 day notice account giving 1.66%. Charter will do 1.67% for 95 days notice. Kent Reliance also do a 60 day notice account giving about 1.45% - you can also withdraw immediately with this account but pay a 60-day interest penalty instead. I have no experience of Charter but have had no problems with Paragon or Kent Reliance.
The best way to use a notice account is to deposit the funds and then serve notice as soon as it's cleared, so it's like a 120 day fixed term account. The interest rate is variable but you normally get advised of any downward change at least as long in advance as the notice period itself.
Perhaps put some of it into an easy access account - just in case you need it earlier.0
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