Premium Bonds

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  • firestone
    firestone Posts: 520 Forumite
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    If you are happy with the risk why worry,at the end of the day there the only gamble i know of where if you lose you get your stake back so no harm no foul
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
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    username12345678 wrote: »
    PB's can be a useful tool for some people.

    I don't think that anyone said otherwise, but the truth is that for the overwhelming majority of people they are not (unless that person likes the thrill of the lottery at the expense of getting a reasonable return on their money). Premium bonds have a niche that doesn't fit with the majority's financial situation.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
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    firestone wrote: »
    If you are happy with the risk why worry,at the end of the day there the only gamble i know of where if you lose you get your stake back so no harm no foul

    My biggest problem with premium bonds is the way that they are regularly recommended to people on these forums as a good idea when a question is asked about where to save money. They are not a savings product and there is a lot of ill-informed comment about the mythical 1.4% interest rate. If someone wants to put their money in premium bonds because they are not bothered about earning any interest on the money, and love the thrill of a gamble, then I'm perfectly happy for them to go ahead. What I object to is them proselytising about them as a good option for savings.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    ValiantSon wrote: »
    My biggest problem with premium bonds is the way that they are regularly recommended to people on these forums as a good idea when a question is asked about where to save money.

    Normally just to park large lump sums of money for relatively short periods of time. As savings rates have been dire in recent years. I've rarely seen the suggestion as a form of saving. As was posted earlier. I tend to find those who buy PB's on a regularly basis are whose who are financially informed. PB's being one string of a much broader portfolio.
  • firestone
    firestone Posts: 520 Forumite
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    ValiantSon wrote: »
    My biggest problem with premium bonds is the way that they are regularly recommended to people on these forums as a good idea when a question is asked about where to save money. They are not a savings product and there is a lot of ill-informed comment about the mythical 1.4% interest rate. If someone wants to put their money in premium bonds because they are not bothered about earning any interest on the money, and love the thrill of a gamble, then I'm perfectly happy for them to go ahead. What I object to is them proselytising about them as a good option for savings.
    Would totally agree but think some of the idea of them being called a savings product has come about through the low interest rates and them being popular with retired people who maybe have a larger cash sum then most and use them knowing they are also safe but have enough in other accounts.There are many on here (myself included) who would recommend S&S over PB but that is based on previous performance but to some they would be a bigger gamble then the bonds but its each to there own.Could always stick a Tenner on Leicester again next year
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
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    Thrugelmir wrote: »
    Normally just to park large lump sums of money for relatively short periods of time. As savings rates have been dire in recent years. I've rarely seen the suggestion as a form of saving. As was posted earlier. I tend to find those who buy PB's on a regularly basis are whose who are financially informed. PB's being one string of a much broader portfolio.

    But as I've already said, this is simply anecdotal, and I posted my own completely anecdotal evidence about financially aware people who play the lottery.

    If you don't see the regular suggestion of premium bonds for savings then we must be reading different threads!
  • IanManc
    IanManc Posts: 2,085 Forumite
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    edited 25 February 2018 at 2:38AM
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    firestone wrote: »
    If you are happy with the risk why worry,at the end of the day there the only gamble i know of where if you lose you get your stake back so no harm no foul

    You get back the capital you put in, but really your "stake" - i.e. the money you are gambling - is the interest that the capital generates. You never gamble the capital, but you don't get the interest you're gambling with back if you lose. If you win you get back some of your stake, but the gamble is that your winnings might exceed your stake ...... or they might not.
  • eskbanker
    eskbanker Posts: 31,034 Forumite
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    ValiantSon wrote: »
    My biggest problem with premium bonds is the way that they are regularly recommended to people on these forums as a good idea when a question is asked about where to save money. They are not a savings product and there is a lot of ill-informed comment about the mythical 1.4% interest rate. If someone wants to put their money in premium bonds because they are not bothered about earning any interest on the money, and love the thrill of a gamble, then I'm perfectly happy for them to go ahead. What I object to is them proselytising about them as a good option for savings.
    I still think you're too dogmatic about them, perhaps unsurprisingly when you openly admit that "Premium bonds are one of my pet hates" which is hardly going to be the starting point for an objective assessment of their merits!

    I don't see anyone proselytising about them but do see them as a perfectly valid choice for savers, even if not necessarily the best - as discussed elsewhere recently, there is no dispute that the return isn't guaranteed but the fact that the capital is clearly makes them closer to more conventional savings products than to lotteries.

    There is no formal definition of 'savings product' that I'm aware of that requires returns to be guaranteed and there are other accounts described as savings accounts where the return isn't guaranteed, such as the Sharia-compliant products. The current accounts that you (not unreasonably) recommend to optimise returns also aren't savings products if you want to get too literal about this.... ;)

    So I don't see much value in getting bogged down in the semantics of whether or not they fit within specific pigeonhole definitions of options for people's money, as it's not exactly difficult to make a case that they're completely unique and so wouldn't be the answer to any question!
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
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    eskbanker wrote: »
    I still think you're too dogmatic about them, perhaps unsurprisingly when you openly admit that "Premium bonds are one of my pet hates" which is hardly going to be the starting point for an objective assessment of their merits!

    They are one of my pet hates because they are such a poor option for the overwhelming majority. Having objectively assessed them I have come to the conclusion that they are generally a rubbish option and they have become a pet hate. This entirely logical. You are attempting to suggest that my view is tainted by them being a pet hate, but this is flawed because they have become a pet hate due to my evaluation of them. (This is how critical opinions are formed).

    I know you don't agree with me and we've been through this all before, so I see little point in you having another go.
    eskbanker wrote: »
    I don't see anyone proselytising about them but do see them as a perfectly valid choice for savers, even if not necessarily the best - as discussed elsewhere recently, there is no dispute that the return isn't guaranteed but the fact that the capital is clearly makes them closer to more conventional savings products than to lotteries.

    Okay, you don't see the proselytising and I do. Each of us has a unique perception of the world.

    They aren't a savings product, they are a lottery. There is no guaranteed return; savings products offer a guaranteed return, even if it is miniscule. Premium bonds are a lottery: if your number is picked you win a prize. That is the definition of a lottery. It is irrelevant that the capital is not at risk, the return is based on a lottery.
    eskbanker wrote: »
    There is no formal definition of 'savings product' that I'm aware of that requires returns to be guaranteed and there are other accounts described as savings accounts where the return isn't guaranteed, such as the Sharia-compliant products. The current accounts that you (not unreasonably) recommend to optimise returns also aren't savings products if you want to get too literal about this.... ;)

    I never said that current accounts were savings products.

    Any savings product offered by a UK bank or building society (with the exclusion of Sharia-compliant banks) have a guaranteed return. I don't think that it is unreasonable to use that as a definition. Sharia-compliant banks are distinctly different due to religious laws: they offer a profit, rather than interest. The difference is very small and, to the best of my knowledge, they have not failed to deliver the projected profit to customers, so it is, to all intents and purposes, analogous to interest.
    eskbanker wrote: »
    So I don't see much value in getting bogged down in the semantics of whether or not they fit within specific pigeonhole definitions of options for people's money, as it's not exactly difficult to make a case that they're completely unique and so wouldn't be the answer to any question!

    You have just tried to raise a semantic issue regarding what a savings product is, but I'll let that slide for now.

    The return on premium bonds operate on a lottery. It is not, therefore, wrong of me to refer to them as such.

    Nothing I have said is wrong, and my view is based on an objective evaluation of the product on offer, and compared to other available products. Furthermore, as I have repeatedly said (both to you, and in general), premium bonds are a potentially useful product to some people. It is not the case, however, that they are best for the majority.

    This really is becoming tiresome. Could you just accept that I have not said anything that is factually inaccurate, and I am perfectly entitled to object to them being recommended, without clarification, as a suitable savings product for anyone looking for a reasonable return? And then can we move on? Please?
  • eskbanker
    eskbanker Posts: 31,034 Forumite
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    I think you may have missed the point I was making about semantics, namely that it doesn't really matter what label is given to a product, as this is clearly fairly arbitrary and dependent on the definitions people choose to use - it came across as if you were asserting that only products that fit within your definition of 'savings product' should be recommended to those wishing to save (and that products that you feel are in another category shouldn't), but to be fair you didn't actually spell that out in those terms so perhaps I've misunderstood.
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