30k into Premium Bonds

Vanilla · 4 Jul 2011 at 13:59

I've had the full 30k in for a few years. I average 50 quid a month but often get about 150.

Savings accounts were offering poor interest and I was a high rate tax payer so it made sense. I've just left them sitting there.

Irish_Tom · 4 Jul 2011 at 13:59

I wouldn't bother with premium bonds; the rate of return is gash and the chances of winning the top prize is one in 42 billion!

You get better odds with the lottery and they are close to zero.

Greebo · 4 Jul 2011 at 14:15

15,000 tickets for Tuesday's Euromillions if you are feeling lucky?

Greebo · 4 Jul 2011 at 14:19

arknor said:
your almost garunteed atleast to get your money back on scratchcards just as you are with bondsthey let you win enough to keep tempting people to buy more.

No your not. Pretty sure from memory only 50% of the money on scratchcards goes into winnings with cards ranging from 1 in 2 to 1 in 5 chance of winning (most of the prizes are just the value of the card back as a prize) so unless you were lucky enough to win one of the larger prizes, on avarage you would get half your money back.

Greebo · 4 Jul 2011 at 14:27

Vanilla said:
I've had the full 30k in for a few years. I average 50 quid a month but often get about 150.

Savings accounts were offering poor interest and I was a high rate tax payer so it made sense. I've just left them sitting there.

That was why a lot of higher rate taxpayers bought the full allowance. You got on average 8.33% gross which was way better than any savings account and you never know, you might win a few grand.

Nowadays you would be better off taking that money out and putting it elsewhere as the 1.5% tax free return is appauling.

People back when the prize fund was 5% and I advised them to buy bonds did quite well. I know a few who got lucky including one who won £50,000.

mehuk · 4 Jul 2011 at 15:07

Vanilla said:
I've had the full 30k in for a few years. I average 50 quid a month but often get about 150.

Savings accounts were offering poor interest and I was a high rate tax payer so it made sense. I've just left them sitting there.

That makes sense to me, I think ill give it a go, I mean 1 year.. even if I averaged out at 400 quid... im not losing any money really, maybe a few hundred from some interest.

Also, is it limited to 30k per household or 30k per person? If its per person, I might get the Mrs in on this as well.

matt_fsr · 4 Jul 2011 at 15:16

mehuk said:
what other option would you take?

Give some to Ethiopia?

Energizer Bunny · 4 Jul 2011 at 15:18

Not to labour a point that's already been made, but any time you're making less than inflation, you're losing money. CPI is 4.5% right now so if you average £400 per year your money is actually worth c3% less each year. Worth considering when you could just put it into that account which is also NS&I which will track above inflation.

Vonhelmet · 4 Jul 2011 at 15:33

Just stick it in a real bond.

sHo0sH · 4 Jul 2011 at 15:35

Manchester United vs Norwich at old Trafford

30k United to win. No tax on the winnings

BennyC · 4 Jul 2011 at 15:54

I stuck £1k in there last year and haven't had a peep out of it. Not that I was expecting to.

Depends entirely on whether or not you need a return or just fancy the what if aspect. In which case I'd probably put however much was needed to put me into the higher winnings band and invest the rest elsewhere.

Greebo · 4 Jul 2011 at 16:04

Look as everybody is telling you, it's a poor return unless you get lucky. Your odds of winning any prize (even just £25) is 24,000 to 1

Your £30,000 "invested" for 2 years gives you the following odds:

What are the chances?
Winnings Probability
£0 Exactly 1 in 10,693,271,526,224
At least £25 Virtual certainty
At least £50 Virtual certainty
At least £75 Virtual certainty
At least £100 Virtual certainty
At least £150 Virtual certainty
At least £175 Virtual certainty
At least £200 Virtual certainty
At least £250 Virtual certainty
At least £350 Virtual certainty
At least £400 99.9%
At least £450 99.5%
At least £500 98.6%
At least £750 66.9%
At least £1,000 18.3%
At least £1,500 2.78%
At least £2,500 1 in 326
At least £5,000 1 in 360
At least £10,000 1 in 766
At least £25,000 1 in 1,842
At least £50,000 1 in 4,202
At least £100,000 1 in 11,692
At least £1,000,000 1 in 56,315

For a £1 bond the odds you winning a lowish prize of £5000 each draw is over 483 million to one! Even £50 is over 1.3 million to one.

Shimmyhill · 4 Jul 2011 at 16:04

sHo0sH said:
Manchester United vs Norwich at old Trafford

30k United to win. No tax on the winnings

Norwich beat Man Utd last time they played, season they got relegated

But back to the question - 30k in premium bonds is pretty poor payback since the way it worked changed - folks still have money in and while they have always made more than inflation its usually a last resort for guaranteed funds if you have used up all other allowances etc.

Can you not offset on your mortgage or is that on a low rate anyway?

[TW]Fox · 4 Jul 2011 at 16:55

I wouldnt put 30p into Premium Bonds let alone £30k, they are a con - avoid them at all costs. £30k is a significant sum - even only earning 3% in an e-saver - you could do better with a fixed term account - you'd be earning almost £1k a year before tax.

mehuk · 4 Jul 2011 at 17:48

Greebo said:
Look as everybody is telling you, it's a poor return unless you get lucky. Your odds of winning any prize (even just £25) is 24,000 to 1

Your £30,000 "invested" for 2 years gives you the following odds:

What are the chances?
Winnings Probability
£0 Exactly 1 in 10,693,271,526,224
At least £25 Virtual certainty
At least £50 Virtual certainty
At least £75 Virtual certainty
At least £100 Virtual certainty
At least £150 Virtual certainty
At least £175 Virtual certainty
At least £200 Virtual certainty
At least £250 Virtual certainty
At least £350 Virtual certainty
At least £400 99.9%
At least £450 99.5%
At least £500 98.6%
At least £750 66.9%
At least £1,000 18.3%
At least £1,500 2.78%
At least £2,500 1 in 326
At least £5,000 1 in 360
At least £10,000 1 in 766
At least £25,000 1 in 1,842
At least £50,000 1 in 4,202
At least £100,000 1 in 11,692
At least £1,000,000 1 in 56,315

For a £1 bond the odds you winning a lowish prize of £5000 each draw is over 483 million to one! Even £50 is over 1.3 million to one.

Them odds aint so bad... especially if I can chuck 30k in the Mrs name, then they would half... so a 1 in 28k chance at a million!

Hatter The Mad · 4 Jul 2011 at 18:35

[TW]Fox;19513557 said:
I wouldnt put 30p into Premium Bonds let alone £30k, they are a con - avoid them at all costs. £30k is a significant sum - even only earning 3% in an e-saver - you could do better with a fixed term account - you'd be earning almost £1k a year before tax.

As much as I lament people thinking bonds are the greatest investment in the world, I also sigh at people who call them a con or pointless.

You're buying into the chance at winning a sum substantially greater than what you put in. You are buying lottery tickets, except you're guaranteed to get your capital back (less inflation).

They are not a con. They are not a sensible investment for regular income, either. It's a game.

Vanilla · 5 Jul 2011 at 01:19

mehuk said:
That makes sense to me, I think ill give it a go, I mean 1 year.. even if I averaged out at 400 quid... im not losing any money really, maybe a few hundred from some interest.

Also, is it limited to 30k per household or 30k per person? If its per person, I might get the Mrs in on this as well.

Don't base your desire on doing it because I am - I don't need the cash and if UK interest rates were a little better i'd probably put it in an account.

I'm tempted to move it to Australia where I am, exchange rate sucks but my bank interest is 6.5%......

Also - it is per person.

Greebo · 5 Jul 2011 at 07:31

mehuk said:
Them odds aint so bad... especially if I can chuck 30k in the Mrs name, then they would half... so a 1 in 28k chance at a million!

So long as you appreciate that it is a gamble. Over two years the odds you getting a return better than 5% gross (3% net) which you could find in an investement account is less than 2% or one in fifty.

The odds are that you will win less than the interest you could have made on the money - 98%.

So good luck and can i have a grand please if you win a million?

Pawnless Endgame · 5 Jul 2011 at 09:16

arknor said:
premium bonds? you may aswell buy 30k worth of scratchcards or lotery tickets bet the odds of a bigger return are higher

Nah, gambling on Camelot only has a payout of 50%. Considering that casinos payout at approx 95%, Camelot is quite bad in comparison.

I would use the £30k to reduce your mortgage if your building society allows overpayment.

Participant · 5 Jul 2011 at 09:45

Hatter The Mad said:
As much as I lament people thinking bonds are the greatest investment in the world, I also sigh at people who call them a con or pointless.

You're buying into the chance at winning a sum substantially greater than what you put in. You are buying lottery tickets, except you're guaranteed to get your capital back (less inflation).

They are not a con. They are not a sensible investment for regular income, either. It's a game.

Indeed.