30k into Premium Bonds

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.
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I strongly suggest putting half of your £30k into a NS&I inflation linked savings account (5%+ tax free at the moment) and then the other half in premium bonds.
 
Stick the 30k into a 3% savings account and earn 1k in interest

Spend/waste 500 on lottery tickets

Your very own diy premium bond with better odds and prizes than the real thing
 
arknor said:
premium bonds? you may aswell buy 30k worth of scratchcards or lotery tickets bet the odds of a bigger return are higher
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The odds of getting 1 million or more would be higher yes. However....

The overall expectation is very negative for the lottery. Worst case scenario is you lose everything. Realistically you'll likely lose around 70-80% of your 'investment' - assuming only £30,000 is invested. If you were to re-invest winnings then you'd lose more.

The overall expectation for premium bonds is slightly positive (if you ignore inflation). Worst case scenario is you get your money back with no prizes in 1-2 years time. Realistically you'd likely lose out by 1 or 2% compared with a savings account.

You could always structure your own product perhpas - invest in a savings account and set aside the difference between the interest on savings account and the expected returns for premium bonds for purchasing lottery tickets.

Perhpas play around with the figures a bit - I haven't got time at the moment but I wouldn't be surprised if you could put together something that gives you the same expected returns as premium bonds and a higher chance of getting over 1 million.
 
dowie said:
The overall expectation is very negative for the lottery.
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Just like Premium Bonds then.

The overall expectation for premium bonds is slightly positive (if you ignore inflation).
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Yes, lets ignore inflation, perhaps it'll go away and justify your decision to place money in a pointless 'competition' that erodes its value over time.
 
[TW]Fox;19518764 said:
Yes, lets ignore inflation, perhaps it'll go away and justify your decision to place money in a pointless 'competition' that erodes its value over time.
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I wonder whether people have worked out that the prize money comes from the interest that NS&I make investing the money that they're merrily not paying the players interest on...
 
vonhelmet said:
I wonder whether people have worked out that the prize money comes from the interest that NS&I make investing the money that they're merrily not paying the players interest on...
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Exactly.

In a nutshell I guess its like this.

You open a savings account. You have 100 savers each saving £1000 and wish to pay them 3%.

Do you:

a) Pay each saver £30 interest over the year
b) Pay 99 savers absolutely zip and pay 1 lucky saver £3000.

The cost to you as the bank is the same in this simple example. Yet only one person actually gets anything in example b - 99 others get nothing, the money they invested loses value over the year through inflation (Technically so does the money in a) but by a far lower margin).

b) is Premium Bonds. Only the odds are loads worse than in my simple example.

Just don't bother.
 
My parents put 20K into PB's years and years ago. We quite often had a cheque come throught the post for £100 or £200, We worked out that over the course of the 5 years the cash was in there they were getting 22%. Now It was just luck as with eveything to do with gambling, it just happened to pay out really really well.
 
There was a cheque for 3k one month, one for £500 another, so over the course of the 5 years the average was 22%. As I said it was pure luck, they recieved a lovely return for their investment, They could have recieved nothing at all.
 
vonhelmet said:
I wonder whether people have worked out that the prize money comes from the interest that NS&I make investing the money that they're merrily not paying the players interest on...
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They're probably not aware of that because it isn't true.

The UK govt isn't acting as some from of investment fund here - NS&I is effectively issuing debt at interest to meet government funding requirements.

Offering these products to retail consumers is simply a complementary activity to issuing UK gilts.
 
ripoffthemonkey said:
There was a cheque for 3k one month, one for £500 another, so over the course of the 5 years the average was 22%. As I said it was pure luck, they recieved a lovely return for their investment, They could have recieved nothing at all.
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OK, fair enough.

However, for the 22% they got, there were therefore shedloads of people who invested and got nothing, so the wider point stands.
 
ripoffthemonkey said:
There was a cheque for 3k one month, one for £500 another.
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That's not what you said though! That would make it more believable, albeit lucky.

ripoffthemonkey said:
My parents put 20K into PB's years and years ago. We quite often had a cheque come throught the post for £100 or £200, We worked out that over the course of the 5 years the cash was in there they were getting 22%.
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dowie said:
They're probably not aware of that because it isn't true.

The UK govt isn't acting as some from of investment fund here - NS&I is effectively issuing debt at interest to meet government funding requirements.

Offering these products to retail consumers is simply a complementary activity to issuing UK gilts.
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wikipedia said:
The government pays interest on the bond (pegged at 1.5% in July 2010). But instead of the interest being paid into individual accounts, it is paid into a prize fund from which a monthly lottery distributes tax-free prizes, or premiums, to those bond-holders whose numbers are selected randomly.
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Buying government gilts is an investment... About the most secure investment going, really.
 
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