Capital/Prem Bonds.

SideWinder · 3 Aug 2010 at 16:15

Just chatting to a mate about bonds and we have come to the conclusion they seem too good to be true...the way i understand it: you enter a "lottery" every month and you "win" X amount of money.

Can someone explain a bit more about them? Downsides? Upsides?

Prophet · 3 Aug 2010 at 16:17

All you need to know here

http://www.nsandi.com/products/pb

SideWinder · 3 Aug 2010 at 16:19

...seems to good to be true.

Stumble Bum · 3 Aug 2010 at 16:20

On average these always pay out less than a decent savings account/cash ISA.

you may win big theres always that chance, but you're more than likely going to keep on winning sod all for a long time. A decent savings account (before the recession crap) was always a better option and guaranteed income.

Why do you think they're too good to be true.

It is very similar to playing the lottery with your bank interest. you may win the 'jackpot' but on average you'll probably be worse off.

Prophet · 3 Aug 2010 at 16:20

I've had them since I was a baby (parents stuck some money in for me)

Not won a sodding penny yet lol.

SideWinder · 3 Aug 2010 at 16:21

Anyone know what the odds are like?

As to the "too good to be true" remark, remember i don't know anything about it. I am a firm believer in the phrase "in it to win it" so...worth a go.

Prophet · 3 Aug 2010 at 16:23

I think they're on the site.

edit.. Give this a go.

http://www.moneysavingexpert.com/savings/premium-bonds-calculator/

tntcoder · 3 Aug 2010 at 16:24

I win something most months, but these days it's never often above £25 p/m, which is sadly probably losing me money in the long run

But it's still more exciting than a high interest account.

SideWinder · 3 Aug 2010 at 16:24

http://www.nsandi.com/products/pb/rates

Found it. Hmmm.

Azza · 3 Aug 2010 at 16:26

I had £200 worth for something like 3 years and won £50 once.

SideWinder · 3 Aug 2010 at 16:27

Do you have more of a chance of winning, the more money in the account?

tntcoder · 3 Aug 2010 at 16:27

SideWinder said:
Do you have more of a chance of winning, the more money in the account?

Yes. The more bonds you own the more chance you have.

Prophet · 3 Aug 2010 at 16:28

SideWinder said:
Do you have more of a chance of winning, the more money in the account?

Yes.

platypus · 3 Aug 2010 at 16:29

You're better off investing in an ISA/a fixed term Bond/gilt bond.

Azza · 3 Aug 2010 at 16:39

SideWinder said:
Do you have more of a chance of winning, the more money in the account?

Yeah. More money = more bonds a.k.a numbers.

So if you have £200 that's 200 numbers. If you have £1,000 in them then that's 1,000 numbers.

So you will have a bigger chance of winning.

Prophet · 3 Aug 2010 at 16:42

tntcoder said:
I win something most months, but these days it's never often above £25 p/m, which is sadly probably losing me money in the long run But it's still more exciting than a high interest account.

You have the maximum 30K invested then?

rodo · 3 Aug 2010 at 16:45

I had some grandparent's money in premium bonds and the investment never grew in real terms. A complete fad in my opinion when you can look at bonds, mutual funds, long term share positions (potentially in an ISA) etc. Also potential for regular savings accounts which have some interesting interest rates.

PlumpMonkey · 3 Aug 2010 at 17:03

I stick some money in it every month, not really as an investment, but as a lottery alternative.

I stuck 50 quid a month into the lottery for 18 months and won a tenner. At least with bonds Id have my 900 quid back

I agree though, as a serious investment plan, theres options that will give you a better guaranteed return. However, an ISA hasn't got the slim option of netting you a million quid and telling work where to stick it!