I Ddn't even know PREMIUM BONDS still existed any more, but a guy at work was saying that his family have
all their savings in them and they have a steady trickle of 'payouts' although his 'big number' has not come up yet.

He said he made about £500 last year as opposed to what would be practically nothing in a savings account.
he also said he has an endowment coming out next year for about 30k and he is very tempted to put the lot
in premium bonds rather than pay a chunk of his mortgage.

I thought nothingmore of it until we went to see a FINANCIAL ADVISOR last week.
We asked him where we should put the money we are saving for our house deposit.

He said "PREMIUM BONDS"...... blimey I nearly fell off my chair !!! 2 people in one week !!

The FA said he has made an absolute packet on them.

What do you think ?

How do you get hold of them?

National Savings and Investments.

You're gambling with the interest with Premium bonds.

http://www.moneysavingexpert.com/savings/p...nds-calculator/

this calculator shows your chances of winning- tony blair cut the amount of winnings and hence the percentage chance of winning a couple of years ago.

From the Post Office. They are OK if you are a high rate tax payer, otherwise your money's better in a high interest account.

www.nsandi.co.uk

I've got a few thou in them, they pay out about 5% every year for me (I have average luck, apparently), don't forget it's tax free!
I'm always hoping for 50k or so, though given rampant hpi I should revise that to 500k at least
Far far better than the stupid tax, in any case.
enter ns&i in google and check out their website, I printed the pdf application form and sent them that and a cheque...
Good luck!

Pants but if you like go to the NS&I site http://www.nsandi.com and try your luck. I look at it this way if you take the prize fund and divide into the total "invested" it pays out some 3.5%, take the big wins out and it's even less. If your lucky you may win big but if you are just average it won't even beat inflation

I am a fan

The MSE guide is excellent and you can buy them online.

Premium Bonds

The underlying interest rate isn't so hot (currently 4%), but the winnings are tax free. So the value of the bonds is highly dependent on your tax status. The investment is essentially gilt-edged so you're not going to lose your capital.

Drawbacks: it takes a few weeks for your money to enter the draw, so not suitable for short-term holdings (or the dead-time dominates too much). Also, you can suffer the indignity (as I did once) of seeing a colleague with 250 invested win a big prize, while your own 20k investment gets you the odd 50 or 100 But that's the charm of the things of course, the possibility that you might win a life-changing amount (or you might conceivably win nothing!)

I have £150 worth, had them for about 7 years, won £100 three months after I bought them and two wins of £50...so have doubled my money. IMO better than putting money on the lottery, at least with PBs you have a chance of winning a million each month and can still get your money back.

PB's don't pay interest.

"Instead of paying interest, Bonds are entered into monthly prize draws. Remember that inflation can will reduce the true value of your money over time."

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

No that IR have been cut, even more reason to go for Index-linked national savings certificates, paying RPI + 1.35% tax free, equivalent to over 6% for an ordinary tax payer, 9% or higher rate payer.

Pardon the colloquial language, but they're a bunch of w*nk. I bought about £10k worth and held them for a year and won absolutely sweet FA. I lost out on a few hundred quid that I'd have gained after tax in a savings account.

Steer well clear.

WHen do you think they'll bring out a new issue ?

The MSE guide was written before Northern Wreck and includes these comments:


Nearly half the UK has money in these Bonds, they generate the Government cash and with over £30 billion held in them, are by far the biggest single savings product around. The aim here is to answer the most important question… “are they worth it?”

Win some, lose some.

Thanks x-quork

Seconded. Everyone should have some of these.

Financial advisers will not recommend them (or any other NS&I product) to you because they get no commission on the sale. But they are one of the best deals around. Inflation-proof and tax-free!

I don't much like premium bonds: if I were a betting man, I'd at least bet on stuff I knew a bit about and had a chance of predicting, rather than just government-generated entropy.

Absolutely, I have 60k in these and periodically check to see if there's a new issue available.

I've had 30K for 3 - 4 years now. Would have done better in a building society. Am waiting till Jan 2nd to remove them all and stick the money into a savings account or the index linked national savings certs.

A man in Swansea who bought 2K worth of bonds in 2001 won this month's 1 million.

I recently cashed in 25K worth of Premium Bonds. I won regularly with them, but the returns fell way short of basic interest I would have earned in a simple savings account. I estimate I made HALF the amount in winnings compared to potential interest payments. Basically they're a gimmick. I kept a few for lottery purposes, but that's all.

Be prepared to get zero return, if you're happy with that risk...crack on.

As has already been said, you are gambling with your interest, but it is a safe home for your cash, winnings are tax free, and your money is easily accessable.

they are only inflation proof if you actually believe that the published numbers for inflation are correct.

if it happens that inflation is being understated, then you are almost guaranteed a loss every year.

But you can only put £15K in them per issue, and your money's tied up. And if they suddenly change it to CPI then you're shafted.

Premium Bonds - have a dabble if you fancy, just not with money on which you depend on an interest return.

Speaking from personal and a friend's experience - averaged 2% per annum return. But not even that is guaranteed.

On the other hand, you may be one of the lucky ones who does well, someone has to after all.

IT'S RIGGED. I TELL YOU IT'S ALL RIGGED!!!!!!!!!!!

True, there's a limit to how much you can invest. But you can get your money out at any time (foregoing interest, but that's true of most similar products). I doubt they could change existing bond-holders' index-linking to CPI without a massive uproar - if they did, and I doubt they will, it would most likely be for new issues only.

It probably is a bit over the top to say they are "inflation-proof", but they are a decent hedge against inflation. You shouldn't sink 100% of your savings into them, but they're definitely worth having in your portfolio. Particularly if you're a higher-rate taxpayer.

Premium Bonds are based on the model proposed in George Orwells' 1984, where a handful of proles win a small amount every now and again in order to make the majority think they have a chance of escaping poverty.

Actually no, Britains entire economy is based on that.

First of all, it's important to understand that the fact that the returns are volatile (as opposed to paying guaranteed interest) is universally bad. Compared to a bank account, investors should require a higher yield (risk premium) to be paid on premium bonds.

People see premium bonds as "fun" and a chance of winning, but clinically speaking all you're getting is return volatility, which sucks.

Second, the key important thing to look for is what the expected payout is. This is currently 4%, tax free. This equals a taxable yield of 5.13% if you're a 22% tax payer and 6.67% if you're a 40% tax payer.

In comparison, you can get savings accounts that pay a guaranteed interest in excess of 6%.

So, in conclusion, they're only worth considering if you're all of
A) A higher rate tax payer
Have used up your ISA allowance
C) Are prepared to accept significant return volatility in return for the little bit extra in expected return in excess of a savings account. Typically you'll be looking at making a poor return in most cases, with a small chance of winning a lot.

Ask yourself why institutional investors aren't investing in premium bond like investments? Because they're bad. They offer a very poor risk/return reward in comparison to other markets. In essence you're paying by accepting a sub-par investment for a bit of "fun" of being in a lottery. Not very different from other lotteries.

Lastly, your FA is breaking regulations if he recommended premium bonds on the basis he's "made an absolute packet" on them. He should be excluded.

Also see: http://www.moneysavingexpert.com/savings/premium-bonds

Git!

I have had about £2000 for 6 years and have won the grand total of sod all..... but I guess that is the nature of a lottery.

I am going to leave it in there though, I just hope that when my luck changes it will be for a big prize.

THANKS EVERYONE, A mixed bag of comments.

I'll have to have a think................

Premium Bonds are the safest place for your money at the moment. The caveat being, the variable rate of return. I'm almost up to the max now and get consistent returns, at least £50 per month, which seems in line with the NS&I predictions.

After using up your ISA allowance, and not wanting to commit to longer term funds, there isn't a great deal of choice on the market for higher rate tax payers.

I use regular savings accounts as well, but the premium bonds are simply "forgotten money", to be used when the day indeed becomes very rainy.

I put the money I "win" into a regular high interest account.

(deleted)

Institutional investors aren't interested for several reasons - some or more of the following:
Premium bonds are open to individuals only.
Institutional investors, have as you say different investment criteria, something is not automatically 'bad' because it doesn't meet their criteria.

On a separate note premium bonds are not a lottery and distinct from a lottery in several important criteria:

1. Bond holders are gambling their interest - the capital is always safe. Not true of a lottery.
2. Bond holders can have a limited influence on their odds of winning - as the holding is limited to £30k each.
3. Conversely I can buy every combination of ticket in a lottery and guarantee a win. It's not a worthwhile strategy but I can do it.

Premium bonds can be bought for £100 with the very remote possibility of winning £1million. You'd be hard pushed anywhere to find an investment that returns 10% nowadays. So the other main alternative to parlay-up £100 to £1million would be to stick the money in a high interest building society account and buy £7 worth of lottery tickets once a year with the interest earned.

The choices are therefore: 12 attempts at 1/17million spread-out over the course of a year versus 7 attempts at 1/14million in one go.

Provided one recognises that premium bonds are a minor gamble - the equivalent of the annual office sweep for the Grand National - and not used as a major part of anyone's investment portfolio then you can come to little harm with them.

My point was that this type of "lottery" investment doesn't exist outside premium bonds simply because there's no demand for it. The reason is I'm afraid that return volatility is indeed automatically bad when compared to paying a steady stream of income. The only people who would go for this sort of thing are private individuals who either don't know better or who are willing to accept the downside for a bit of thrill.


Premium bonds IS a lottery. You've got the option of sticking it in a risk-free account with a guaranteed 6% return. If you've got 30k's worth that's 1800 quid that you're betting each year. Might be minor but a lottery nevertheless. If you don't win the value of your capital will be eroded by inflation, so it doesn't really matter that it stays the same in nominal terms, cause you'll lose out in real terms.

The odds of winning alone are pretty irrelevant since it doesn't account for the size of the winning. There is a large chance of winning a small profit (less than the interest would have been) i.e. a loss taking the opportunity cost (what you could have earned) into account.

I used to rate them got 30k worth
seriously getting the hump with them . felt i was just about up last year (only because of a £1000 win(which according to moneysavingseexpert is as rare as hens teeth) up by about £200 over normal interest.

after analysing last years i only recieved a measly cheque every other month 6 wins which is half of the supposed projected wins =12

So they are either an absolute con or i just have way below average luck................Im begining to believe they are a scam. They Seem to pay out on

New money. I think i will cash mine in . and take 6% .

what makes things worse i bought my mum £7k worth(recently)
I have had £50 on my £30k while she has recieved..
£ 50 January
£ 50 January

£ 50 January


£50 December

£100 November

I've noticed this by looking at the prizes of 1K or more since I have taken out PBs in 2003. There have been several 1 million pound winnners who bought PBs within a few months of buying their bonds which, interestingly, were around the same time that there was advertising trying to get people to money into PBs. A cynic might argue that this was fixed. I would of course not do so.

I'm not a huge fan of PBs because the return is not guaranteed but I see it as a bit of fun. I put in £50/month by direct debit and have built up about £1000 worth over the past couple of years.

I had one win in July of £50 which was nice - but there is always the chance of winning a million. So I'm happy to stick with them for now.

Also, you can cash them in at any time. I have looked into the index linked savings account (RPI + 1.75%) but these are 3/5 years terms so I have steered clear of them - for now.

That is of course because you realised that the resurgence in their popularity in recent years has meant that massively more bonds have been issued in recent years and because each bond has an equal chance of being drawn the statistics will inevitably mean that more prizes will be won by newer bonds. This as you realise is of course no conspiracy theory just a statistical fact:

"There are now more than 27 billion Bond numbers in each monthly draw, compared to just 4 billion 10 years ago"

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

Still planning on giving them the boot.

i know they are supposed to be fun but loosing aint no fun ........just frustrates me when i think if they go the same way as last year 6 x wins at minumum £50 .....£300 on £30,000 yea not my money.........i would rather buy a 30k car and enjoy 30k rather than leave it rotting ..winding me up......

I've just sent in a form to get my 30k out after the next draw..
I'm gonna stick the cash in a one year bond...