Premium Bonds

[BobbyD]

Not what I would call a great return...

Well you must enlighten us as to where you can get a "great return" on your £1000, with guaranteed security and guaranteed no loss of capital.

Scott.

I must...?

Well, if you insist, try a bank. http://www.moneysavingexpert.com/bankin ... s#interest There are a number of accounts which give a better return with capital guarantees via FSCS, and several of them have associated regular savers which give you further scope for better returns.

So the return is better, guaranteed, and the Tax free benefit of PB will be less of an advantage to your average saver now that the first £1000 of interest is tax free.

[XFool]

Not what I would call a great return...

Well you must enlighten us as to where you can get a "great return" on your £1000, with guaranteed security and guaranteed no loss of capital.

Scott.

I must...?

Well, if you insist, try a bank. http://www.moneysavingexpert.com/bankin ... s#interest There are a number of accounts which give a better return with capital guarantees via FSCS, and several of them have associated regular savers which give you further scope for better returns.

So the return is better, guaranteed, and the Tax free benefit of PB will be less of an advantage to your average saver now that the first £1000 of interest is tax free.

Yeah, but many of those are not directly comparable. They are not straight deposit accounts. They are current accounts with specific requirements or regular savings accounts, which is fine if that is what you are looking for.

WRT the PSA. Well yes, but some of us are finding the tax measures introduced over the last few years increasingly problematical. The fact that PBs really are Tax Free and therefore outside the income tax regime is itself an added attraction! Making them equivalent to a flexible cash ISA. The PSA can then be used wrt 'normal' interest bearing accounts.

[BobbyD]

There's the problem, right there.

Due to the quantified nature of Premium Bond winnings, if you are going to carry out yearly interest rate comparisons with a bank or savings account (and why not?), then you need to have at least a minimum amount invested to reasonably expect, at the current odds, at least one prize a year. Plainly £1000 is currently simply not enough. So, IMV, the above comparison doesn't really make a lot of sense.

Surely the only valid comparison of returns is entirely like for like given the amount of money and time you happen to have on your hands?

Work out the expected return on whatever your circumstances might be, but I'm unlikely to use PB's to stash a spare £1000 for a year knowing my most likely return is £0 having seen this, and so I would say it is a pretty informative comparison, and probably more useful to most savers than the return on £50k over a decade. Those who have £50k to stash for a decade should obviously do a different comparison...

[XFool]

There's the problem, right there.

Due to the quantified nature of Premium Bond winnings, if you are going to carry out yearly interest rate comparisons with a bank or savings account (and why not?), then you need to have at least a minimum amount invested to reasonably expect, at the current odds, at least one prize a year. Plainly £1000 is currently simply not enough. So, IMV, the above comparison doesn't really make a lot of sense.

Surely the only valid comparison of returns is entirely like for like given the amount of money and time you happen to have on your hands?

Yes. So, if you only have £1000 to invest and for not much longer than about one year then, in present circumstances, Premium Bonds would reasonably seem to be the wrong option. As I imagine the stock market would also be.

[BobbyD]

Well you must enlighten us as to where you can get a "great return" on your £1000, with guaranteed security and guaranteed no loss of capital.

Scott.

I must...?

Well, if you insist, try a bank. http://www.moneysavingexpert.com/bankin ... s#interest There are a number of accounts which give a better return with capital guarantees via FSCS, and several of them have associated regular savers which give you further scope for better returns.

So the return is better, guaranteed, and the Tax free benefit of PB will be less of an advantage to your average saver now that the first £1000 of interest is tax free.

Yeah, but many of those are not directly comparable. They are not straight deposit accounts. They are current accounts with specific requirements or regular savings accounts, which is fine if that is what you are looking for.

WRT the PSA. Well yes, but some of us are finding the tax measures introduced over the last few years increasingly problematical. The fact that PBs really are Tax Free and therefore outside the income tax regime is itself an added attraction! Making them equivalent to a flexible cash ISA. The PSA can then be used wrt 'normal' interest bearing accounts.

There are hoops to be jumped sure, but they are hardly onerous, and the returns are directly comparable, and not to put too fine a point on it, better. Deposit requirements are easily achieved using a simple circle of standing orders, most people have too many bills to pay so standing orders aren't so much of a problem, and they are very easy to manufacture if not.

Obviously personal tax circumstances will have an affect on the return, no single sanctuary is best all around, but the question was where I can get a great return... and Income tax isn't the one which causes me problems, besides I only claimed the advantage for an average saver...

[BobbyD]

Yes. So, if you only have £1000 to invest and for not much longer than about one year then, in present circumstances, Premium Bonds would reasonably seem to be the wrong option. As I imagine the stock market would also be.

I feel we are failing to disagree at great length.

[XFool]

Yes. So, if you only have £1000 to invest and for not much longer than about one year then, in present circumstances, Premium Bonds would reasonably seem to be the wrong option. As I imagine the stock market would also be.

I feel we are failing to disagree at great length.

I disagree!

[XFool]

With Premium Bonds nobody can give a simple answer to the question: "Are they a good investment"

You have to bare in mind a range of factors and many are individually determined.

1. The interest rate on the PB fund as compared to other equivalent opportunities. In general these will usually be much of a muchness.

2. That the 'interest' received to the holder is quantised.

3. The interest received is tax free.

4. The effective interest received will itself depend on the level of investment and the investment period. This is because of point 2 above.


Point 2 originally determined, for me, a minimum level worth investing in PBs. I decided that two expected prizes a year was the minimum acceptable and this, along with the existing odds of winning, established a minimum amount. Which I think, at the time, was £3000.

For myself, traditionally a BR taxpayer, point 3 didn't matter apart from in comparisons (point 1) it needed to be compared against net interest. It was important in comparisons mainly for higher rate taxpayers. However, with the changes to the taxation system over recent years, this tax free status of PBs may be more alluring even for a BR taxpayer.

[Halicarnassus]

With Premium Bonds nobody can give a simple answer to the question: "Are they a good investment"

You have to bare in mind a range of factors and many are individually determined.

1. The interest rate on the PB fund as compared to other equivalent opportunities. In general these will usually be much of a muchness.

2. That the 'interest' received to the holder is quantised.

3. The interest received is tax free.

4. The effective interest received will itself depend on the level of investment and the investment period. This is because of point 2 above.


Point 2 originally determined, for me, a minimum level worth investing in PBs. I decided that two expected prizes a year was the minimum acceptable and this, along with the existing odds of winning, established a minimum amount. Which I think, at the time, was £3000.

For myself, traditionally a BR taxpayer, point 3 didn't matter apart from in comparisons (point 1) it needed to be compared against net interest. It was important in comparisons mainly for higher rate taxpayers. However, with the changes to the taxation system over recent years, this tax free status of PBs may be more alluring even for a BR taxpayer.

I think that the most important reason that people buy premium bonds is because they have a capital guarantee with the chance of a lottery type payout once per month. These people are unlikely to split hairs on who and where the best comparable Deposit rates are found. I don't think wisdom really comes into it in any prioritised way.

[Bouleversee]

I had to laugh when I was congratulated by NSandI on winning this month, only to find it was only £25. Since I hold £50k, commiserations would be more appropriate. I must check to see whether it was one of the £40k I have held for some time or one of the £10k recently added.

They are not a great investment, but a useful tax free place to park some money till needed with a chance of a bigger win thrown in. I shouldn't grumble as I have had two wins of £1000, both a long time ago, and one was when I only held £13 of bonds.

[flyer61]

Have had the happy email! won two £25 prizes this month on the grand bond total of £8225. Quite chuffed!

[Halicarnassus]

No luck this month. Clean forgot to check too!

[GJHarney]

Well I worked out my drip of £25 prizes over the last year and it equates to a 1.73% interest rate for me as a HR tax payer, not great but better than most non-bond bank/BS savings accounts and the chance of a bigger prize and the return of my 'stake' whenever I want makes them a pretty sensible choice as a small part of a wider savings strategy in my opinion, and like with my ZOPA account I just have auto-reinvest and more or less forget about it knowing that it will take care of itself with no effort on my part.

[XFool]

I don't usually see the point of simply posting: "I've won £25/Nothing this month". However I was taken aback by the following from the August draw and it might help others in a similar position.

I got a notification of a single £25 win this month, along with the list of new reinvested bonds.

Trouble was, the total didn't make sense, as I didn't win anything in July. I seem to have worked it out now on my own. I had actually won three £25 prizes this month, though only one win of £25 was shown on the top of the reinvestment notice. Previously, say I won two prizes, they would list both the prizes and the two winning bond numbers on the paper reinvestment advice. The total would show the new bonds added.

This time it all looked to have gone wrong. But I was very near the bond limits, only say two more £25 wins to go; also, like very many people, I have one £1 PB bought for me decades ago. So what seems to have happened is they:

Reinvested one £25 win - the only bond number listed at the top of the form as winning!
Reinvested £24 from a second winning bond - winning bond and reinvested bonds not listed at top, but reinvested winnings added to total.
Third £25 win not shown, not reinvested, not listed - presumably to be sent as cash plus the £1 cash from second bond win.

So hopefully I await a cheque for £26 along with further explanation by post.

[ModernMicawber]

I have a few, I am an IT Contractor and recently (re)started using them to hold "next year's" income tax, i.e. the payment due in January. This is, at least in part, a hangover from previous self-employed life when interest rates were rather higher! It wouldn't be an exaggeration to say that the current year's winnings have been "disappointing".

In the happy event of having enough money in the current account to meet the tax bill, I'll "roll over" the PB balance for the year after.

For the company tax, Aldermore do a "custom" fixed term account where you can specify the end date, but I've never seen anything comparable for personal savings, at least not for the £fewK in question here.

[XFool]

I wonder if anyone here can help?

Does anyone who currently receives their bond wins in cash, as opposed to new bonds, know how long it currently takes, after the first of the winning month, to receive their warrant by post? I still await any sign of my £26 cash from wins in the August draw.

TIA

[PinkDalek]

I wonder if anyone here can help?

Does anyone who currently receives their bond wins in cash, as opposed to new bonds, know how long it currently takes, after the first of the winning month, to receive their warrant by post? I still await any sign of my £26 cash from wins in the August draw.

TIA

I don't know how long it takes (receiving mine direct to my bank account) but they say this:

I haven’t been paid my prize money yet – what do I do?

With over two million prizes to pay out each month, it can take us a while to get round to everyone. We announce the two £1 million jackpot winners on the first working day of the month, but it takes us a bit longer to pay everyone else. ...

My prizes are paid by post

Not received anything by the end of the month? Let us know by writing to us with:

your NS&I number or Premium Bonds holder’s number
the winning Bond number
the amount you’ve won
the month and year you won
(And remember to sign your letter.)

From https://www.nsandi.com/i-haven%E2%80%99 ... at-do-i-do

[XFool]

OK. Thanks PD.

I'll just have to be patient. And possibly less lazy about looking for answers myself on the NS&I site.

[Bouleversee]

Why don't you ask them to pay the prize money into your bank account? Then you will have it in a couple of days from the draw.

[XFool]

Oh well that's another matter!

The 'new' NS&I system and UI seem to be a dog's dinner to me. It crashed the last two times I tried purchasing bonds on line.

I looked at changing the account to enabling payment of prizes direct to my bank account, as obviously that is the preferred option from now on. It said something like: "You can only enable this if we have your bank details". But they do have my bank details. So...

It seems their current systems may be rather rough around the edges.