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Premium Bonds
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- Lemon Slice
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Re: Premium Bonds
Got quite excited yesterday when I noticed that someone in East Sussex with the same number of bonds bought in the same month as mine had won £10,000.
Brought down to earth this morning when I found it was someone else
Did get 4 x £25 though, so still quite happy.
Brought down to earth this morning when I found it was someone else
Did get 4 x £25 though, so still quite happy.
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- Lemon Half
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Re: Premium Bonds
As we are now on page 22, I suppose there is no harm in repeating https://www.nsandi.com/prize-checker.
2 x £25 for me on a full holding.
2 x £25 for me on a full holding.
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- Lemon Quarter
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- Lemon Quarter
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Re: Premium Bonds
PinkDalek wrote:As we are now on page 22, I suppose there is no harm in repeating https://www.nsandi.com/prize-checker.
Good call, I was thinking about posting the same.
3 x £25, first hit since 3 in August, not the full amount invested but getting there.
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- Lemon Quarter
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Re: Premium Bonds
I've just realised that the average published payout at 1.4% is really the equivalent of 1.75% for basic rate taxpayers and 2.33% for higher rate taxpayers.
It makes holding premium bonds a bit more attractive for me in these extremely low interest times.
It makes holding premium bonds a bit more attractive for me in these extremely low interest times.
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- Lemon Half
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Re: Premium Bonds
richlist wrote:I've just realised that the average published payout at 1.4% is really the equivalent of 1.75% for basic rate taxpayers and 2.33% for higher rate taxpayers.
It makes holding premium bonds a bit more attractive for me in these extremely low interest times.
Except that you have to be getting quite a lot of taxable interest before you actually pay any tax on it - £6000p.a. for basic rate taxpayers.
So I'd say for most people, the premium bond rate of 1.4% (or a bit less if you exclude the unlikely possibility you'll win a million) can be directly compared with the rate on other savings accounts. You can probably get 1.5%+ if you shop around.
Scott.
Scott.
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- Lemon Half
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Re: Premium Bonds
PB wins over the last ~3 years for me & Mrs Monabri. We both hold full allowances. On average - we win ~£50 each, per month.
The mother-in-law has just under the full allowance - over the last 2 years - average is ~£45 per month.
The mother-in-law has just under the full allowance - over the last 2 years - average is ~£45 per month.
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- Lemon Slice
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Re: Premium Bonds
richlist wrote:I've just realised that the average published payout at 1.4% is really the equivalent of 1.75% for basic rate taxpayers and 2.33% for higher rate taxpayers.
It makes holding premium bonds a bit more attractive for me in these extremely low interest times.
That is the mean payout - given the skewness of the distribution of prizes the median is a better indicator of your likely return. As an extreme, imagine 100 people putting a pound into a lottery where the winner takes all. The average (mean) return is £1, but clearly 99 people are going away empty handed.
According to the MoneySavingsExpert probability calculator the median is currently in the region of around 1.25% (£625 p.a. for a £50k holding):
https://www.moneysavingexpert.com/savin ... alculator/
(Only about 35% of people with the maximum holding get 1.4% or more...)
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- Lemon Quarter
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Re: Premium Bonds
Thank you for the info'......I'm currently showing a 1.2% return so I'm somewhere near your figure.
A 1.25% payout is worth 1.56% for a basic rate tax payer and 2.08% for a higher rate tax payer......I'll take that.
It's difficult to get 1.5% these days let alone 2%
But the real problem though.....is if I win a million where am I going to invest it ?
A 1.25% payout is worth 1.56% for a basic rate tax payer and 2.08% for a higher rate tax payer......I'll take that.
It's difficult to get 1.5% these days let alone 2%
But the real problem though.....is if I win a million where am I going to invest it ?
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- Lemon Half
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Re: Premium Bonds
richlist wrote:Thank you for the info'......I'm currently showing a 1.2% return so I'm somewhere near your figure.
A 1.25% payout is worth 1.56% for a basic rate tax payer
At risk of repeating myself - only if you already earn £6000 per year of taxable interest.
Scott.
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- Lemon Quarter
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Re: Premium Bonds
I thought there was a tax free savings interest allowance of £1000 for basic rate and £500 for higher rate tax payers. Where is your £6000 figure coming from ?
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- Lemon Half
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Re: Premium Bonds
swill453 wrote:richlist wrote:Thank you for the info'......I'm currently showing a 1.2% return so I'm somewhere near your figure.
A 1.25% payout is worth 1.56% for a basic rate tax payer
At risk of repeating myself - only if you already earn £6000 per year of taxable interest.
Not so. The (full) £5,000 starting savings 0% rate only applies for non-taxpayers, i.e. people with other income (earnings, pensions, etc) up to £12,500.
For every £1 of other income above that the starting savings allowance is reduced by £1. So (remembering that there is also a £1,000 personal savings allowance) that means that you can have £12,500 of other income and not pay tax on up to £6,000 of interest. (So, £18,500 in total and no tax at all.)
However, if you have, say, £14,000 of other income you can only have £4,500 of interest before paying tax on it, with £16,000 it's £2,500, etc, etc, and if you have other income of £17,500 or more then you can only have the £1,000 personal savings allowance of interest tax free (until you become a higher rate taxpayer, when it's only £500).
Explanations and examples at https://www.moneysavingexpert.com/savings/tax-free-savings/
One little observed side effect of the starting savings allowance is a 40% tax rate on other income for low earners with reasonable amounts of interest (e.g. pensioners).
E.g. if you have £12,500 of "earnings" (inc. pensions) plus £6,000 or more of interest, or £16,000 plus £2,500 or more, or other such combinations up to £17,500 of "earnings", then for each additional £1 of earnings you will pay 20p on the earnings plus 20p on the £1 of interest that is no longer in the starting savings allowance.
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- Lemon Half
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Re: Premium Bonds
Ah ok, it's more complicated then. The £6000 applies to me, but not everyone.
Scott.
Scott.
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- The full Lemon
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Re: Premium Bonds
mc2fool wrote:The (full) £5,000 starting savings 0% rate only applies for non-taxpayers, i.e. people with other income (earnings, pensions, etc) up to £12,500.
For every £1 of other income above that the starting savings allowance is reduced by £1. So (remembering that there is also a £1,000 personal savings allowance) that means that you can have £12,500 of other income and not pay tax on up to £6,000 of interest. (So, £18,500 in total and no tax at all.)
It's nice to be able to earn £18,500 in a year and not pay any tax. But how many people on that low a total income would have the kind of sum that would net £6,000 in interest? Even if you could find an account paying 2% that didn't keep changing the rate, you'd need a sum of £300,000 to generate that interest.
And if you had £300,000 lying around you would surely diversify into shares anyway.
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- Lemon Quarter
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Re: Premium Bonds
Diversifying into shares might seem to be the obvious thing to do it you are in your 30's of 40's.......but .
what If you were Say 75 years old, perhaps not eh?
what If you were Say 75 years old, perhaps not eh?
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- Lemon Half
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Re: Premium Bonds
There's no "surely" about it (at any age). I know plenty of people with that level of savings or more who wouldn't touch equities with a barge pole ("shares can go down you know"), and others who have only "risked" a small %age of their total pot in shares (well, IFA recommended OEICs), for much the same "only put into shares what you can afford to lose" kind of feelings.
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- Lemon Slice
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Re: Premium Bonds
You’d be amazed at how many ‘ordinary folk’ have amassed 6 figures of savings in their working lives, and it’s all in cash.
A shame that our financial education is so lacking that so many people don’t understand how to invest in a low cost, relatively safe manner.
Btw I think I will be in the situation of having a low earned income but too much other income to benefit from the starting rate for savings. I should look more closely to see if I can transfer something to spouse to bring it down.
A shame that our financial education is so lacking that so many people don’t understand how to invest in a low cost, relatively safe manner.
Btw I think I will be in the situation of having a low earned income but too much other income to benefit from the starting rate for savings. I should look more closely to see if I can transfer something to spouse to bring it down.
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- Lemon Slice
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Re: Premium Bonds
Back on topic, now it's December, here's our figures for 2019. All three holdings are at the max.
Me - 1.45%
Mrs - 1.55%
Ma-in-law - 1.55%
All slightly above the 1.4% average payout. Not great compared to 2018 (£10k win) but comparable to bank saving rates.
Me - 1.45%
Mrs - 1.55%
Ma-in-law - 1.55%
All slightly above the 1.4% average payout. Not great compared to 2018 (£10k win) but comparable to bank saving rates.
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- Lemon Slice
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Re: Premium Bonds
Redmires wrote:Back on topic, now it's December, here's our figures for 2019. All three holdings are at the max.
Me - 1.45%
Mrs - 1.55%
Ma-in-law - 1.55%
All slightly above the 1.4% average payout. Not great compared to 2018 (£10k win) but comparable to bank saving rates.
0.6% over the last calendar year for me on an £18k holding. Very poor return but better than the losses made on some Funds.
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