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Investment
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I want to invest for income. What is your thought investing in Premium Bonds
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Whilst Premium bonds are good if you've used up all your tax free savings which allow instant access (ISA's �3600 this year). Your best bet is a longer term savings account, many now offering 7% or so.
Check MSE website for the best current savings accounts and also a Premium bonds calculator.
http://www.moneysavingexpert.com/banking/
http://www.moneysavingexpert.com/savings/premi um-bonds-calculator/
Typically the return on �30,000 of Premium bonds is 3.5% giving you 1050 pa. whereas if your money was in a savings account paying 7% you'd be getting �2100 pa. Thats �1050 more every year.
Check MSE website for the best current savings accounts and also a Premium bonds calculator.
http://www.moneysavingexpert.com/banking/
http://www.moneysavingexpert.com/savings/premi um-bonds-calculator/
Typically the return on �30,000 of Premium bonds is 3.5% giving you 1050 pa. whereas if your money was in a savings account paying 7% you'd be getting �2100 pa. Thats �1050 more every year.
I am not sure I would call premium bonds "investing", more like gambling without losing your stake.
Suppose you buy �1,000 of premium bonds, but in the first year you win nothing. Because inflation is now 3%, your �1,000 stake is now only worth �970.
If you were unlucky enough not to win in the second year either your �970 is now down to �940.
Now as pug100 says, the odds of winning are 3.5%, but you may be unlucky and win nothing, or at least less than 3.5%.
And each year you win nothing (or less than expected) the value of your money is dropping.
Suppose you buy �1,000 of premium bonds, but in the first year you win nothing. Because inflation is now 3%, your �1,000 stake is now only worth �970.
If you were unlucky enough not to win in the second year either your �970 is now down to �940.
Now as pug100 says, the odds of winning are 3.5%, but you may be unlucky and win nothing, or at least less than 3.5%.
And each year you win nothing (or less than expected) the value of your money is dropping.
Lots of help and advice on the premium bonds web site:
http://www.nsandi.com/products/pb/isitrightfor me.jsp
I should say my wife has had some premium bonds since she was a child (not sure how many) and has never won a penny.
http://www.nsandi.com/products/pb/isitrightfor me.jsp
I should say my wife has had some premium bonds since she was a child (not sure how many) and has never won a penny.
As suggested try Martin Lewis`s MSE website, premium bonds are not an investment put your money in a high interest account.
http://www.moneysavingexpert.com/banking/
http://www.moneysavingexpert.com/banking/
I bought my first bond - �1 - the week they were issued.
I know they are money down the drain if you fail to win a biggie, but each month I live in hopes. (I now hold the max).
However, I don't believe ERNIE to be impartial.
I have a �2k bond taken out 8 years ago which has won 4 times and another �2k bond taken out the following month which has won 15 times.
They have all been small prizes and I would have done far better to have invested the money in a Building Soc a/c - but maybe come 1 June I'll be able to record that I'm a millionaire - and that's what keeps me going.
.
I suggest you cash in your bonds every few years and buy afresh, but I will never sell my best one as above!
PS. Are there any statisticians out there who care to comment on the inequality of my 2 x �2k bonds?
I know they are money down the drain if you fail to win a biggie, but each month I live in hopes. (I now hold the max).
However, I don't believe ERNIE to be impartial.
I have a �2k bond taken out 8 years ago which has won 4 times and another �2k bond taken out the following month which has won 15 times.
They have all been small prizes and I would have done far better to have invested the money in a Building Soc a/c - but maybe come 1 June I'll be able to record that I'm a millionaire - and that's what keeps me going.
.
I suggest you cash in your bonds every few years and buy afresh, but I will never sell my best one as above!
PS. Are there any statisticians out there who care to comment on the inequality of my 2 x �2k bonds?
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