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I think there's some confusion her. Each individual bond has the same chance of winning, whether it's a standalone bond or one of a holding of 1000- although the person who holds 1000 does of course have a 1000 times more chance of winning something.
Yes, I know Martin Lewis's issue but I'm not sure your point is the same.
Anyway, I don't think people are as gullible as you think- many people enjoy premium bonds and take all aspects into consideration when deciding whether to buy, hold or sell.
Yes, I know Martin Lewis's issue but I'm not sure your point is the same.
Anyway, I don't think people are as gullible as you think- many people enjoy premium bonds and take all aspects into consideration when deciding whether to buy, hold or sell.
Reposting this from the other premium bond thread, because Mikeys dismissive tone about people using premium bonds is irritating me.
"I sort of resent my mum being called daft, or that her investments strategy is "ludicrous", Mikey.
Quite the contrary. She has done the math. She has tracked back all her winnings on her £30,000 investment over the last 5 years. In every single year, without exception, she has won, on average, £550. Given that she does not want to tie up her money in a long term investment bond, the best kind of rates she could have received would have been around 2% a year or approx. £600 a year. So - she has lost nothing compared to the best rates available for shortish term savings vehicles, and has had the chance of winning, each month, a life-changing sum.
She likes a gamble, does my mum. She sees this as a risk-free gamble, gives her something else to look forward to when the postman drops the post through the mailslot each day, and is secondary to other investments that she has. I think you are being unduly judgemental in your assessment."
"I sort of resent my mum being called daft, or that her investments strategy is "ludicrous", Mikey.
Quite the contrary. She has done the math. She has tracked back all her winnings on her £30,000 investment over the last 5 years. In every single year, without exception, she has won, on average, £550. Given that she does not want to tie up her money in a long term investment bond, the best kind of rates she could have received would have been around 2% a year or approx. £600 a year. So - she has lost nothing compared to the best rates available for shortish term savings vehicles, and has had the chance of winning, each month, a life-changing sum.
She likes a gamble, does my mum. She sees this as a risk-free gamble, gives her something else to look forward to when the postman drops the post through the mailslot each day, and is secondary to other investments that she has. I think you are being unduly judgemental in your assessment."
If you don't believe me, see what Martin Lewis has to say about Premium Bonds. He is vastly more experienced and knowledgeable than I am !
http://
"You're likely to win even less than the interest rate"
"For many, they're worse than the top savings accounts"
http://
"You're likely to win even less than the interest rate"
"For many, they're worse than the top savings accounts"
>"Rather an obvious answer FF but its from the interest that the Government earns on all the premium bonds that people hold."
Maybe this is rather an obvious question then: where does the money come from that pays interest on NSi savings, ISAs, government bonds etc? It comes from the interest that the Governement or financial institution earns on the savings that people hold.
There's no difference to me apart from one being a guaranteed return and one a potential return based on probabilities and averages which may be lower (even nil) or much higher
Maybe this is rather an obvious question then: where does the money come from that pays interest on NSi savings, ISAs, government bonds etc? It comes from the interest that the Governement or financial institution earns on the savings that people hold.
There's no difference to me apart from one being a guaranteed return and one a potential return based on probabilities and averages which may be lower (even nil) or much higher
I am pleased for your Mum LG, but she has been very lucky to win £560 every year out of her £30,000 holdings. Again, if you don't believe me, see what Martin Lewis has to say about somebody in your Mum's position :::
http://
Only 4.99% of people win more than £550 a year. Lucky Mum !
http://
Only 4.99% of people win more than £550 a year. Lucky Mum !
Mikey - The one thing I am not is stupid. Nor is my mum. We are both well aware of Martin Lewis's advice and opinion on premium bonds. Neither of us discount his opinion. But he does not term them ludicrous. He does not describe those people using them as "daft", unlike you.
Do the math. Yes, the guaranteed return is less than a fixed rate bond. It could indeed, in theory, be nothing at all. But people do not necessarily wish to lock their money away for long periods of time, and if you have been getting regular wins throughout the year, tax -free, with that added little frisson of excitement as the envelope lands on the doormat - who are you to call people daft, or their savings strategy ludicrous?
You have no clue what other investments my mum or the thousands of others who have premium bonds have, what their investment strategy is. Stop with the condescension please.
Do the math. Yes, the guaranteed return is less than a fixed rate bond. It could indeed, in theory, be nothing at all. But people do not necessarily wish to lock their money away for long periods of time, and if you have been getting regular wins throughout the year, tax -free, with that added little frisson of excitement as the envelope lands on the doormat - who are you to call people daft, or their savings strategy ludicrous?
You have no clue what other investments my mum or the thousands of others who have premium bonds have, what their investment strategy is. Stop with the condescension please.
Inflation rates around 2% per year.
Accessible Investment vehicles ( 1-2 year fixed terms) best rate if you have been lucky over the last 5 years or so has been maybe 2.5% on 2 years or more, less than 2% for just a 1 year term.
For my Mum, over the last few years, she has been getting a return of close to 2% on her premium bond investment.
She is not daft. She has done the math, and likes a small gamble. Provided you are aware of the limitations of premium bonds and go in with your eyes open, they provide a reasonable savings proposition.
Accessible Investment vehicles ( 1-2 year fixed terms) best rate if you have been lucky over the last 5 years or so has been maybe 2.5% on 2 years or more, less than 2% for just a 1 year term.
For my Mum, over the last few years, she has been getting a return of close to 2% on her premium bond investment.
She is not daft. She has done the math, and likes a small gamble. Provided you are aware of the limitations of premium bonds and go in with your eyes open, they provide a reasonable savings proposition.
I am not calling your Mum daft, just very optimistic LG. If she has won £560 every year than she has been extremely lucky, and I repeat, I am pleased for her ! Her return has been about 1.8%.
Martin Lewis is giving hard, unimpeachable facts. The trouble is most people don't have the holdings that your Mum has, but still labour under the false impression that they are going to be millionaires. They are highly unlikely to be so. My point is that Premium Bonds have a place in some portfolios, but they are still a highly risky investment, that shrinks with inflation every day that they are held. Suitable for some people but everybody.
Martin Lewis is giving hard, unimpeachable facts. The trouble is most people don't have the holdings that your Mum has, but still labour under the false impression that they are going to be millionaires. They are highly unlikely to be so. My point is that Premium Bonds have a place in some portfolios, but they are still a highly risky investment, that shrinks with inflation every day that they are held. Suitable for some people but everybody.
@Mikey. I simply wish you to withdraw the comments from earlier, describing premium bonds as ludicrous, and that they are a daft investment proposition.
They are not. They have their place, and for some people represent a very good opportunity.
It might surprise you, but I agree with Martin Lewis's assessment about premium bonds. But they are not a "high risk" proposition at all - I really do not know where you are coming from with this concept.
Given that savings rates have been in the doldrums for a significant period of years now, all savings propositions have to be measured against the inflation rate versus any savings rates you can get- and for the most part, the commonly available investment packages have barely been able to keep up with inflation.
For a 30,000 savings block in premium bonds, the risk is losing £600 a year (2%) in real terms from inflation.
My Mum for the last 5 years has been getting a return not far away from that, more or less keeping up with inflation and mitigating that real term erosion in the value of her savings. She may indeed be lucky, but she has invested with her eyes open, but you calling an investment "highly risky" when the total risk/ gamble is over a piddling 2% erosion in the value of your savings is simply inaccurate.
Everyone will have different resources and different requirements for their savings. There is no "one size fits all" package, and provided they get some advice and think through their strategy, what they do with it is down to them.
They are not. They have their place, and for some people represent a very good opportunity.
It might surprise you, but I agree with Martin Lewis's assessment about premium bonds. But they are not a "high risk" proposition at all - I really do not know where you are coming from with this concept.
Given that savings rates have been in the doldrums for a significant period of years now, all savings propositions have to be measured against the inflation rate versus any savings rates you can get- and for the most part, the commonly available investment packages have barely been able to keep up with inflation.
For a 30,000 savings block in premium bonds, the risk is losing £600 a year (2%) in real terms from inflation.
My Mum for the last 5 years has been getting a return not far away from that, more or less keeping up with inflation and mitigating that real term erosion in the value of her savings. She may indeed be lucky, but she has invested with her eyes open, but you calling an investment "highly risky" when the total risk/ gamble is over a piddling 2% erosion in the value of your savings is simply inaccurate.
Everyone will have different resources and different requirements for their savings. There is no "one size fits all" package, and provided they get some advice and think through their strategy, what they do with it is down to them.
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