How's your luck with Premium Bonds?

[Highway Man]

I think after 12 months the interest rate drops a lot on that account.

OMG

 

[MNW67]

OMG

@pete01

When the original bonus rate runs out, you can usually just open another account with the same bank and get another 12 months bonus.

Then you simply transfer the money from the old account to the new one. But each time you open a new account, make sure the payee mandate is working properly first before moving a large amount, as advised in my post above. Once all the money is transferred, you can then close the old account.

It is a rigmarole. The banks rely on people forgetting. But you should get plenty of notice from the bank that the bonus rate is ending. Best to calendar it as well!

 

[Koolpc]

@pete01

When the original bonus rate runs out, you can usually just open another account with the same bank and get another 12 months bonus.

Then you simply transfer the money from the old account to the new one. But each time you open a new account, make sure the payee mandate is working properly first before moving a large amount, as advised in my post above. Once all the money is transferred, you can then close the old account.

It is a rigmarole. The banks rely on people forgetting. But you should get plenty of notice from the bank that the bonus rate is ending. Best to calendar it as well!

This is exactly what i do, every year..

 

[fillyboy]

This is exactly what i do, every year..

I thought you might bury your money in the garden.

 

[JohnD]

Seriously though, I have some money I want to put aside, are premium bonds a safe bet?

You used the word "safe."

The company will not go bust, or run off with your money. So, yes, safe.

The returns are random, so no guarantee, so if you have ten thousand or more, the random chance will bring you nearer to getting the average return, over time, which is currently just under 4% a year.

However

There is no growth or increase in value. A bond that cost you a pound is always worth a pound.

If inflation is 20% a year, and the return is 4%, you will get 16% poorer is real terms.

If, the following year, inflation drops to only 10%, you will then be 22% poorer than when you started.

If inflation falls, you will never make back the value you lost.

So over time you are guaranteed to lose value. The same applies with cash savings in a bank or building society.

So if, for a short time, you need to hold some cash, with no risk of the value going down (for example, a large bill is anticipated, such as a daughters wedding, or a car on order) it is quite a good way to hold cash, as no burglar will steal it, it will not be destroyed if your house burns down, and no tax is due on whatever prizes you gain. You don't even have to list them on a tax return. If I value my time af £100 an hour, not having to fill in a tax return is valuable to me.

There is no risk of loss, and no risk of gain.

Investments are available that give you a reasonable expectation of long-term growth that beats inflation.

That's what you should look for with your nest egg or pension fund.

 

[Koolpc]

I thought you might bury your money in the garden.

I tried that but i kept loosing it!! Woof!

 

[Koolpc]

You used the word "safe."

The company will not go bust, or run off with your money. So, yes, safe.

The returns are random, so no guarantee, so if you have ten thousand or more, the random chance will bring you nearer to getting the average return, over time, which is currently just under 4% a year.

However

There is no growth or increase in value. A bond that cost you a pound is always worth a pound.

If inflation is 20% a year, and the return is 4%, you will get 16% poorer is real terms.

If, the following year, inflation drops to only 10%, you will then be 22% poorer than when you started.

If inflation falls, you will never make back the value you lost.

So over time you are guaranteed to lose value. The same applies with cash savings in a bank or building society.

So if, for a short time, you need to hold some cash, with no risk of the value going down (for example, a large bill is anticipated, such as a daughters wedding, or a car on order) it is quite a good way to hold cash, as no burglar will steal it, it will not be destroyed if your house burns down, and no tax is due on whatever prizes you gain. You don't even have to list them on a tax return. If I value my time af £100 an hour, not having to fill in a tax return is valuable to me.

There is no risk of loss, and no risk of gain.

Investments are available that give you a reasonable expectation of long-term growth that beats inflation.

That's what you should look for with your nest egg or pension fund.

Putting money into a higher interest account is good too though?

 

[pete01]

This is exactly what i do, every year..

Do you get much interest on dog biscuits?

 

[Koolpc]

Do you get much interest on dog biscuits?

For every 100 i get 10!

 

[Atgni]

I have 10k to put away just need to do something with it before I blow it on prostitutes and beer

That's better than wasting it

 

[Highway Man]

That's better than wasting it

exactly

 

[Highway Man]

You used the word "safe."

The company will not go bust, or run off with your money. So, yes, safe.

The returns are random, so no guarantee, so if you have ten thousand or more, the random chance will bring you nearer to getting the average return, over time, which is currently just under 4% a year.

However

There is no growth or increase in value. A bond that cost you a pound is always worth a pound.

If inflation is 20% a year, and the return is 4%, you will get 16% poorer is real terms.

If, the following year, inflation drops to only 10%, you will then be 22% poorer than when you started.

If inflation falls, you will never make back the value you lost.

So over time you are guaranteed to lose value. The same applies with cash savings in a bank or building society.

So if, for a short time, you need to hold some cash, with no risk of the value going down (for example, a large bill is anticipated, such as a daughters wedding, or a car on order) it is quite a good way to hold cash, as no burglar will steal it, it will not be destroyed if your house burns down, and no tax is due on whatever prizes you gain. You don't even have to list them on a tax return. If I value my time af £100 an hour, not having to fill in a tax return is valuable to me.

There is no risk of loss, and no risk of gain.

Investments are available that give you a reasonable expectation of long-term growth that beats inflation.

That's what you should look for with your nest egg or pension fund.

Sound advice, thanks.

 

[Atgni]

I think after 12 months the interest rate drops a lot on that account.

@pete01
When the original bonus rate runs out, you can usually just open another account with the same bank and get another 12 months bonus.
Then you simply transfer the money from the old account to the new one. But each time you open a new account, make sure the payee mandate is working properly first before moving a large amount, as advised in my post above. Once all the money is transferred, you can then close the old account.
It is a rigmarole. The banks rely on people forgetting. But you should get plenty of notice from the bank that the bonus rate is ending. Best to calendar it as well!

You need to be doing this almost as a full time job- perfect if you are retired.
The good thing about premium bonds is that you dont need to keep up with the rigmarole and every month you have a little excitement in seeing if you have won anything.
Same with the NS&I isas although they may be slightly less % they stay like that and dont drop to 0.0001% after 1 year.
Also has anyone thought about the fact that you are helping the country a little bit by lending it cash.

 

[Notch7]

No one has ever told you the basics about spreading your investments i see

Thank you for admitting you gave bad advice to buy loads of Tesla shares

We got there eventually

 

[gas112]

Thank you for admitting you gave bad advice to buy loads of Tesla shares

We got there eventually

oh deary me notch cant see tesla is still a rising share up 53 % in a year
Since Elon has said he is coming back up 25% in a week .
Perhaps you should have listened .
Dont be blinkered like thicko Notch
You could have made 25k in a week
you know how you said you know how easy it is to move money in and out of your premium bond account