Premium bonds - weird coincidence

[PeteXXX]

Big fat as expected zero for me.
A first win for grandson, with the bonds I gave him, of £100.

 

[ebikeerwidnes]

Turns out that I got £25!!!


which makes £50 this year

which is a very low rate of return when last year I worked ou tI got more than I would have done in an investment account

 

[MontyVeda]

50 quid for me... first since last July.

 

[vickster]

Disappointing £25 this month. Will cross my fingers for decent holiday spending money in October 🙄
Nothing for my mum

 

[ebikeerwidnes]

I'm seriously thinking of taking it out an putting it in an ISA or something

the prizes certainly seem to have dropped in frequency

I think I saw something about them changing it so there were fewer prizes but "The Big One" was bigger

which isn't how I personally want it!

 

[Paulus]

£200 for myself, £75 for MrsP and £50 for MissP. 😁

 

[sungod]

I'm seriously thinking of taking it out an putting it in an ISA or something

the prizes certainly seem to have dropped in frequency

I think I saw something about them changing it so there were fewer prizes but "The Big One" was bigger

which isn't how I personally want it!

premium bond payout is currently 3.6% of prize fund, for the averagely lucky

but you need to hold a lot for your annual results to converge on that - a single pb is likely to pay zero for decades, not 3.6% a year (i've a couple i was given in the 1960s, they've not won a penny, let alone a sausage)

even a boring cash isa will get you over 4% at the moment, and an investment isa holding decent index funds is likely to far outdo that long term

once the isa allowance is used up, whilst for higher/additonal rate taxpayers, putting 50k into pb may give better return than a savings account as the pb prize will be tax free, a non-isa investment account is still likely to thrash the pb 3.6% even after capital gains tax

another option is put money into a sipp, you'll get tax relief (up to the limits) and boost your pension pot

unless you're happy to gamble on a big pb prize and willing to accept the otherwise very poor return, you're likely to do far better putting your money elsewhere

 

[SpokeyDokey]

premium bond payout is currently 3.6% of prize fund, for the averagely lucky

but you need to hold a lot for your annual results to converge on that - a single pb is likely to pay zero for decades, not 3.6% a year (i've a couple i was given in the 1960s, they've not won a penny, let alone a sausage)

even a boring cash isa will get you over 4% at the moment, and an investment isa holding decent index funds is likely to far outdo that long term

once the isa allowance is used up, whilst for higher/additonal rate taxpayers, putting 50k into pb may give better return than a savings account as the pb prize will be tax free, a non-isa investment account is still likely to thrash the pb 3.6% even after capital gains tax

another option is put money into a sipp, you'll get tax relief (up to the limits) and boost your pension pot

unless you're happy to gamble on a big pb prize and willing to accept the otherwise very poor return, you're likely to do far better putting your money elsewhere.

We took ours out ages ago - a total waste of time.

MSE has an excellent analysis of why most people will win less than the amount they would receive if investing in alternative products.

It seems that the gambling (heart) rules the head for many people.

Worryingly, a huge percentage of PB holders have all their liquid cash assets tied up in PB's - not a position I would like to gamble from.

 

[sungod]

We took ours out ages ago - a total waste of time.

MSE has an excellent analysis of why most people will win less than the amount they would receive if investing in alternative products.

It seems that the gambling (heart) rules the head for many people.

Worryingly, a huge percentage of PB holders have all their liquid cash assets tied up in PB's - not a position I would like to gamble from.

yeah, it's a really bad place to park primary cash, the likelihood of prize return is poor, and inflation erodes the value

according to the bank of england's inflation calculator, £2 from the 60s would be over £35 in today's money (seems low to me), but as premium bonds it's still worth just £2

whereas £5k i'd stuck in a 2001 investment account that i forgot/lost track of until a few months ago had become over £31k, just sat in a boring usa tracker fund, nothing special

 

[ebikeerwidnes]

I have had mine in there for several years and overall the "interest" has been greater than the ISA I used to have

This year it is way lower

I think it is due to a change on the way the award prizes

which is why I have been looking ISAwards!

 

[bikingdad90]

yeah, it's a really bad place to park primary cash, the likelihood of prize return is poor, and inflation erodes the value

according to the bank of england's inflation calculator, £2 from the 60s would be over £35 in today's money (seems low to me), but as premium bonds it's still worth just £2

whereas £5k i'd stuck in a 2001 investment account that i forgot/lost track of until a few months ago had become over £31k, just sat in a boring usa tracker fund, nothing special

£33 inflation impact is 1650%.

A £26k isa growth is a 520% improvement.

A fair comparison of the £5k inflated would be £82,500 if it was invested in the 60’s.

Very crudely 20/60th of the £82.5k is £30k so arguably the ISA has kept pace with inflation over the years but not exceeded it.

 

[sungod]

£33 inflation impact is 1650%.

A £26k isa growth is a 520% improvement.

A fair comparison of the £5k inflated would be £82,500 if it was invested in the 60’s.

Very crudely 20/60th of the £82.5k is £30k so arguably the ISA has kept pace with inflation over the years but not exceeded it.

$5k invested in the s&p500 in 1965 would be almost 2 million today (chart is usd as this keeps it fx neutral, if it were an original £5k, the value today would be even higher due to gbp's decline vs. usd)

obviously there was no isa back then, but even in an investment account and paying cgt, the return since 1965 is far above inflation

 

[bikingdad90]

@sungod the point I was trying to articulate, perhaps not well is that you gave an apples and pears comparison.

If you invested just £2 through the same graphing system, what figure does it come out with and then you can compare that same £2 against the inflation figure.

Same idea with the £5k figure.

The larger the figure invested, naturally the greater the £ and p generated as the risk is potentially greater. However in percentage terms the gain/loss could be the same “margin” as a smaller investment.

 

[briantrumpet]

Turns out that I got £25!!!


which makes £50 this year

which is a very low rate of return when last year I worked ou tI got more than I would have done in an investment account

Yeah, coincidence of me cashing a chunk in to pay for house renovations in Devon & France, plus them reducing payouts, has resulted in me getting a very low rate of return this year, even accounting for the reduced holdings. Thinking about transferring the rest over into the savings account for a guaranteed return.

 

[sungod]

@sungod the point I was trying to articulate, perhaps not well is that you gave an apples and pears comparison.

If you invested just £2 through the same graphing system, what figure does it come out with and then you can compare that same £2 against the inflation figure.

Same idea with the £5k figure.

The larger the figure invested, naturally the greater the £ and p generated as the risk is potentially greater. However in percentage terms the gain/loss could be the same “margin” as a smaller investment.

i was aware of the difference in dates, but it was a real world comparison based on my own money

my premium bonds returned zero and simply eroded capital, for c. 60 years, whereas in less than half that period the markets gave significant capital growth, far outpacing inflation (in spite of a few bad times in the markets during that period)

the fact is that long term investing in usa markets using accumulation tracker funds, has easily beaten inflation, whereas even the best savings accounts tend to fall behind

since its inception, the ftse100 has outperformed inflation by c. 4.5% a year on average...

https://chasedevere.co.uk/2024/02/08/lessons-from-the-ftse-at-40/