Page 4 | To ask if premium bonds are better than a cash ISA?

Wondering001 · 2021-07-10T20:20:47+00:00

My savings have been sat in a cash ISA earning f all interest really over the past couple of years. I've been looking into premium bonds, does anyone know if it'll be worth while using all my savings to buy premium bonds instead? Do you have any? Have you ever won anything? Do you have hundreds of premium bonds or thousands? I saw on the website there's a 1 in 34500 chance of winning £25 each month. Does this mean if someone was to have £34500 worth of premium bonds they'd be likely to win £25 fairly often or am I being dense? Cheers

blessedbe · 11/07/2021 16:52

I have a couple of thousand in (self-employed and I save my tax money in there now), have only had money in since April (which doesn't count until May as it has to have been in a full month before you can win from it) and I already won £25. I was very pleasantly surprised.

VanGoghsDog · 11/07/2021 17:18

I get that you then can't access pension for a long time however you get a chunk of free money from the government as well as whatever return the stocks and shares give out.

You don't get a chunk of free money from the govt in your pension. Pension conts are tax free which might be what you mean.

VanGoghsDog · 11/07/2021 17:30

@entropynow

I have about 50K in an income trust and get over £3000 a year

This seems unlikely. What is an "income trust"?

I have c£80k in stocks and shares and get about £2,500pa income (not interest, not growth, dividends).

Figmentofmyimagination · 11/07/2021 19:35

I love my premium bonds - I’ve got just short of £50k - so that when I win, the prizes can be used to buy more pbs and I don’t have to think about it. I seem to do ok, although I’ve never won more than £100 a month - usually £25.

It’s v clever use of the psychology of ‘winning’, prizes, ‘agent million’ etc and I’m afraid I’ve bought right into it. I always know when it’s the first of the month, and I’ve even been known to look up the winning bonds and the geog areas of the winners - how sad is that. Newer bonds always seem to do better older ones, but that’s not surprising as there will be so many more of them.

If you have £50k, your odds of winning £1million are about 850,000 to one, but that doesn’t stop me dreaming... I am their perfect customer.

Blondeshavemorefun · 11/07/2021 21:37

Someone HAS to win the million. Or the 2 people

Compared to those who do the lottery .
You loss your money
It can rollover and no one get it for months

LoveManyTrustfewAlwaysPaddle · 11/07/2021 23:57

@VanGoghsDog

We have in the last year invested £18,000, it is our emergency fund for imminent retirement we need to grow it to £25k, we have won £75 on £18,000.

You're pretty unlikely to "grow" £7k from premium bonds "imminently". Or from anywhere really, especially if risk averse (which you should be with your emergency fund). Mind you, in £18k, £75 is good going.

Oh yes I can see I wasn't very clear, we save about £1,500 a month and when we hit £5k in the bank we transfer it over, so we will hit that figure in the next five months, actually before because from September we will have final salary pension and my DH's salary going into the bank so it will be faster than that.

But that fund is literally only for a new boiler a new second hand car, a washing machine or new tv money.

When we were younger it was always case oh Sh*T where is that money coming from..... so I always swore blind we would have an emergency fund.

LoveManyTrustfewAlwaysPaddle · 11/07/2021 23:58

Sorry I went off on a tangent.

AnnaMagnani · 12/07/2021 00:02

Vanguard Life Strategy ISA - pick how cautious you are (or not), put your money in and forget it.

Even in a cautious rated one, and including the Covid crisis I am getting >20%.

LoveManyTrustfewAlwaysPaddle · 12/07/2021 00:21

Ooooh will look at that tomorrow. Thank you.

Sixgeese · 12/07/2021 07:40

I have £50K in PB, this year so far I have got £300. Last year my total was £600 for the year.

There is a PB winning thread running somewhere on Mumsnet that could give you an idea of what people get.

AnnaMagnani · 12/07/2021 16:28

Compare that to I have 11K in Vanguard Life Strategy. In the last 6 months I made more than £200 in 6 months out of 12, with losses of

Lemonmelonsun · 12/07/2021 17:05

Anna I'm the same, I have a range of vanguards funds including life strategy fund, I've gone for 100% equity at the moment.

I have a few what I call my gamble shares /funds and some individual shares.. But when I get the time I'm probably going to streamline into vanguard only and probably with vanguard.

Women in particular sadly seem to know less about investing than men and are poorer as a result.

Lemonmelonsun · 12/07/2021 17:06

I've actually been running at 32 % for most of this year.

VanGoghsDog · 12/07/2021 20:30

Women in particular sadly seem to know less about investing than men and are poorer as a result.

Yet, conversely, women are better investors than men.

Billandben444 · 12/07/2021 21:53

I tucked £20k in a Nutmeg s&s ISA in 2019. In March 2020 the value dropped overnight to £17k but I was in it for the long haul so didn't panic and the value has now risen to £24.5k so I'm a happy bunny. My £50k in PB, however, is safe as houses (though not inflation proof) and I tend to win £25 or £50 a month - it's the thought of a big win that keeps my money there!

Lemonmelonsun · 12/07/2021 22:00

Yes van gogh in terms of choices of what to invest in I've read that.

It's so sad that it's not not taught and portrayed as gambling etc.

It frustrates me when I see threads like this and people comparing pb to "interest" rates on saving...

Zenithbear · 12/07/2021 22:03

We have just reached maximum in premium bonds and usually win most months. This has to be the worst year in prizes though, no where near as much as other years. Thought it might be because a lot of people are buying because of covid from business grants, self employed grants, extra savings etc

Original poster

Wondering001 · 12/07/2021 22:25

It's so sad that it's not not taught and portrayed as gambling etc.

I'm failing to see it being that serious.

In a way, yes, you're gambling interest, and with current interest rates we're mostly talking tens of pounds. But you're never losing any money you're putting in. I'm not sure I can think of any "other" form of gambling where you're not risking your initial investment at all.

OP posts:

DorsetCafes · 12/07/2021 22:55

Whoever said “if you want your capital to be guaranteed a cash ISA is better” is talking out of their bottom.

Your capital is safe with PBs - you can take out whatever you invested any time you like. Unlike gambling you do not risk your initial investment. And because they are issued by NS&I ie the Government they are very safe, whereas in certain circs eg if you have a lot of money with one bank you could lose some of your cash ISA if that bank went bust.
For both PBs and cash ISAs, the real risk is that inflation outstrips the effective interest rate. That means, even if the nominal value of your initial investment remains the same (ie invest £100, get £100 + interest/prizes back), the real value (what it can buy) declines. The only way around this is to invest in stocks and shares ISAs and/or inflation-linked bonds.

VanGoghsDog · 12/07/2021 23:37

@Wondering001

It's so sad that it's not not taught and portrayed as gambling etc.

I'm failing to see it being that serious.

In a way, yes, you're gambling interest, and with current interest rates we're mostly talking tens of pounds. But you're never losing any money you're putting in. I'm not sure I can think of any "other" form of gambling where you're not risking your initial investment at all.

The person you are quoting is talking about investments being portrayed as gambling, not premium bonds.

blueshoes · 13/07/2021 02:17

I have primarily invested in stocks and shares for more than 2 decades.There are ups and downs but I swear my return is better than investing in property with the benefit of an ISA tax shelter/pension tax efficiency and with far less maintenance hassle. All my single stock investments have not done well but where I have gone for ISA S&S funds (yes, Vanguard included), many have at least doubled, a few tripled in value over that time, particularly those heavy on US tech stocks.

I do dollar-cost averaging i.e. a monthly investment. I don't choose particularly racy funds, mostly low cost index-linked.

Deposits and cash ISAs or premium bonds don't really make sense to me except as a place to park a small amount funds I need to keep very liquid.

BarbaraofSeville · 13/07/2021 04:29

I have primarily invested in stocks and shares for more than 2 decades.There are ups and downs but I swear my return is better than investing in property with the benefit of an ISA tax shelter/pension tax efficiency and with far less maintenance hassle

It is true that over 2 decades, the return is likely to be higher with stocks and shares, but as you acknowledge, there are ups and downs.

As the OP has said she is likely to need the money in the next 2-3 years, it is likely that investing is too risky, because if you have to access the money at a time when the market has dropped, the losses are realised.

For most people, the money they have in cash, or PBs is that which they are likely to need in the next few years and/or is part of a balanced investment portfolio that also includes stocks.

We must not forget the disclaimer that accompanies every item of promotional material about investments 'past performance is not a guarantee of future returns'.