Premium bonds - are they safe?

[Someaddedsugar]

Apologies if this has been asked before.

I'm about to receive an inheritance of £10k which is completely unexpected and I'm in a bit of shock as this is a lot of money to me.

We currently own a property and we'd already planned that we want to move in two years time and keep our current property as a rental (sought after rental area so no worries there).

I know that the people gifting me the inheritance would be very happy that I'd put it towards a deposit for the new property as it's something I talked about often with them.

However in the meantime I want to find somewhere to put the money (along with some additional savings we already have) with easy access in case we find a house sooner. I've spent a lot of time looking online today but the interest rates don't seem that good on any savings account with easy access and I was wondering if premium bonds is the way to go, and if there's any risk to the money I would put in?

Any advice would be hugely appreciated.

They're super safe. They're guaranteed by the government so if they're at risk, we're all in big trouble, because it will be indicative of much more significant problems!

They are backed by HM Treasury. 100% of your savings are safe, no £85k limit. Though you are asking specifically about premium bonds, those have a £50k limit anyway. Direct Saver account has £2million limit.

Ease of access is the limitation, it does take time to get money out. Typically 3 working days but NS&I have recently had some issues. www.bbc.co.uk/news/business-55756381

Thank you both @thecognoscenti and @nannynick.

I would hope 3 days would be fine as I would aim to withdraw as soon as we knew what we were doing re a new property etc.

I've looked all over the website and unless I'm missing something there doesn't appear to be a withdrawl fee - do you know if there is one? Apologies for the many questions - this is all new to me and I'm a bit thrown by the number of options.

There's no withdrawal fee

Thanks @Dinosauraddict

No withdrawal fee, perfectly safe. You might win a prize!

Just to mention re letting out your property. There are so many legal obligations and things you need to be aware of and do correctly. It's not easy, and could end up costing you more than you ever recoup in rent. I'd never advise anyone to become a landlord nowadays.

Thank you @Chunkymenrock. I'll take that on board. We've spoken with a number of people with experience or knowledge of being a landlord and the detail and it's always good to have other opinions too. Is it certain costs in particular that would put you off?

premium bonds safe as anything and you have a chance of a bit of money. Interest rates are indeed diabolical at the moment, they've been below inflation for a decade but this is something else.

I concur - if the property is in England (more so if in Scotland) you would be nuts to become a landlord now, let alone in two years. The laudable concept of tenants rights is now 'no eviction for almost any reason, and no eviction for 18 months.' You also need hefty insurances and a pile of money to do repairs, deal with voids etc. Being a landlord is a constant worry and I speak as one with good tenants.

sell up.

ps lurk on landlordzone for a while to see what can and is happening.

No withdrawal fee. Can move money in and out as often as you like but money has to be in 1 full month before it goes in the draw.
Takes about 2/3 days for funds to show in your bank after withdrawal.

Thanks @AndWhat and @murbblurb.

I'll have a look on landlordzone. It's great to get opinions from others on the property element too and I really appreciate you all taking the time to advise.

PS I'll never understand the fascination with premium bonds.

Martin Lewis has a good explainer on how they work and why most investors receive little to no interest
www.moneysavingexpert.com/savings/premium-bonds/

We have had a really good return on premium bonds, far better than where the money was before and where it might go now. Maybe it's pot luck but long may it last!

Me neither, ParentOfOne, it's not dissimilar to buying a lottery ticket. Really unlikely to win much at all over the years. Most people who receive the type of small win you're most likely to get will just take the money and put it towards a meal out or something, so there's no reinvestment and therefore no compound interest, so gradually over the years, factoring in inflation, what you had originally in premium bonds doesn't end up being worth much.

However, if you just want to put it somewhere safe because you're going to spend it all anyway in a year or so then yeah, it's worth it, I suppose, as the teeny weeny chance of winning big is a bit of excitement to some people.

there is a difference between premium bonds and a lottery ticket - in premium bonds you still have your stake. Subject to the ravages of inflation, of course.

Bank of England and govt hate savers and have done for decades - but we all know how screwed we are without savings. Following 'eat out to get covid' it will be 'piss money away to help out'. Shame really.

@Someaddedsugar come over to the Premium Bond thread www.mumsnet.com/Talk/legal_money_matters/4040452-PREMIUM-BOND-THREAD?msgid=104622537#104622537

So if you do have a relatively small 10k to put away for a rainy day (these days all being rainy!), where is the best place to put it if not premium bonds?

@FAQs thank you I will!

@Timeforabiscuit

So if you do have a relatively small 10k to put away for a rainy day (these days all being rainy!), where is the best place to put it if not premium bonds?

Define best.

In terms of getting your money back: any saving account - they all benefit from the FSCS up to £85k per person www.moneysavingexpert.com/savings/safe-savings/
It means that, should the bank fail, you will be reimbursed up to £85k per person
Or anything with NS&I, which is part of HM Treasury - it's like lending money to the government

However, the returns on these accounts are so low they will most likely not keep pace with inflation. If you want higher returns, you must be willing to accept greater risks...

Thanks @ParentOfOne I really hate risk, my mum got stung by investing in index shares in the 80's and barely got back what she put in over 15 years - its left a lasting mistrust!