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The UK's Dangerous Addiction to Premium Bonds
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- เผยแพร่เมื่อ 16 ส.ค. 2024
- Premium Bonds - The Nations Favourite Gimmick that will set you back £1,000s.
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00:00 Premium Bonds
1:03 How They Hook You
5:03 The Maths
8:21 What You’re Missing Out On
Thank you for the comments, clearly Premium Bonds cause a lot of debate!
To be clear, I’m not suggesting you should do away with an emergency cast fund and invest it. You should hold an emergency fun at all times, just make sure it doesn’t get too big. 👍🏻
The maximum holding in Premium Bond is £50,000. It is unlikely to cause an issue.
If you had invested £50k in Bitcoin 10 years ago, you would have £26,800,000 today. Fortune favours the bold.
@@sang3Etamore likely lost the lot 🙄
why not take the money you`d put on the euromils or national lottery, and put that into premium bonds each month, (lets say you do both games and both mid week and weekend you`re talking £9 a week) this would be separate to savings and investments. this can also be your emergency fund at the same time so lots of good reasons to do it. Then seperatley save and invest (ISA, stocks, pension) like normal, that`d be a win all round, right?
Grandparents are also more comfortable paying into premium bonds to grandkids, and like to track it. I would say, that it can be worthwhile as quick to get out, secure, and also useful if you've used the tax free allowance in an ISA
To be fair, my few thousand quid emergency fund held in Premium Bonds was outperforming any available savings accounts until we saw the base rate increases.
The fact this post has so many likes just confirms people must realy like these premium bonds.
So what’s the plan now?
@@JamesShack What's in there is staying put for now but I've not paid in any more for about 18 months since I setup a S&S ISA. I was a late starter to a pension so the bulk of my saving goes into that along with a regular payment going into the ISA each month. My saving journey only started during the post 2008 period of historically low interest rates so PB turned out to be right for me in that time but if I was starting today I would be looking elsewhere for more guaranteed results. So I do see your point.
I sold a house 14 years ago and bought £50,000 worth of premium bonds, over the years I’ve made an average return of about 1% per annum on my investment ! With my highest single prize being 100 pounds ! I’ve now put it all into a saver fixed at 4.2 % for 2 years, it wasn’t a difficult decision. Bonds are just not worth it anymore !
@@andy.m265 If you had invested 50,000 into an S&P 500 index tracker you'd have made over £100,000 in the past 14 years.
I've held them for a couple of years, my return is lower than the stated average, but it's not bad, and when you factor in the lack of tax it's pretty close to easy access rates. Plus it's a little bit of fun!
I've recently sold our kids premium bonds, which were given by grandparents and invested the money into child's stocks and shares ISA's. Much better return for when they reach 18.
The one thing James forgot to mention about Premium Bonds is they don’t pay any commission to advisers.
They invest your money in proper bonds with a defined rate of return, so they earn more than you invest - that is the commission. Plus you are losing the real value of your investment - i.e. inflation, which I calculate to be around 12% per year in. Thats £5k for every '50k invested'. These are invisible but real fee's.
@@jasonbuksh2958how are you calculating 12% inflation? What metrics are you using to bump up from cpi figures? Genuinely interested for future reference for myself. Thanks 🫡
Also no taxes
I was bought £10 of premium bonds in 1984 by my great grandmother when I was born. I found the little yellow card with the number on it a few years back, updated my details and checked how much I had. I still had £10 😂
Correction - you had 10 NEW pounds. Worth so much less than in 1984
Similar to my wife. She inherited £60 about 50 years ago, as bonds. Not a penny has been 'won' .
Part of the reason would be that you need to claim your winnings within 6 months or something, could be a year or whatever but there is a time limit
@@garyukdividendinvestor on premium bond there is no time limit. On the website you can check for historical prizes and mine still says no prizes and £10 worth of premium bonds.
@@frederickwoof5785 A hundred pounds or less is not likely to provide a win in your lifetime, even a thousand is going to provide wins quite infrequently.
The reason i have Premium Bonds (PB) is because if i put £1,000 in a building society account and got £25 pa in interest, it's not going to make any difference to me.
With PB, I get the same return of £25, but i may win, say, £1,000+ which would be very handy. Plus, this stops me buying lottery tickets, which really is throwing money into the wind!
Good point about not buying lottery tickets - I've stopped buying all this year, as prize history ( for me) is pathetic!
May😂
Yes, losing £2 per week on the lottery has financially ruined many people! 🤣
I have met with financial advisors and they drone on about saving for retirement. You cannot predict if I will get there, many of my friends have not. My children told me to enjoy life and they do not care about any inheritance.
Yes I have premium bonds, they are fun. Yes, I buy lottery tickets and yes I am out of pocket. But I have something called enjoyment and you cannot put a price on that.
I predict you will be a rich man but when you die you cannot benefit from that.
I can guarantee if I consult a financial advisor it will suck away 95% of what little enjoyment I have in life.
I am not rich, but I have had, and still do have an enjoyable life. Some banker is not benefiting from my money though
Retirement is a scam to bleed your excess cash. You may never get there and if you do it's just a waiting room for death ☠️
I like them. I use them basically as a Lottery ticket, that I can’t lose on. I’ll literally get my ticket cost back. I don’t use them as a primary investment source, just a bit of fun on the side.
I do too, but it’s not a free lottery, we’re paying for the tickets each month with the value of the interest we would have guaranteed received on the money if it was in a savings account. I’m with you tho, premium bond day is my favourite day of the month haha
Same
A great way of keeping the interest/winnings on £50,000 out of the way of the taxman. Definitely not a gimmick in my opinion.
Yes, makes sense in one of those taper regions where the marginal tax rate is >50%
As a senior citizen (aged 70) I have £50,000 invested in premium bonds and they bring in a regular monthly income, I love them. They pay out far more than I used to get when I had the cash invested in an ISA. The only way I could get more of a return would be to invest in a more risky investment plan and tied up for a lengthy period, neither of which I find optimal for a person of my age.
but interest rates on isa’s back then was rubbish and now it’s far better. You would earn far more interest on even an instant access savings account. Just depends how much tax you pay.
Currently, if you are willing to tie up the money for one year, you can get over 6% with an NS&I bond and you can take the profit monthly or at term end.
@@johnwellbelove148I just bought one of these for my mum and they gave her 6.2% for one year. That bond has now been withdrawn by national savings, so it was only available for 6 weeks
NSL at about 6% pays interest monthly into your bank’s current account is a no brainer
@@azza1793 yeah i would've done that one if i didn't need access to the money, i went with Santander 5.2% easy access which suited me better. Both great deals and far outpay the premium bonds i had before 😂
I dont regret holding them though, was a lot of fun to check each month and got pretty lucky compared to average winnings
Only one person has ever been hit by a meteor in recorded history and the odds are 1 in 700,000 yet the lightning hits the earth on a daily basis but the odds are 1 in 5million. How does that make sense
Agree. If you are maxing out your ISA and SIPP allowances, then Premium Bonds are perhaps not a bad place to keep an emergency fund or short term accessible cash for planned big spends
Very interesting perspective! Thanks James. Personally I like the use of premium bonds for an emergency fund store, with the spice of potential lottery winnings!
It definitely has a qualitative value that is hard to quantify.
If you buy a lottery ticket, the cash has gone. Premium bonds is available if you need some cash.
I have twice as much in an ISA as i have in premium bonds. Premuim bonds have made 3 times more that the interest from my ISA.
I have a hard time seeing it as a gimmick.
Especially, when my mother, my Uncle also have premium bonds that are doing just as well.
If you’d put it in an etf you’d be so much better off :( savings accounts don’t even beat inflation.
National Savings Premium Bonds were first issued in 1956 not 1994 as stated.
Having invested in Premium Bonds over the last three ears, I thought I must watch this video. Having watched it, I'm keeping my money in the bonds.
What are you reasons?
What are your reasons?
@@JamesShack I'm doing better than the returns you predict.
@@Rog5446 50% of people will do better than the median. If you play it long enough that should revert to the mean.
@@JamesShackthat isn't how averaging works. Some people will just be lucky and have above average. The people winning the top prizes will be miles above the average irrespective of duration.
Best thing i ever did, putting my money in Premium Bonds, i have won something every month since i started with them many many years ago. Much more then leaving in the bank or having my money in any investments that could go down, which all the ones i was following did. Plus the easy access to them.
Yea my brother who has savings that he needs access to and he like you thinks there absolutely brilliant
Did you even watch the video😂😂 the government loves uneducated people like you
I keep my stud dog’s fees in premium bonds and he’s made £100 this year, he enjoys his work and doesn’t want to retire.
Little fella has the dream gig
If you are a high earner and you need to save money for a house deposit, there is simply no other financial vehicle that allows you to save £50k and earn interest tax free. Unless you want to waste the ISAs allowance for storing cash.
Suppose a couple of years in a tax free ISA would be ok. But, you lose the possibility of a large win.
I think another fair use case is for a lot of people who have very little savings. If you have a couple of hundred quid in them, you aren't missing out on any meaningful interest as 3% of f all is still f all. Plus a million would change your life.
I agree with this. If you have very litter or are only just starting saving, it makes the whole process a lot more exciting. But once you’ve been doing that for a few years you have already formed the habit and can move on.
This is the lottery ticket fallacy
Exactly! 💯👍
This touches on points I was going to make.
1. Yes, getting significant returns on PBs is a lottery but there's another clue in the name: with a bond, you get your money back - there's no guarantee of a return but there is a guarantee that all you'll lose is due to inflation and during periods of low interest and low inflation, that's very little to lose.
2. People judge situations by their own standards - that's just human nature. People that are ready, willing and able to invest for the future, will normally have a secure income, low, or well managed debt and some surplus income that they can afford to invest for the longer-term. In other words, they can manage unplanned expenditure from other sources. @James, given your educational background, you know far more about this than I do but any form of saving/investment is about "deferred gratification". For people with only a small disposable income of a few pounds per week, that investment would return almost nothing until the growth is compounded over many years. With the lottery, or PBs, even with the tiny probability of winning, there is still the possibility of winning life-changing amounts of money, so people don't see it as a loss in the same way as locking away that same small amount of money for many, many years.
For the avoidance of doubt, I have done the lottery only rarely and never bought Premium Bonds; I only had a moderate income (below the 40% tax threshold) and could only afford to start investing on a small scale around 15 years ago, so I am most certainly not in the "high net worth" category, whatever that means in practice.
Interesting video, thank you. I keep £10,000 in premium bonds as an emergency fund but this does raise the thought of moving this to an easy access saving account for higher guaranteed interest returns on my money.
I've maxed out my £50K in premium bonds as a safe, quick access fund with benefits. Last year I got 3.2% back, tax free, and the thrill of maybe getting a big prize. I've also got ISA, Pension, stock options as my ongoing long term investments.
How much was 3.2?
@@XY4ZX 1600
@@XY4ZX £50k x 3.2% = £1600
I put into premium bonds what I used to put into the lottery because you get to keep your stake, it's just one part of my savings portfolio.
Im 24 with 11k invested in premium bonds, won £200/300 this year alone, plus gives me something to look forward to each month
I sold some of my risky stocks in September 2021 and I put that money to PB.
PB returned me only around 3% ...BUT...If I kept my money in those risky stocks, I'd be down 25-30%
My emergency fund is now in Barclays that pays just over 5% + and the rest of the money is in other accounts with 3 - 4.5%
I think PB can be good as a temporary holding until you actually need that money, let's say saving for a deposit. You don't want to risk that money in the stock market so you can put it to PB for a chance to win until you take that money out in 2 - 3 years to buy what you were planning to buy but I wouldn't use it as a long term savings account or as an ''investment'
I used to spend £5 per week with Euromillion Lottery, £260 per year, I don't smoke or drink coffee so that was my 5 minutes Happy Thought of "what if I win the Lottery?!?". Now I transitioned from saver to investor but I pay some £25 per month into the Premium Bonds and I park my travel budget for the year, so I can still have that 5 minutes Happy Thought but won't lose any money
I did the same. Around £20 per month on the lottery, with virtually zero chance of winning any significant amount.
I sporadically buy Premium bonds instead, the odds of winning may be slightly better than lotto, but at least I keep all the money I put in.
The most I've won is £25 (every year) with a small investment.
An important thing to consider with Premium Bonds, is the wait time before you are entered into a prize draw. If you invest during January, you will only be entered into March draw, so best to invest at month end.
So in your first 12 month period, you would only be entered into 11 draws.
This is more of an issue if you just want to park your funds there for a short period, this could tip the scales towards a savings account even for higher rate tax payers.
For me it's short term. Got 13k ish in high rate savings, keeping under £500 interest. Then £15k in bonds for tax free earnings. Yes it could be in an ISA but the difference in a short term is insignificant. It's only waiting there as an emergency find whilst we see out maternity leave and an upcoming remortgage. After that whatever is left will be hitting the pension!
I put £20k in premium bonds and won £1,000 2 months later! Since then I've won an average of £550 per year. I guess I'm just lucky!
I'm a big fan of mathematics and appreciate the difference 1% can make over the long term so I'm with you in principle. Since I quit my job as a teacher I no longer pay tax on a PAYE basis so PB is where I keep my tax money and my emergency fund! Volatility is something I can live with for the potential to win £1000000. Sometimes it's less. Sometimes it's more. Obviously 90% is invested elsewhere (property, S&S ISA, gold, BTC, ETH etc) but it is nice to have Jim Carey's optimism!
We’re in the fortunate position to have retired 10yrs early last year. We have divested our savings into a mixture of 2yr fixed rate accounts, ISA’s, and Premium bonds, (which we’ve jointly maxed out) oh, and a separate private pension.
Presently the pension is performing the best because it’s RPI linked.
After that it’s the 2yr fixed rate at 4.5%, but because of the tax free status of the Premium Bonds, the Net amount is close.
However like other investments, past performance is no guarantee of future performance. But hey, they give us a nice little top up each month into our pension, and who knows one day we may do a little better.
This is why I do both: the majority of my savings go into index funds (S&S ISA), but I still put a little bit each month into Premium Bonds.
I'm sitting just below £100k income, so anything extra I earn is taxed at a 62% marginal rate due to loss of personal allowance. Premium Bonds winnings don't count as income and aren't taxed, so I currently have my emergency fund cash savings in them. I win something most months and the effective rate I get is higher than I'd get in an instant access or notice account that is taxed (and I've already used my £500 personal savings allowance and that money still counts as income anyway so takes me into a higher tax bracket). I already max out my stocks and shares ISA with £20k per year and already have plenty in my pension.
That is why my emergency fund is in premium bonds.
This!
In this situation Premium Bonds are very tax efficient. Especially if they can keep you below £100k. Even savings income that falls within the personal savings allowance counts towards the £100k limit and the tapering of personal income tax allowance.
@@JamesShack Yes I lost a small amount of my personal allowance last year because I forgot personal savings allowance would count as income and it took me over £100k. I've adjusted things for 2022-2023 tax year to avoid this.
@@owensmith7530 The tapering of the allowance is a nightmare. Just drop the 45% rate to 100k, remove the complexity, and remove the ridiculous marginal tax rate. I'm just about to hit it too, would rather just have a higher rate from the get go than this. Still, as a pension fund encouragement instrument, it is effective.
James - I've been debating this conundrum recently myself and thank you for the insight. Here's a coffee to go!
I put my emergency fund into Premium Bonds.
It definitely makes an emergency fund more exciting.
Have always only done the lucky dip occasionally anyway on the national lottery - Once people start using their lucky numbers they psychologically feel forced to do it every week in case their numbers come up - I'm not really into gambling.
My attitude to Premium Bonds is simple. If the chances of winning are 24,000 to 1, then it's pretty clear that you have to have 24,000 or more of them. This is what I have and have had for some time. There are very, very few months when I win nothing. And I sometimes win more than the basic £25 on a bond.
James talks about the situation now when conditions are becoming more attractive to savers. But for a number of years recently interest rates for savers were extremely low. Compare James' figure of 2.5% average return for 25,000 premium bonds to the rate of interest on my HSBC savings account which for quite a while was at 0.01%. And then add the thought that perhaps, just perhaps, you might one day win more than £500 (my highest wins so far) on a premium bond.
You can't put a value on fun. And how many investments are fun?
I dont think many expect to win the very top prizes I certainly dont but the returns the past few years has been much better than Bank interest rates, however you do need to have a significant amount of bonds something like £10,000+ which does start to accumulate lots of those smaller prizes.
I run a forum and we have a topic running whereby we all post what prizes each of us have won each month and most tend to win prizes that exceed bank interest rates so the premium bonds only have a thumbs up from me.
i bought £100 or £200 in premium bonds for my wife approx 22/23 years ago, moved twice and forgot about it, also lost the receipt from the post office - remembered a few months ago and wrote to ns&i received £325 in winnings and 59p in interest!
Well Premium Bonds are certainly not a gimmick for me! I invested 12k in them back in 2021 as savings interest was next to nothing. Last year I won 10k on them and reinvested it back in. This year I have already won 350. So I currently see them as a good investment!
Yes, but people like you are rather rare, which is the point he's making. I had £60k in there. The most I ever won was £50
If I bought a £1 scratch-card and won the lottery, would that make scratch-cards a good investment ? Of course not, I just got lucky once.
I thought you were only allowed up £50k
@@clusterm2 £60k? How is that possible when the limit is £50k?
@@clusterm2limit is 50k in premium bonds...
I'm in the situation of having sold a house, but renting until I buy the next house (moved quite a distance, so wanted to scope out the area before committing), and having to put the several six-figures of future deposit across many different savings accounts (all under £85k) and an ISA. CHIP might be 3.55% but as you point out, it's really 2.1% after tax, and that's the best there is (although the app is nice). Another issue is that it has to be instant access, in case a house does come up, so the better fixed rate offerings are out of the question. So I stuck some into Premium Bonds, and this is where I learned something - you don't get entered into the prize draws until you have had that investment in for a full calendar month - so it's useless for very short term savings as well!
But you aren’t going to buy a house in 30 days so might as well try all hands? Put some in premium bonds as well?
1 in 700,000 for a
Meteor crush simply cannot be right. That would mean 90+ people in the U.K. die from meteor strikes every year.
Definitely will need a source for those odds.
Yes, that was 💯 BS. I don't know where he pulled that from. I must say, the guy seems to have a dislike for PBs that was bordering on personal! You don't have to be a high earner to max out the £1k a year tax free threshold either. If you stack up a few long term bonds of varying duration and stake them accordingly to gain £1k in interest each then the cost of the 4,5,6,7 year bonds is cheap and after the first few years you're getting used to recieving £1k a year for a layout of perhaps £3800.
Dumped some money in PBs while sorting out inveatments, returned 10.5% (annualised) in last 6 months so I havent moved them yet!
Currently getting over 6% so seems good value to me
I win most months...over 500quid so far this year!
I sort of agree, but not completely. If you have enough savings elsewhere so that you are going to pay income tax on the interest, then the tax free status of PB is a distinct advantage (assuming that your limited annual ISA allowance has been consumed). At the miserly savings rate of my bank, the recent rate increases means that I will exceed the nil rate interest allowance. The fact that they are 'safe' since they are government backed securities is also a bonus if your savings elsewhere exceed the £85k guarantee.
Ignore the high value prizes, since they are unlikely to turn up in one lifetime - the steady stream of smaller prizes make it worth considering. Over the last decade, I did win £1k once, and £500 once.
Thanks for the comment Robert, as you probably from the rest of the video I agree with your comments.
My grandparents bought me a £1 bond in 1965. It still hasn’t won…. But I’m in it, so I might win it! 😂😂😂
Love them or hate them - Premium Bonds are a far better 'gamble' than the Lotto or Euromillions. At least you get to keep your original stake, but yes - the returns are pretty crap, unless you have the max allowance - and a little luck to boot!
Very interesting article. I recently had over 26K in premium bonds and over two years I have won £450. I cashed in 21K in July 2023 and invested 16K in a fixed term cash ISA paying 5.4% and 5K in a fixed rate bond paying 5.22% both paying me a monthly sum of £94. That's like winning on a premium bond every month and the bank I used (Halifax) enter me into their monthly prize draw where they pay a top prize of 100K and 1600 smaller prizes , so I think what you are saying makes a lot of sense. I still buy £25 premium bonds every month on a standing order just for the fun of it. I will be prurchasing in the near future a two year fixed bond with the rest of my premium bond money.
Not joking, I looked at the Halifax draw about 15 minutes ago, thanks for the product ideas (they're going to think we work for them 😂).
I managed to get a uk bond for my mum, fixed at 6.2% for one year...shes 75 so the markets are not an option. Shes just about to buy 15k of premium bonds, but if there are a few prize wins, she'll be happy.
Ive tried to explain that inflation is eroding the gains but at 75, she isnt interested in chasing higher percentages
Interesting video James, definitely food for thought. I don't currently use Premium Bonds but did have a PB account many moons ago as a teenager...I wasn't winning anything so reverted to a cash ISA instead 😂
They've been around longer than I have so definitely well before 1994. I had about £20k in them and would win 2-3 times a year... only the £50 but better than a high interest account at the time and it got me into a saving habit that was fairly easy to tap into when I needed a deposit for my first home.
My wife and I both have the £50k limit. This month was the first month in the last 5 years that we didn’t win something…. 😂😂😂
50,000 invested and it does ok, winnings overtook banks interest, now maybe not so, will be keepi g an eye on it
its where i keep my 6 months emergency fund. Plus help the country (you and me) balance the books. PB started in 1956.
Does this have anything to do with Financial Advisers not being able to earn commission on premium bonds 🤔
to claim that people could be losing out on "Tens of thousands of pounds" by investing in premium bonds , when the maximum investment in premium bonds is 50 thousand, and you've stated that the typical profit on premium bonds is something over 3% sounds just plain wrong.
- For 50 grand invested , to be losing over 10 grand you're implying that other similar investments can do better than 23% which sounds like bull***t. I expected better from you.
Did you watch to the end?
its worked for me so far. i have held maximum bonds for 14 months now and won every week. best win 7prizes £875. worst win 4 prizes £100. worked out as a percentage for 1st full year it was 4.75% .
i meant month not week😊
Lucky!
i currently spend £20 on the lottery, should I put that into premium bonds instead? is it a good place for an emergency fund ?
You say premium bonds were launched in 1994, but they started in 1956.
Great videos.
Yes, I got that slightly wrong. They only started doing the £1m winners in 1994z
NS and I is such an excellent run UK service. I love premium bonds.
Its the tax free nature for me
That and the option of dipping into savings in an emergency without being penalised!
@@VL-qy4fc Most easy access savings accounts would let you do this however (at least once)
@@Dr.JubairsFinance indeed, but if you're a higher rate taxpayer, and have a decent rainy day fund (>£20k), the net return on PBs is likely to be better. However cash ISAs exist with decent rates and instant withdrawals. I think some people need that what-if factor to have something to dream about, and PBs beat the National Lottery in that it's not throwing money away, just interest - which until recently has been dire on savings accounts anyway.
@@AgileSnowWeasel and some people max out their ISA, have enough in an instant access savings account to max out the tax free allowance and want somewhere to park the extra tax free.
@@lonyo5377 Yes precisely, lots of people max out ISAs and a Cash ISA is not a great option for them
You're absolutely correct about this, however we're in the very enviable position of having paid off the mortgage, kids have flown the nest, we have no debts of any kind, plus good pensions and savings. So for several years my wife has kept the maximum in premium bonds and her winnings have equated to somewhere between 1.5 and 2.0% interest each year. She knows that she could get over 3% elsewhere , but prefers the excitement of this safest form of gambling. Good for her!
I agree with this message - the only reason I'm currently holding is I'm a FTB'er and looking to buy a home thus can't invest it all as I need it in the shorter term for my deposit.
I would just add, not mentioned in your video than when interest rates are incredibly low, it's a good time to put money in premium bonds.
With bank failures, I like it's Government backed so therefore it's a reasonable place to park my emergency cash.
NS&I do guarantee all your money not just up to £85k. They have some decent online products.
That is true, but given that you can only put £50,000 into them it does not give you much benefit.
It is a very low maintenance saving scheme. No fees attacking my savings. Winnings far out weigh bank interest paid. Oh, and my son won £500 last year with £200 worth of bonds!
One of your examples uses 55k and the maximum PB's you can have is 50k
I'm actually the opposite. I have money in a 3.25% savings account (~£35k) and I am also an additional rate tax payer. It seems that I would be better off putting that money into Premium Bonds, but the "luck" aspect of the returns puts me off.
Interesting, thanks for sharing.
For an emergency fund though you're aiming for safety, not returns. And you ignore the pleasure of the potential wins, which people enjoy and has a value (maybe not for you though). Rather not pay more tax than I have to, so PB it is for me as a fellow additional rate payer.
I’ve had bonds for over sixty years and never won a penny . So I contact them and they said “ all that old bonds where deleted form the list some time along and the money is now lost , under the old issue , Sorry”. It seams that a huge amount of Scottish bonds have just disappeared, it happened back in 2011 so I’ve been told.
I have had £5 worth since 1956. I won £50 some time in the 1980’s. I guess there’s no more point keeping trying to get myself to write to ask about them. Is it legal though for them to delete people’s money like that?
If you haven’t got tens of thousands of pounds worth
There’s no point
If I can make a profit it's a bonus but my main priority now is protecting what I've got. The end of fiat money is coming to an end and banks will be collapsing like a pack of cards. With the bail-in rules, our savings and probably mortgaged homes will disappear overnight. For that reason Ive chosen premium bonds for some of my savings and just left a minimal amount in the bank to cover direct debits.
PBs work for me as a place to park my emergency fund. All wins are automatically reinvested. But, as you said, sensible to keep any eye on the value so I don’t have too much parked there. For me it’s part of my overall savings plan, but not a significant proportion of it.
No interest, but the capital is always safe, less inflation. I have £5,000 in Premium Bonds and regularly receive a prize, so far working out annually at 7.2% interest.
I've won more in one month on the premium bonds than I have on the Lottery in 3 years. So for me its definitely worth the investment.
I put my emergency fund in premium bonds. I still have ISA, LISA etc.
My premium bonds have been a life saver. If I had invested my money in my pension then I would have been forced to sell my house.
While my initial use was an emergency fund when COVID hit and I lost my job and worked as planned. Now I have been hit with long term illness and have had to give up work. It's been 8 months so far and I have no idea if I'm going to be well enough to work again. So my premium bond money is being spent paying my bills and putting food on the table.
So while I agree investing money in the long term is definitely beneficial maybe putting some in an ISA may be a wise choice rather than dumping it all in your pension.
I agree with you. An emergency fund is very important and you should have this before you start investing. I wish you all the best with your recovery.
It might be worth getting help to find out what benefits you may be entitled to.
As you have a long term illness, you may be entitled to claim the disability benefit PIP, Personal Independence Payment. This benefit is not currently means-tested.
Another possible benefit to ask about is contribution based Employment and Support Allowance (ESA). It's only paid for a year though.
A great place for your emergency fund old boy. A tad melodramatic one feels.
Makes a lot of sense James. I’ve had £50k invested in premium bonds for a few years and enjoyed receiving a small win each month when interest rates were very low, but now that bank interest rates significantly exceed the likely 2.55% return, it makes sense to move the money somewhere it will work harder. I already have a considerable amount in shares and bonds and think there is still considerable uncertainty ahead in the markets, so I’ll be moving my premium bonds into 6 and 12 month fixed cash savings at well over 4%. If inflation comes down as fast as the PM hopes then I should about break even, if not, and there’s a recession, then I’ll have kept my losses a bit lower as I watch my existing bonds and shares fall.
Yeah as long as the banks dont go bust and take it with them
Good point. I’ll ensure I’m within the £85k compensation limit in any bank. Now, what about Pacific Western 🤔😉
@@maxpower1797U.K. bonds max investment is 50m and is U.K. gov backed
@@davidclark9973David
Just make sure you don’t save up to much
You can’t take it with you when you die
And most people who are savers , die leaving far to much money
BTW the gamblers fallacy you mention is countered by simple probability maths: the more times you play, the more likely you are to win (0.00001% add 0.00001% add...). But, the more you play, the greater the magnitude of money you give to charitable causes say 52:48 and not returning back to you as winnings. However I do agree, the lottery is an utterly pointless, hopeless game that exploits.
Hi, I used to have £30k in my premium bonds account back in 2010...my return was 7.8% that year...took it out shortly after for house deposit. I was happy
ISAs are full, £50k in bonds, 3.6% return this year. Tax free. £300 per month.
Tax free is probably the kicker in your case.
@@JamesShack It is. I agree with everything else. However, the day of the draw is always fun.
In the last 2 months my premium bonds have returned £2300 , and in the last 2yrs my Pension, ISA and GIA have returned -£750 plus £1500 of fees read into that what you will
My grandad always said the lottery is a tax on stupid people 😂
😂😂😂😂😂 I’ve never bought a lottery ticket for similar reasons, at least one pound in a premium bond gives you a chance of winning every month and you get your pound back whenever 😊 you lose a pound every week with a lottery ticket 🎟️ so it’s a no brainier for me 😂😂😂
I don't believe in luck, or at least don't rely on it, so have never had premium bonds, but know someone who has been winning prizes several times a year, and the most recent one being one of the big wins at £5k. Before that £5k win, his return was already around 8% pa, far far higher than average.
Ive never had a big win, but I win 25-100 nearly every month. (11 of the last 12) And this year I'm on track for 10% return. For me it's not about luck. I like the risk free nature of the savings. Of course now, I'll probably not win anything for the rest of the year 😂
@@meldrew69 my friend boasts about it all the time, so maybe you haven't jinxed yourself yet. 😆
To be honest i don't really care about the added money i can get from other banks, i just want somewhere to save my money properly and if i win something via lottery that would be great.
The trouble is, people that have premium bonds are not financially educated, nor do they care to be. So 2.25% interest or 3.3% means nothing to them. My parents each hold like 50k in premium bonds and clearly couldn't care less what their money does. It was sat depreciating for years before that. As Warren Buffet said, if we level the playing field today and gave everyone 25k each, in 30 years the rich would be rich again and the poor would be poor. You can take a horse to water...
Your parents example is the classic case. They get good at saving but other than investing in property they don’t see other options and end up having those savings eroded over time.
Kept starting to write comments until I realised "unless you're a small segment of the population..." - yep, that's my reason - also instant access.
Also, this month is the million. I can feel it. I BELIEVE. IT'S MY TIME!!!111111!!!!!
My savings are in Premium Bonds my cash is safe in the last 7monthsi have won 900pounds tax FREE
You make valid points about premium bonds. But, as nearly every financial advisor says, folk need an emergency fund of around 3-6 months' worth of expenses, so it might be worth having the equivalent of 3-6 months of expenses in premium bonds as you won't lose that much in interest with such small sums. And because it's a lottery, it puts the fun into creating an emergency fund. I mean, if you put £25-£50 into premium bonds over a short period of time you'll probably end up building up a nice emergency fund and have the chance of winning a million along the way. Plus, if you are completely snookered financially and a relative gives you money to buy premium bonds as a birthday or Christmas present, then why look a gift horse in the mouth?
You're quite right, during the last year my emergency 2k premium bonds have crept up to over 7k. Thanks for another great video James.
I’d sooner stick with my bonds than take advice from a financial advisor.Don’t tell me their not in it for my money.
Ive done very well out of premium bonds , but you need to invest a lot to see a decent rolling return and it's tax free .
Absolutely agree and I have always thought so. Nonetheless I keep the minimum £25 balance in there for the infinitesimally small chance of winning something.
i dont think you should use the median when doing the comparison across 25 years as you completely discount the probability of any higher winnings.
Yes that is a good point. It would be closer to the mean. You would still need a fairly decent chunk in though. £50,000 is still a way off the average.
Watched my dads (relative) wealth be absolutely wiped out by inflation as he’s left it all in PB’s since 1994.
I can’t see me having any money in them in he future for this reason.
I also can’t ever see me saving more than an ISA allowance in a year in my life time.
Yes, no compound interest (or compound winning chance) with PBs, most people get the winnings paid into their bank, and then it's treated like 'winnings' rather than 'savings'. OTOH 'wiped out' really should be 'halved', as £50k in 1994 would be £97,675 now after inflation. OTOH, and this wasn't well known back in 1994 for the average person - S&P 500: $50000 in 1994 → $759,294 in 2023
How much is the annual ISA tax-free allowance? £20,000. If you can save that a year from your take home pay - the average annual take home pay of £30,628 according to the ONS, you'd be living off the Bank of Mum and Dad while you do it. You'd only have just over £200 a week to pay for everything else.
@@AgileSnowWeasel No, wiped out as if he'd have put his £150k in to a nice house in 1994 he'd be in a million + pound house now.
So i think 'wiped out' is more than accurate.
Thanks, but my monkey brain will continue to use maxed out premium bonds as emergency savings... 😂
Let’s hope this one doesn’t have a big black screen in it!
hit by a meteor odds seem wrong.
@@cleric7788 I know. I was a little surprised when I saw that.
One of the winners of the million this month had only had theirs for 10 months.
As a higher tax payer, I rather the risk of losing a few quid on my emergency find
@@JamesShack I think you are a few orders of magnitude off? The US NRC says an average of 91 people die per year worldwide from meteor hits which is the equivalent to a 1 in 85 million.
If your stat is correct, it would mean 11,000 people die each year from meteor hits worldwide, or 95 per year in the UK alone. Which feels like too many for no one to talk about it!
@@davidt.9578 I think some stats include the fact that there have been big events every 1000+ years that have killed a lot more people. The extent of my research was Googling “Things that are more likely to happen than winning the lottery” and it’s on most of these lists somehow!
I've only had investments in premium bonds for a year.. 10 out of 12 months I have been lucky, as have been my sister and mother. No way would we have had the same return elsewhere...
Same
With 5 million prizes a month now, as long as your holding is a decent size, you will likely win something. But it's not as good as many simple savings accounts - unless you are a higher rate taxpayer and you have decent savings already. Also there is that 'I won!' feeling that might be worth it, and that 'being in it to win it' feeling. Longer term, you have to compare to, e.g., an equivalent S&P500 holding, which might 'win' you hundreds of thousands over 30 years. Personally, I think it's a good short/medium-term safe holding, e.g., house deposit, after you've maxed out the ISA, and would hit savings allowance from other savings (~30k).