Please turn on javascript in your browser to play chess.
Debates Forum

Debates Forum

  1. 24 Dec '11 14:52
    In the UK we have treasury backed premium bonds: http://www.nsandi.com/savings-premium-bonds

    Whilst there is contention about the return on such investments, for example:

    http://www.moneysavingexpert.com/savings/premium-bonds?gclid=CIDx5sH5mq0CFYQLfAodnWyeoQ

    ...I wondered if any people here banked in this type of "investment" with the chance of winning big vs. the value of your interest. There are nominal payouts, some reasonable, but the odds of winning are very low.

    Nevertheless, with interest rates now so low (especially outside of ISAs) perhaps the opportunity to win a life changing amount of money, is actually worth the cost of the interest you would have earned in a regular account.

    Thoughts?
  2. Standard member finnegan
    GENS UNA SUMUS
    25 Dec '11 22:53
    Originally posted by divegeester
    In the UK we have treasury backed premium bonds: http://www.nsandi.com/savings-premium-bonds

    Whilst there is contention about the return on such investments, for example:

    http://www.moneysavingexpert.com/savings/premium-bonds?gclid=CIDx5sH5mq0CFYQLfAodnWyeoQ

    ...I wondered if any people here banked in this type of "investment" with the chance of ...[text shortened]... tually worth the cost of the interest you would have earned in a regular account.

    Thoughts?
    The odds of winning a life changing sum are remote - close enough to zero to be zero.

    Traditionally, with enough bonds, the regular small prizes offered a sensible rate of interest all the same. The current rate of interest is, however, unfairly low and investors are, to my mind, being taken for a ride. I know this has to be taken in the context that many high street savings accounts are offering far less than 1%.

    When I was paying a mortgage and borrowing to survive with my young family, interests rates were abominably high. In the Eighties, they would add a hundred pounds to the monthly mortgage payments without apology and without asking where I was expected to find that money. Now that I am debt free and retired with very modest savings, guess what, interest rates are next to zero.
  3. 26 Dec '11 00:43
    Yes life's like that unfortunately.

    So then, if you had £1,000 to invest (or 10,000 even) would you risk the nomnal interest in Premium Bonds?
  4. Standard member finnegan
    GENS UNA SUMUS
    26 Dec '11 23:44
    Originally posted by divegeester
    Yes life's like that unfortunately.

    So then, if you had £1,000 to invest (or 10,000 even) would you risk the nomnal interest in Premium Bonds?
    I have done. It's just a safe place to park the stuff as I have no mind for so called investment. Most months I get a £25 cheque which probably comes close to 1% tax free. Inflation has been about 5%.

    I have sat through several interviews with financial advisers at more than one bank and emerged with the clear impression that I was being lied to and tricked. For instance I put money in an account with decent interest, which I could only hold for one year as it was mostly owed in tax, only to discover when it was too late that the interest had fallen to 0.6% after a few months, without telling me. I stated I was not prepared to invest anything in stocks and shares, so instead I was offered an investment whose return is based on a complex index of the value of .... stocks and shares. Since the market in financial assets is essentially random, some people will gain and some lose but whatever happens the banks will gain. They cannot lose since it is our money they are raking commission from, gambling with, and risking. When they claim expertise they are lying - there is no expertise that can predict the future prospects of any financial asset. So I look at my own best guess, which is that on average the British, European and American markets are at least more likely than not to crash and decide to invest in nothing.
  5. Subscriber Kewpie
    since 1-Feb-07
    27 Dec '11 00:26
    Many years ago I "invested" $10k in a similar product called Kiwi Bonds, run by the NZ govt. After they'd run it a couple of years it was privatised, and eventually taken over by the ANZ Bank. Eventually I got my original investment back. I'd kept track over the years, and the many small winnings worked out to around 2% - at a time when banks were offering 9-10% to depositors. Even allowing for the tax benefit it wasn't a good investment for me.
  6. 27 Dec '11 14:06 / 1 edit
    Originally posted by finnegan
    I have done. It's just a safe place to park the stuff as I have no mind for so called investment. Most months I get a £25 cheque which probably comes close to 1% tax free. Inflation has been about 5%.

    I have sat through several interviews with financial advisers at more than one bank and emerged with the clear impression that I was being lied to and tri ...[text shortened]... nd American markets are at least more likely than not to crash and decide to invest in nothing.
    This is where I am too; I've also spoken to financial advisers and the bottom line (with the honest ones) is to either invest in cash ISA's or propoerty, the former being complicated and risky and the later requiring considerable debt attachment to access -both require tying up the cash. Standard savings accounts are virtually worthless unless as you say, they are linked to stocks and shares.

    Premium Bonds don't pay much, but at least they are safe and you get a (albeit small) chance to win some serious cash.
  7. 27 Dec '11 14:07
    Originally posted by Kewpie
    Many years ago I "invested" $10k in a similar product called Kiwi Bonds, run by the NZ govt. After they'd run it a couple of years it was privatised, and eventually taken over by the ANZ Bank. Eventually I got my original investment back. I'd kept track over the years, and the many small winnings worked out to around 2% - at a time when banks were offering ...[text shortened]... 9-10% to depositors. Even allowing for the tax benefit it wasn't a good investment for me.
    With interest rates as they are now (in the UK) the differencial is quite small.