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Premium bonds

Discussion in 'General Chat' started by gigsta, Jan 6, 2018.

  1. gigsta

    gigsta Registered

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    Here's the odds
    1516222694471720200645.jpg
     
  2. mbull

    mbull TK Veteran Forum Supporter

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    I thought i would Update this, as I remember i got some comments regarding my Winnings.
    It is now JUNE 2018 and to date this Year so far with a good Investment, I have won £200 with Only 6 months of the Year gone.
    Please anyone tell me what returns £200 back in 6 months outwith gambling and Shares, in which you can lose at any stage.

    June 2018 - £25
    June 2018 - £25
    May 2018 - £25
    March 2018 - £25
    March 2018 - £25
    February 2018 - £25
    January 2018 - £25
    January 2018 - £25
     
  3. teddybloat

    teddybloat Forum Supporter

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    You've got lucky which means many other people haven't

    Also when you don't win, you do lose your investment to inflation and also to opportunity cost

    It is a slightly above average return for your investment sum. and i mean £20-50 above average. and the reason you are close to average is because you have fairly sizeable chunk of change invested. someone with £1000 invested in premium bonds is about 90%+ to receive nothing in 12 months, never mind 6.

    The average return is around 1.4% which is already a fairly low return on investment. But most people will achieve much less than 1.4% over a 12 month period. lots will see no growth in their investment at all. A small number such as yourself will see close to or slightly above average growth. a handful will win big. all winners come at the expense of losers. there will be more losers than winners.

    another thing to consider is that most investment funds will have beat your return. also if you don't win anything for the rest of the year, it will have been a 'bad' year for you.

    as to this: If I do not win, i still have £28,750k

    you do have 28.700 still invested if you don't win. however inflation is eating into that money.

    so if you leave 28k under a mattress a year later it will have lost about £600 of purchasing power.

    so in years where you win nothing you have effectively lost £600 of your net worth to inflation.

    note that this means you have to 'win' £600 per year in premium bonds to stay afloat. you have made 200 in 6 months. and have been lucky doing so. this means if you continue your hot streak and end up £400 up for the year, your investment will have lost £200 worth of spending power. you will have lost.

    you also have opportunity cost. your 28k could be actually earning you money over and above inflation. and the beauty of compound interest could really grow that into a lovely nest eg in 20-30 years time.
     
    Last edited by a moderator: Jul 6, 2018
  4. pabloescaban

    pabloescaban TK Veteran Forum Supporter

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    where are you supposed to invest it to get a decent return then?
    High interest accounts aren't worth a carrot as far as I can tell and the horses aren't worth half a carrot as i have found out to my cost.
    There's a Nigerian chap I'm in contact with via email who appears genuine, apparently his dad was King of Nigeria and to cut a long story short, his brother has overthrown him and he wants to deposit 67 trillion dollars in my account, please advise, let me know your account details, and your mother's maiden name, and her account details and I'll let Ktangae know, cheers
     
    lionheart11 likes this.
  5. dsayers2014

    dsayers2014 VIP Member

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    I've always wanted to know about investing. Bitcoin and premium bonds confuse the :poop: out of me, the most I get is £3 a month from my Halifax account used to be £5 when did that change? I have an ISA I opened about 2 years ago that has about 6k and doesn't seem to gain any interest lol

    Edit I made £5.05 in April lol
     
    Last edited: Jun 11, 2018
  6. teddybloat

    teddybloat Forum Supporter

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    Spread your money around and choose a risk profile that is appropriate for you.

    Fixed term ISAs, government backed bonds and index tracking funds are all relatively low risk vehicles that will out perform premium bonds and actually grow your wealth.



    You can lose money on these, but they are very low risk. Leaving your money in a bank guarantees you lose to inflation.

    Let's say you leave 20k in a zero interest bank account for 20 years. In 20 year time at current (low) inflation rates you will have the purchasing power of 12k. You will have lost nearly half your money.

    The same for premium bonds. In the times when you don't win, your sum becomes worth less each year due to inflation.

    Mbull has won 200 quid this year and won't beat inflation unless he wins another 400 in the second half of the year.

    Inflation means you are always losing money unless you are growing it.

    Index funds just invest small amounts across the stock market. They dont rely on skilled managers so have low fees.

    They essentially back the whole market or portions thereof. Over a long time scale these funds have consistently shown growth.

    Just picking the ftse100 will have shown long term growth over a decent length of time. I think any random 10 year stretch had a 95% chance of growth and the average ROI was 70% if you reinvest earnings

    So 10k grows into 17k.

    Compound interest is a beautiful thing. Over a 30-40 year period you can grow your money substantially
     
  7. mbull

    mbull TK Veteran Forum Supporter

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    teddybloat, I appreciate the replies and the IN-Depth Details you reply with.
    But to cut a long story short, i am not seeing anywhere that is giving me the return i have got on my Premium Bonds.. £200 over a 6 Months Period with no Risk and i can at any stage take the money out and without losing a penny.
    I have had this sort of Return every year with my premium Bonds. Last year was £350 returned, and this year so far it is returning pass the same.
    if i was to be luicky and land the 1 Mill, then that's a different story altogether
    On the Shares side of things, I have piled in alot of money over the years in this side of things and have done good, and done bad. Overall, BAD!! and have now learnt to stay clear on that side of things.
     
  8. teddybloat

    teddybloat Forum Supporter

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    Well 350 last year means you lost money to inflation - your investment was worth about 300 pounds less at the end of the year than it was at the beginning.

    A fixed term ISA at a rate of 1.4% would have beat that 350 and would have been just as risk free.

    It's an investment your happy with so im not trying to convince you otherwise, but others reading may want to grow their money and invest their money. I wouldn't recommend premium bonds to them
     
    Last edited: Jun 11, 2018
    Pilf likes this.
  9. Pilf

    Pilf Registered

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    I've had my say on this in January so don't want to say too much again. But for a highly risk averse person who doesn't mind their money eroding over time, Premium bonds aren't totally dreadful.

    Just as a comparison though, over the last 24 months my stock market investments (which can go down as well as up) have returned 25% with my better performing funds running at over 50%.

    Does this happen every year? No, but it doesn't need to.

    Every investment is individual, an advisor really needs to understand someone's needs, goals and risk appetite before advising on how to invest any money. What I'm trying to get at is, don't take financial advice from strangers on the internet. If you've £20k+ to invest, speak to someone or research, a lot.
     
    lionheart11 and teddybloat like this.
  10. teddybloat

    teddybloat Forum Supporter

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    The beauty of investing nowadays is there is high quality information available for free. I'm not talking about ''pick this stock, its hot...' info. But the 'this is how money and different investments work' type information.

    Theres a few enjoyable podcast episodes that can exponentially increase your theoretical knowledge for example:

    http://freakonomics.com/podcast/everything-always-wanted-know-money-afraid-ask/

    http://www.econtalk.org/archives/2007/04/bogle_on_invest.html

    The first 5-10 episodes of

    https://meaningfulmoney.tv/mmpodcast/

    All of these are non specialist (well econtalk is slightly highbrow) podcasts that you can passively enjoy in a few hours and will leave you much better placed to evaluate advice, stratagise and do your own research.
     
  11. grog68

    grog68 TK Veteran Forum Supporter

    I see losses due to inflation mentioned a number of times but that's the same with anything. put £1k in a savings account for a year, even with the small interest earned your £1k is not worth as much after the year, you invest £1k in shares, yes you may do ok but your initial investment is still not worth the same £1k.

    Choice invest in something with lower return but no chance of losing your capital or invest in something with possible high return but you could lose everything?

    Personally I think if you do the lottery each week then rather than do the lottery spend the money on premium bonds, over time you will get a decent amount invested, you won't lose it and probably better chance of winning than the lottery. If you want to earn big bucks fast then go marry a billionaire's daughter.
     
    mbull, dsayers2014 and rs500nutter like this.
  12. mbull

    mbull TK Veteran Forum Supporter

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    I think my comments have been LOST in here with all the replies and Large updates
    In short, two hundreds notes in 6 months is a Good return in my eyes VIA Premium Bonds Only.
    Yes, i am aware of all the other methods & Ways, as Premium Bonds are not my only method, i use many.
    SO, to kind of get back to the topic. 6 months, Two Hundred pounds returned, I see no savings account on the market that is going to return me that amount in 6 months with no Fees, no Tax and i am still able to withdraw my funds without penalty at anytime..
     
  13. teddybloat

    teddybloat Forum Supporter

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    Two Hundredpounds returned, I see no savings account on the market that is going to return me that amount in 6 months with no Fees, no Tax and i am still able to withdraw my funds without penalty at anytime..

    Actually there are high street savings accounts that can pretty much match that. And if having the full 28k readily available isnt a concern you can do much much better
     
  14. mbull

    mbull TK Veteran Forum Supporter

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    Sadly i Do not agree
    no Fees, no Tax and still able to withdraw my funds without penalty at anytime.??

    The Amount was an Example Btw, not the Actual Amount i have put in PM, would rather keep that to myself..
    Let's just say it is not as much as 28k.
     
    teddybloat likes this.
  15. gigsta

    gigsta Registered

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    You must have put 50k in the premium pot to get that otherwise your just born
    lucky ha ha ha
     
  16. mbull

    mbull TK Veteran Forum Supporter

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    lionheart11 likes this.