Premium Bonds

Depends what you want to achieve!

The 'something for nothing' approach rarely works and avg PB payout will be akin to savings rates (it's been 1.5% since 2009).

If you want better results potential and can think long term, beyond next 5 years say, there's plenty you can do. Low interest rates are finally drumming home to savers that bank and B/soc savings accounts help make the banks and B/Socs richer, not the saver. It's rare for savings accounts to beat inflation and when they do, it's not for long. And the chances are you will still have much of your savings in lower rate stuff anyway, even if some of it is in the high/best rate. You will unlikely get wealthier from cash based savings. Strictly speaking you will likely get poorer over the years by keeping your funds on deposit, in the sense that your money will be able to do less for you later than it could now. Measure against annual increase in Naim prices for example...

Most people benefit from adopting a diverse and flexible strategy, don't have a fixed term, keep your options open, spread your savings into different 'pots', use your tax breaks, use some cash savings accounts and (if you take advice) ideally use well regarded investment funds as opposed to less well regarded ones.

if you want to keep all of you money on deposit because you know exactly what the result is, rates are what they are and perhaps unlikely to get much better, unless the economy ends up in deeper sh*t, inflation rockets or your bank's in trouble. None of which you want to happen. However, you do know what's your rate of return is, albeit at only 0.75% or 2.1% gross or whatever. That's your lot.

If you really want to try for better, you have to take a step into the (relatively) unknown and if you don't know what you want to invest in, what you want to own for your future, you should take some direct and personal advice and see if it makes sense...

Gold?

Premium Bonds are a waste of time. 

I was given £100 worth by a rich old aunt way back when PB’s first came out in 1956 when £1 was a huge amount of money to an irksome small boy.  My mother insisted I kept them & that has been so up to today.   How much have I “won” – zero, zilch, nana, sweet FA.

I began putting small cash amounts into various stock & other investments when we got settled after getting married. Over the years they have enabled us to buy otherwise unaffordable items even when times were hard & mortgages & kids kept us poor.  In the last 10 years its bought stuff like Naim, cars & 2 or 3 long distance, long stay, overseas holidays a year. 

My advice is to cash them in & spread the dosh around “investment” plans, stocks shares & Bonds; go search www & the serious/financial papers advice pages.  Your deposit bank will advise one of their own schemes but be careful as they can charge hefty “service” fee’s, check them out against others & note that some of the smaller banks can be surprisingly competitive. 

same here,

   several PB purchases over many years and not a red cent to show for it.

Youre gambling each month the interest you could have earned on a deposit account. And the odds of winning something substantial are tiny, but every month a few lucky folks get happy.

You could equally put it on deposit and then buy lottery tickets with the interest.

Either way you get the same money back when you withdraw, tho the PB is marginally safer than a bank or building society.

Better? If I knew, I 'd be doing it. Even cash ISA returns are woeful. Buy to let/property but its much more complex and risky.

It depends on your appetite for risk, what you can afford to lose, taxable status, timescale to access the funds,....

Blame the banks and govts: the banks made huge gambles that failed, the govt bails them out with cheap money and the banks dont need your money, because (and I'm talking in the UK here) they have a limitless supply of very cheap funds. That us taxpayers have let them have because of their greed.  IMO.

Do they inform you if you win or do you have to check on line? G

Last year we won £25 on £1000 invested, which is 2.5% tax free, so not too bad really.

It seems that the Government's much trumpeted Funding for Lending scheme, which gives banks cheap money to lend (whether they do as intended is moot) is driving down savings rates, as banks no longer compete for money. In fact they try not to be top of the best buy tables as money floods in, which they don't want. 

I go online about the 7th of each month and check their website which is very easy to do,then if we have won(which aint often) a heavily armed security truck pulls up outside the house,half a dozen guards jump out and hand me a cheque for a massive 25 quid which i feel for the amount we have invested is a total bloody joke.

Mista h

JW are you in the finance game??  If so perhaps you can explain something. Although i am retired i have kept the Limited company going as i rent out the w/house to the guy who bought my business.

We have just had a one year bond with Santander mature which paid us 3%. Now if we want to renew it they will only pay 2%, and Close Bros 1.8% BUT if i invest the same money as an individual the same Banks will give me 3%. Bit unfair if you ask me !!

Mista H

You can register your bond details, and they will automatically tell you if any winnings, but don't wait up

We used to have a lottery syndicate at work but changed to Premium Bonds about 12 years ago. We have near the max now and have won £475 in the last 12 months. That's probably approaching 2% but is tax free. The way I look at it though is that had we been doing the lottery for the last 12 years we very probably have nothing to show for it as the odd £10 win would have been put back in. With the bonds, we have had £3800 winnings and all of the capital to show for it.

Hi Mista H, yes I am.

For as long as I can remember, companies, charities, trusts etc. are often offered lower rates on deposit accounts than private savers through many banks. The reasons were/are numerous but over the years have become somewhat irrelevant in modern times. However, banks will usually try to get away with what they can. If the amount needs to stay in company name, then others may be less stingy than Santander...However 2% is pretty much the going rate, 2.5 for longer term perhaps. Not sure you'll get 3% many places, perhaps only some of the smaller, newer firms to the UK which means phone/online, not high street.

Exactly  - & why you need a balanced investment portfolio that includes bonds stocks & some of the carefully considered high st stuff.

My investments have been going thru the valley of doom with the big crash, but with a balance of different risk investments including high st ISA's & such like, collectively they held there own thru 2008/10 & have come thru it ahead of the posse.   I am looking forward to year 2012/13 showing double digit percentage gains. 

Well the problem can come with emotive words like 'crash', or media presentaion implying the world is about to stop spinning. Again. So savers look for their expectations to be met from 'safe' investments, i.e. deposits. And they just don't do that.

Essentially, for some reason, people panic at the notion that the price of stuff rises and falls and so look for investment growth from deposits rather than buying stuff to appreciate in value. However, generally the price of stuff does rise over the years, it's called inflation. There's many cautious rated, managed funds out there that have made 30/40% over the last 5 years. 5 years that have included the 'credit crunch', any number of Greek/Eurozone crises, Tsunami's, Arab Springs etc. This is largely because bonds have made higher results than they should and equities in many markets lower. Maybe the next 3,5, 10 years will swing the other way.

So, you're absolutely right, buing a range of stuff, from cash, to equities, to fixed income, property, gold etc. etc. in a diverse and flexible manner over an open ended term is often a good plan.

About 10 years ago i stuck a large amout of money(the firms) in an investment portfolio with a well known Bank. The reason i did this i asked the salesman who came to see us.......What can i expect to get back if i invested xxxx number of pounds with you over 5 years.....his reply was he expected to double my money. My stupid fault but i did the deal,telling him the spread was to be nothing high risk.  To cut a long story short my portfolio fell off a cliff,this wonderfull bank refused to take the blame,i went to the Financial Onbudsman,it took a year but i got my money back. The very next day i closed all our accounts with this great Bank(the firms & private) and moved to Santander.  NO MORE INVESTMENT PORTFOLIOS FOR ME....EVER

Mista H

I sympathise Mista H,  but by balanced portfolio I mean you make up your own list holdings,  a mix of stuff from all over,  not in a single package from a bank.

That said banks & similar can provide mixed results

I have 2 with separate institutions that show just how results can vary

One is a high risk that I started in 2007 - the start of the crash - & it lost about 30% in the bad years but has since recovered all the losses & will be more than 25% up by April 

Another was low risk I took out at the bottom of the crash & its hardly covered the initial investment fee's although looks like it might be +10% by April

My best one was a punt on some mining stocks in 2005, they bought me a 4 week top end luxury tour all around Kenya last year.    

I take on board what you say JW,but what narked me big time was this toe rag salesman saying he should be able to double my money in 5 years. He did not any any stage show me even a 1% gain on my investment,then when i made a formal complaint to the banks HQ i got a snotty letter back saying in no way was it the Banks fault. That is not in my opinion how you look after customers,and i felt the bank in question should not allow their sales people to tell out and out lies to customers. If it had not been for the FOS i(the firm) would have lost a lot of money.I had no choice having had such poor service but to move all our money to another Bank. That said Santander dont exactly get glowing reports in the UK press,but so far i have had no reason to complain about their service.

Mista H

I'm afraid you're correct to be hacked off, there have been many advisers who couldn't 'advise' a chimp to eat bananas. There are many good and careful ones too but I still meet and talk to some people who give advice and providers representatives and I shiver...

How many advisers that take pure results based commission? Namely if it loses money there is nothing to pay ...scaled up to say 50% of all gains above 10%?

I find something fundamentally incorrect about advisers and commission: theres no downside for them that I can see.

Isas linked to the stock market are about the best option right now, forget cash isas as rates are poor right now.

If you can try to invest for the long term.

That's probably why the law has been changed about commission, and not before time.

FSA proposals to ban commission on advised top-ups and increments by the beginning of 2013 will force financial advisers to overhaul their business models, according to Deloitte, the business advisory firm.

A quick story for you. I used to deal with a very nice young lad at one of my London customers. He was THICKER than 2 short planks. He left but Kate and i saw him one evening in a pub in Bromley. When i asked him if he was still in the Bike trade he said no,and that he was now a Financial Advisor. I almost wet myself.

Mista h

Theres nothing funny about Bromley.

I'm looking forward to some overhauled business models. I cant see any model that involves grief for the advisor when they are wrong. The end of advisors, maybe?