Selling house and renting for 6 months - best options?

1. Assuming it has always been your home (for both of you), then it should be exempt from CGT.
2. Or possibly Premium Bonds - or a mixture of both?

isnt there something like a 3 month qualifying period before your bonds can win? So for 6 months, probably not a good idea.

It a full month aafter the end of the month that you buy them in, so optimally 5 weeks

On the basis of my 1% return over the last 12 months, you might be right

tim

And on the basis of one of my client's 25,000 win? :)

If you buy a bond on 31st May it will be in the 1st July draw.............that's a month and a day min

Are you going to argue that I should invest 10 pounds on the lottery each week because I know someone, who knows someone, who knows someone, who won a million?

(FWIW I know two million pound winners by the third hand route, does this increase my odds of winning?)

tim

Premium bonds are not like the lottery - you cannot lose your stake. All you can lose is the amount of interest you would have earned in a deposit account. For a 40% taxpayer, assuming a gross interest rate of 4% p.a., this would amount to 720 (net) on 60,000 ( maximum holding for 2 people) over 6 months - and that's with no prizes at all.

Unless the interest income is critical, it would be "no contest" for me. :)

But there is no difference here to investing the money in a deposit account and buying 720 pounds of lottery tickets, except psychologically

AIH, for my own savings I agree, but this isn't the same as recommending it to someone else

tim

So you think every 40% taxpayer with spare cash should invest in premium bonds?

Yes there is. The expected one-off return from £720 worth of lottery tickets is rather less than the expected return from £60k worth of premium bonds for 6 months. Isn't it?

No, not "every" one - I am sure there are certain circumstances where Premium Bonds might not be appropriate.

All I can say is that most of my clients have some Premium Bonds, and quite a few have the maximum. It was one such client with the max 20k (as it then was) who won 25,000.

Just a bit. Perhaps £330 vs £650, and that's even taking into account the void first month and discounting any proceeds on reinvestment of prizes.

but it's still only a statistical return, which I have not achieved (by a long way) in the last 12 months.

tim

I think you must be mistaken. Surely £330 is what you'd expect to *end up with* from a £720 lottery stake. That correpsonds to an expected *negative* return of £390. The expected premium bond return, though, really is positive.

Like the man said: No contest.

No real dispute. I'd just mentally 'normalised' the cases so that they were both stating return on the initial presumed £60k.

I see. Fair enough.

Very good points made. I am doing mine today :)

I disagree with your approach. What we are planning to do is keep the capital secure and take risks with the income. There are two possible ways of doing this - put the money in premium bonds, where there is no interest, but the possibility of getting some prizes, and your money back at the end of it.

The other way is to put the money in the building society, and use the interest you earn to buy some lottery tickets. These tickets might win prizes.

You need to look at the strategy as a whole.

It seems that one or two people win the jackpot, and everyone else ends up with a lot less. The chances are that you are going to be one of the ones who ends up with a lot less.