What should I do with my £30K?

I stuck my 30K house deposit in premium bonds - not doing too good though. Would have been better in a 5% savings account but, you never know, I might get a million next month.... always next month :-)

A bank/building society account. Possibly a 1 year treasury deposit if you are sure you won't need the money before then.

One year bond from Nationwide etc. Probably get about 5.2% or so. Or a savings account, perhaps an online one. You'll probably get 4 or 5% from that. I guess you could put some (max £3000) into a cash ISA. You could put another £3000 in next April.

I'd suggest against premium bonds - you're effectively gambling a grand or so of (taxable) interest against a pretty small chance of winning (1 in 20 billion chance of getting the jackpot, for instance). I've bought a few hundred pounds worth of 'em, as you obviously need to have some to have any chance of winning, but I can't justify much more than that as it's not really increasing your chance of winning that much.

Just spotted this:

They're offering 5.35%, almost as good as Cahoots (now no longer available) 5.50/5.65%.

"Fred Bloggs" wrote

An "average" set of wins on 30K premium bonds would give 15 prizes over a year; the minimum prize is 50 so that'd be at least 750 - tax free. You could quite easily get a couple of 100 prizes amongst the 15, giving 850 (tax free).

"Fred Bloggs" wrote

Might be 1 in 20 billion **per bond**, but if you have 30,000 bonds then the chances are "30,000 in 20 billion", or around "1 in 666,666". That's equivalent chances, per draw, to having around 21 National Lottery tickets ("21 in 14 million" is "1 in 666,666").

"Fred Bloggs" wrote

That's silly - doubling your stake, doubles your chances of winning. So having a "few thousand" instead of a "few hundred" would give you ten times the chances of getting the million - which can't really be said to "not really increasing your chance of winning that much"!

You can have low risk. You can have good return. But not both at the same time with the same investment.

Any of the on-line savings accounts. Halifax Websaver, ING, etc.

Whereas 30k in Alliance & Leicester's On-Line Saver at 5.35% would return after tax, 1284 at 20% and 963 at 40%.

Obviously interest rates are unlikely to stay the same over the year, but they could equally increase as decrease.

I wouldn't gamble and take in my case 534 extra in interest over a year rather than hope I can return better than average in premium bonds. I have had 100 in premium bonds since 1972 and not had one win so my views are a little biased.

Jane Tweedynn wrote on Tue, 21 Sep 2004

Premium Bond interest rates tend to be low, and to lag several months behind the market. It'll be 3% from October, 3.2% from December. _That_ is the proper figure to use to calculate your expected average outcome.

It'll probably average out ok over the next hundred years.

"Iain Archer" wrote

... which is equivalent to 5.33% gross to a high rate taxpayer, very comparable to Jane's A&L rate of 5.35%.

"Average" in premium bonds would be well over 800, so currently you'd likely only be less than 450 better off with A&L. With premium bond's December rate increase, you'll only be 324 better off than "premium bond average" (assuming basic rate taxpayer). If you did creep into high rate tax territory, you'd only be 3 per year better off when investing 30,000 !

In 32 years there have been 384 monthly draws, so 100 in each of them is equivalent to 38,400 in *one* draw. At recent rates you'd expect around between one and one-and-a-half wins. In other words, the most likeliest outcome with 100 premium bonds since 1972 may be a single win - so no wins at all is hardly statistically significant.

However, unlike the Lottery, you can't win more than £1m at a time, which alters the comparison somewhat.

Jon

It's still a large sum of money with which to hope you'll be averagely lucky!

Still doesn't seem as good as idea as a high interest savings account. You could have premium bonds your whole life and still win nothing, or at least, nothing substantial. And all the time you're losing not interest and being nibbled away by inflation.

And doubles your losses from inflation and loss of interest!

The way I see it is that although if you have 2 tickets you have twice as much chance as winning as having 1 ticket, the increase is still smaller than the difference between 0 and 1 tickets. It's on that principle that I don't "invest" more in premium bonds. There are just so many better options, none of which require a gamble. I'm not suggesting people don't buy premium bonds, but I would suggest a better vehicle for making money. What would you suggest?

Is this a correct way to calculate my chances of winning?

In 1972, 100 was worth considerably more than today, albeit the payouts would no doubt be smaller?, but my chances of winning would have been comparatively better. Obviously I have no idea how I would calculate this.

"Fred Bloggs" wrote

You should *hope* to be *more* than averagely lucky!

"Fred Bloggs" wrote

Eh? If it is *twice* the chance, then the increase (from 1 to 2) is

**exactly the same** as the difference between 0 and 1. How can it possibly be smaller??

Back in those days you could still buy £1 bonds, and the smallest prize was £25. I've just found a £3 one from 1973. I can't recall what the largest prize was. Possibly £25,000.

1972? That's nothing! Try 1967, which is when I got mine, and never won a bean. Some were swapped for new ones in the early seventies, but I still have fifty "originals" from my 21st birthday present. Oops, now everyone knows how old I am!

MM

The million was recently won by a 1959 bond, and as I recall the total holding was something like 39!

Yay! I got one when I was born. Shows how much my parents thought of me

Daytona

Thanks for all the tips... I think I will go for the online savings account, just need to investigate options and see which one I prefer.

Thanks, Simon