This video is the first in a new series where each month we will examine whether popular ways to save and invest actually live up to their promises. Please drop your suggestions below for what else you want me to cover.
Great video. I'd be interested in a look at investing in classic cars and similar depreciating assets that people convince themselves are a good investment.
Yep, its the tax free element that makes the difference. On average my bonds makes more than saving accounts because of how much the savings would get taxed
I've my emergency fund in premium bonds. I find it handy as I'm not tempted to spend it as its out of my current account. Also i do it instead of the lottery for a small bit of excitement in an otherwise rather dull existence 😂
That's EXACTLY how I view mine! As an emergency fund, that's safe, and not easy to spend, and can win you money! I won in November, December, January, and March! A tidy sum too!
I stopped my DD to lotto around mid 2021. I basically just took my £25 DD for Lotto and instead used it to get premium bonds. I was lucky to win £100 last October which now has my pot at £1125. That’s more than I have seen in return from lotto in a 5 year period. I’d go as far as to say with lotto I was massively out of pocket. This swap was and still is a no brainer for me. When pairing up against lotto.
@@slabbygabby well my logic was this was my lottery alternative. I also am currently paying a mortgage on my first property. And I dont max out my ISA so I didn’t see a benefit in LISA. Unless I’m missing something
It's highly liquid (withdraw when needed), risk-free (guarantee capital preservation) and tax-free, with high potential upside (albeit low chance). Certainly has its unique place and value amongst the heavily-taxed British. As you said, it's a tax-free shelter for the people (especially those who can't afford to hire accountants to setup companies/FICs to dodge tax), so it's doing good for the public
Agree with everything you’ve said, apart from it being risk free. The very real risk is that you don’t win anything, and are losing out on gains elsewhere. Let’s take the average £5k investment and the 5% return that Damien mentioned. Investing £5k after 20 years at 5% you end up with £13.5k - a gain of £8.5k. If you put your money into Premium Bonds and don’t win anything you still only have your original £5k - which every year is losing buying power because of inflation - especially these days. It is not risk free at all. Your risk is an £8.5k loss And that’s at a low 5% rate. Investing in the S&P 500 averages around 9% over 20 years - meaning your £5k would on average become £30k. That’s a £25k risk
Couldn’t disagree more. It’s guaranteed capital deterioration (inflation), not preservation, and there is almost no chance of an upside. Yes, buying an index fund carries risk of downside (mostly in the short term), but compare the returns from any year since records have begun - the opportunity cost is enormous.
The British are not heavly taxed, for instance our annual income tax free allowance is double most other european countries. Among those countries with universal health care we have low taxation and if you think the US is lower taxed would you really want to put up with their apalling labryinthine multilayered tax system? - even before you consider that ferociously high cost of healthcare there (where also your care is ultimately capped by the limits of your insurance unless you are very rich )
@@BanthahI agree money de-value over time in the past century, so the wisdom was to flee to hold real assets. But picking the right stock/fund from S&P 500, and time the market right, is not easy for layman. 80% people loses in stock market and funds; I believe there are too much misinformation in the financial market and mis-sales driven by commission and management fees. I still think the loss in real value due to inflation, is the lesser evil compared to stock/funds' investment loss from mis-sale/misinformation (and this hasn't consider capital gain and income tax yet)
@@jabberwockytdi8901British are heavily taxed compare with Singapore and Hong Kong (no capital gain and dividend income tax), and no N.I or 20%/40% income tax thresholds and compulsory pension that may extend to age 71+
This is a solid video! I've been keeping most of my emergency fund and house deposit in Premium Bonds for the last 2-3 years for the exact reasons you describe at the end. I've found the golden amount to hold is between £20k and £25k for "luck" and payout reasons. Using the MSE calculator, I worked out that keeping less than £10-15k or greatly increased how much luck factors into the winnings. In my personal situation I've found I've been better off with PBs compared to best interest savings I had access to by about £100 in the last year. It definitely needs to be compared to savings account as opposed to an investment. Obviously in my case I should've invested 2-3 years ago, but I may need quick access to the money, and I'm not eligible to use a LISA for house purchase.
Additional rate payer here, yes PB are where I stick my emergency fund. It's liquid, safe, and if I'm lucky enough to win (usually between £25-£100 a month) I don't pay any tax.
One aspect you didn't highlighted is the security of premium bonds. It's important to note that NS&I is government-backed, ensuring the safety of funds in the event of bank failures or similar circumstances. This makes premium bonds a secure alternative option for holding money also.
8:17 Damian this is one of the most important things I have ever heard you say that I don’t think a lot people understand it! Could you cut this into a short to expand its reach!! This I feel aligns with your purpose/goals 😉
I have heard it all before but did enjoy the way you presented it. For me Premium Bonds are my emergency cash fund due, as you said, to the tax free return. Once I have 20k in my ISA each year then spare cash goes into bonds.
And it's all at risk enjoy the rest of your life being poor by the day no one understands that you have a counterpartie and when we have another crisis which is going to be 2008 on steroids banks are insolvent no deals no loans and no deposits get ready for the banking bust by design you'll own nothing and be happy
Finally, someone from a younger generation than myself giving good quality investing advice. Keep it up mate…loving the “out and about” style of video too, it’s a good concept, makes everything feel like a mini documentary rather than someone sat in a boutique studio rattling off shite…that’s when the viewers attention span falls off, keep up the good work pal💯👍🏻
Superb explanation, I have a tiny £500 in premium bonds I've had for a while but I've wasted untold amounts on the lottery. Will follow your suggestion and pay into my bonds instead.
What a video Damian! Loved the new format, loved the structure of the video and the fact that it contained everything that it needed and still wasn’t boring or too long. Bit of history, a few puns and jokes, maths and taxes of it all and then the personal reference and your personal take. Great video overall, keep up the good work!
I had Premium Bonds since I was a kid in the 90's. Not once did I win any amount. I had forgotten I had my bonds until last year, then I hit up NS&I and sold them. I walked away with £1800. That's £1800 that had sat there NOT accruing interest for almost 3 decades.
Do you know if that was the original amoun? Going that far back any winnings would most likely have been posted to you. I know from the web dashboard you can choose to automatically pay back into and buy more PBs now but don't know if the same was the case going further back.
@@DeeJayFahrenheit that does suck then I wonder a little if they've managed to computerise everything entirely successfully at times. It must be a headache having damn near 70years of info with a huge amount of it having been transferred from paper copies
Essentially, if you struggle with good financial habits (such as paying yourself first and leaving your savings alone) then premium bonds can be a helpful tool to help you save. They are not investments in my view, but a lottery ticket where you loan the government money and you might get a prize over your entire life, with the benefit of not affecting your Capital Gains Tax :) People on the internet stating it has a "yield " claiming the chance to win is an effective interest rate is at best misrepresentation and at worse a terrible lie.
But it's still nice when you win a couple of hundred quid and Camelot didn't get to keep it. Ah if only John major had been a statesman of Harold Macmillan stature.
With ISA’s maxed out, as couple we have the max allowance of £100k. It will be 19 months at the end of March. I have had double the return over that period compared to my wife. Against the best savings accounts we are only slightly down on what we would have earned after tax. We are happy to accept that.
I've won just under £1000 in a bit over a year of holding bonds. Pretty happy with them and they're a safe portion of my portfolio. I've got my pension set to high risk funds for more exposure, and it's doing well. My Vanguard stocks ISA is doing well lately also. Nowadays I just sling £25 into Premium bonds every month as a constant trickling in that's a safety net fund also just in case. When I win, it's a happy bonus.
@Jalleur14325 if the government has gone bankrupt, we've got big problems anyway. Would uave probably withdrawn all the money before that to pay for food and water 😆
My "rainy day" savings are in Premium bonds. No more, no less. Pretty much instant access and a possibility of winning makes it an attractive option for me.
My take - ignore the big prizes because you won't win them (and if you do, it a nice exception to the rule). Focus on the steady stream of £100 and below prizes (if you hold enough bonds). With £50k held, I normally win zero two months a year, £300+ two months year, and the rest average out at £100 or so. Total over the last 12 months is £1700, tax free, so not too bad. Also don't totally ignore the mid range prizes, over the last 20 years I've one on £1k prize (I only had £30k invested back then) plus one £500 prize - so these come up once a decade or so. This variability makes it futile trying to compare the "investment rate" with other ways of saving, one lifetime is too short to average out these effects.
The fact you get cash out is nice, however even at 30k 1k winnings is about 3% assuming the rest of the year ran even with your averages (which it probably wouldn't as your averages are for 50k) your hitting 9% tax free return for the big win year. Taking your 50k and your average return it's actually about 3.4% YoY which is a bit meh. I think PBs are a good emergency fund as it's a bit of a set and forget with no tax implications but not great for wealth creation. I do pay into premium bonds regardless as I find it convenient to have as a ready cash source which can be useful for throwing into ISAs and the like at the start of the year. I do however wonder if with my level of income I'm better off elsewhere.
@@kieron8051 That is assuming you haven't already filled up your ISA allowance. The real question is whether its better to put it into a regular ETF and pay capital gains or park in premium bonds for tax free growth. Given market exposure through pensions and ISA, my view would be to go the NS&I route for at least a certain amount as its a risk off asset to balance you out.
Ive had my house fund parked in there for 2 years now. 22-23 i got a 4% return and 23-24 i hit 8%, so im pretty happy! Only ever had a couple of months with no prizes at all and most the time i've had a couple of hundred quid.
I love PB. I use them to save for big one off expenses such as our family holiday to Florida and now saving for our wedding next year. For me they're risk free and I might win some money along the way (which i have done). Loving all your videos Damien 🤩
@@DamienTalksMoney the risk-off nature of them vs the stock market where most people will have their pensions & ISA's invested is part of the attraction of premium bonds - parking your tax value in there is a great idea!
The instant access is also a big plus. It's where ive stashed my deposit for a first home and Im getting better returns than with instant access savings accounts. With the unrealistic caps on help to buy it seemed the best way to go.
It is not instant access mate, they give themselves up to two working WEEKS to credit your account, yes it can be credited sooner but there is no guarantee!!! I have just been told 8 days before they will pay back my bonds. I am closing the account next week due to loss of faith in nsandi (Government backed) than means nothing anymore, wait for the New budget and what follows?
put it this way spend a £1. On lotto and it's gone wbut save those pounds up and buy premium bonds then you've a chance of winning something or cash them in and get your money back
Well I've had £40,000 invested at one time, however with £21,500 invested I recently won £10,050 which sure reaffirms my faith in NS&I. I would rather take a no loss gamble than give banks my monies to make themselves rich, whilst rewarding me with next to nothing.
Probably not a good investment. But if you're self employed or someone who (like me) gets most of their income from dividends, it's not a bad place to use as a "tax reserve". Putting money aside that you know you'll have to pay to the taxman eventually. So, not as a saving strategy but so you don't get a tax bill you can't pay.
I agree completely it’s not an investment and with inflation you lose a little but I still do it. Have you done a video on trading 212? They pay interest on any uninvested cash but your money is invested in a financial product so doesn’t get the fscs financial protection. I opted out
If you're a higher earner the tax free prizes from premium bonds are worthwhile like you said Damien. I've had two maxed out accounts at premium bonds for a few years and the fact i don't need to pay tax on the winnings is why i keep it running.
My wife and I both have the maximum PB holdings, and have done quite well. Winning something most months. Winnings are paid straight into our bank accounts.
If the Bank Rate is above the rate of both CPI and Core inflation, and you want risk-free gains, then you should max out your personal savings allowance (if you have one), then max out a Cash ISA, and then max out your Premium Bonds - every year, in that exact order.
The problem is that there is a feedback loop in the personal savings allowance. Hence me changing the amount I pay into my pension AVC twice this year.
It’s like a lottery but just not for chumps, you get entered into a draw every month and can always redeem your initial capital/ amount paid for a ticket.
Stick 50k in & achieve average or below average winnings & the tax free aspect is actually relatuvely attractive (assuming you are already using up your yearly savings income tax free allowance) This is pretty much the main selling point though (beyond the offchance of winning big)
Reason I hold Premium Bonds, is because I love the thrill of knowing I have (a tiny) chance of winning big. I use the money I'd otherwise be spending on Lotto tickets. I know it's not an effective investment alone, but it slightly balances the high risk of my stocks and shares ISA, and means I'm not loosing money playing the lottery.
Never done the lottery as always seen it as a way of paying more tax. Premium Bonds were great after I had to come out of pension fund due to LTA rules and maxed out ISA. Rate is comparable to good savings, your money is safe and there is a chance... I am biased as I got lucky and won £50K last year. So my annual return was over 100%
Premium Bonds are my fave place to have my emergency fund! Plus I’ve won over £400 in the past year on just under £2500 of premium bonds. Also I just love the excitement of the month around draw time! 😂
In 2018 and 2019 had an investment of about 6700. I had originally invested 23000 but drawn some out . For each of those two years I won 10 months out of the 12 giving me 12 x £25 wins as two of the months I won two . The following year I won once , I invested a further £10000 but won a couple of times. So I withdrew and now have my money in savings
I had just over a thousand pounds in my account when I won £5,000 last year. I’ve decided to withdraw all the money and look at investing instead since I don’t think I’d ever win on it again.
I know several people with Premium bonds, some win all the time some hardly at all, so maybe some batches of numbers are luckier than others. Luck is chance and probability at play, the fact that you won £5000 doesnt affect your chance of winning the same amount the next month or the one after that. With your luck I'd have kept £1000 of the winnings and put the other 4k in more PB's. If you win nothing again for the rest of your life it's still not cost you anything as you kept £1000 of your winnings, and you would still have £5000 safely stored away.
Over the last 12 months my NS&I maximum holding Annual Percentage Rate was 2.4% tax free. My wife’s APR is 4.1% tax free. It is FUN. My 2 Stocks&Shares ISAs are returning 17% & 18.9% but just aren’t as much fun.
I have had bonds since my birth day in 1961 and have added to them over the years, after some early small wins, I have just checked and have won £25 only in the last 10 years!. I bought some Rolls Royce shares last year and they are up over 50%, needless to say I will be closing my bond account and invest it in a high yielder with a guaranteed return!
I keep a few grand in Premium Bonds as an emergency fund, happy to roll the dice on the opportunity cost of lost guaranteed interest. I certainly don’t consider it an investment, just a safe place to park my back up cash with a small chance of a big win.
I used to work there - it's a secure but not secret location. One thing you did no pickup on now is that the majority of low prizes are actually £50 or £100 now. The figure you gave for total PB I think is actually the total invested in all NS&I Products (at one point about 14) and another reason people pile money into these is that it's all covered by the Treasury, not just the first £85K. 'Anyone rich and famous' you can think of has about £4m invested with NS&I (the max across the various products at the time).
Since my premium bond total went above £10,000 my average annual winnings have been just over 5% p.a. I've won £250 once, but all other winning numbers have been £100 or less although it's not unusual for two or even three numbers to win £25 in a given month. I consider it sensible to have some diversification in my cash holdings which is why I own premium bonds, but I do not expect I'll ever get close to having the maximum of £50k invested (and I never considered I'd get close to £30k when that was the limit).
Those bonds are tax free which makes a good difference. And people love positive skewed investments. That's the same reason people prefer lottery like stocks (growth) over value stocks
I got £1,500 last year on the full £50k. For me it's the best place for my emergency fund and I am happy to "pay" for a bit of spice each month when the draw comes around. You never know your luck 🤞🏻
@@markwilliams4274 If you hold the maximum £50k you have to take the winnings. If you hold less than that you can build your bond total or take the winnings.
I dont feel like people use premium bonds as a "serious" investment. They do it for easy no risk (realistically) "fun" with emergancy access if required.
I’ve maxed out on premium bonds as my emergency fund. My money isn’t at risk, I get quick access to it if I need it like if I lose my job or my boiler explodes, etc. it gets more return than my savings account and there’s always the chance of a decent win. I don’t class it as an investment. I have a pension and isa account for that. In 33 draws, I’ve failed to win a prize on 4 occasions. I’ve averaged 5.2% overall.
Very informative, Damien. I have held some NS&I index linked savings certificates for years as another tax free option. Shame they are so rarely available now!
Index linked. So glad I made the maximum subscription, issue after issue. But even then they rig the return by changing the index to a doctored lower one.
I guess they’re an OK option if you’re fortunate enough to have maxed out your various savings allowances and ISA’s and still have some money to put away tax free.
Savings are not just for future consumption. They are also for peace of mind, e.g. so that you can cover an unexpected cost. For many, this is worth paying a small %
Personally i think if your someone who plays lottery/scratchcards then your better off buying this since your ticket doesn't expire and you can reclaim the full amount back that you built up over time. The other option i could see is long term planning for your passing to help with costs.
I had some premium bonds bought for me as a child. When I was old enough to open a kids bank account which paid a good rate of interest, I cashed out my bonds and put them into the account. I think to date, that's been the best "investment decision" I've ever made. Premium bonds are only worth thinking about for people who have more cash than they know what to do with, i.e. they can max out their premium bonds and just leave it there. The point being that the money is safe and any "winnings" are free of tax.
Nowt wrong with them. Purchased, won prizes, withdrew funds... purchased again & still winning more. I was working class eventually retired, early admittedly. I've always won more than I'd get from any bank in interest, so it's great as far as I'm concerned.
I love Premium Bonds. It motivated me to start savings, let's remember how important this is. TO SAVE and not SPEND. When we spend the money usually it is 100% loss. If Premium Bond and the hope to win is more motivating than a guaranteed little something, then PREMIUM BOND as the best thing EVER. There is no other investment which makes me so excited that the second working day of the month is here and I can check if I won or not🙂 Thanks for another good video Damien.
For an emergency fund I prefer the Vanguard Sterling Short-Term Money Market Fund paying 5% , 🤷♂️ Put it in as part of my ISA allowance. But obviously everyone has different financial circumstances.
My mum bought me £250 of bonds when I was a baby, I'm currently trying to claim them back so I can put them in my ISA but I'm pretty sure they are still worth only £250 lol. I think I might have one small win since 1997.
We just started doing bonds. Our reason for it is, we’ve played the lottery for years and never really won more than a couple of quid and we are bad at dipping into our savings. By using the money we play the lottery with, plus what we save. We are guaranteed to save money and maybe have a chance of winning extra. If we don’t win anything, it’s no big deal because we haven’t lost anything either.
I won lots last year!!!! Very fortunate year considering I only had a few k in it. Ive now put my house deposit into it instead of investments for assurance that I will have the money when we close in a few months :)
I saved my house deposit in bonds as i was unsure when i wanted to buy and also the quick access without being penalised. I gained more in winnings than any savings account would have earned.
We tried PB last year, one year later the PB return out did our ISA's, which had a fixed rate of 2.8% the return from PB was equal to our current ISA rate of 4.1%
They are a great gateway product. Growing up all I really understood were savings accounts (with terrible interest rates) or the lottery/ gambling. Premium Bonds are a good way to get your man on the street who might be making “bad” financial decisions to start exploring the wider world of investment products. It’s an easy sell that instead of spending £50 on lottery tickets, you buy £50 on premium bonds instead - it still tickles the same thrill, but your ticket gets entered every month and you can always redeem your initial capital
It still makes sense to save some money in an ultra safe place even if it doesn’t outrun inflation (emergency fund to avoid even more expensive debt), and premium bonds are perfect for this, with a very small chance of a massive prize!!
Great vid as always. Keep pushing the space - the extra detail and effort in these videos doesn’t go unnoticed! On tax free income that you cover at the end… one thing I don’t see a lot of people talking about w.r.t. tax free sources here in the uk… the income from Gilts/uk gov bonds are exempt from capital gains tax. Long story short, this makes up the majority of the return on gov bonds (as the bond is typically bought for less than its principle). With higher rates and outdated tax free thresholds on interest income, a lot of people have been putting money into these to achieve a better post-tax return on their cash. Even more relevant now capital gains tax allowance will be 1/4 of what is was. Could be worth running the numbers and exploring this topic in a video while rates are still high. Although this is mainly attractive to people who are higher rate tax payers, past 10k invested interest income (as you mention) and already filled 20k ISA allowance for the year… so limited audience. But gilts are getting more interest because of this. Cheers, Nick
Its not entirely straitforward but is actually a good idea. There are different gilts and at the moment the short dated are yielding more than the longer term. The interest or coupon on gilts is taxable the gain is not. So the trick is to buy low coupon and maximise the gain element.
I used them as a quickly accessible place to hold my deposit for a house when I was looking to buy. I would get regular small prizes and even won a grand one month. Overall I had a good experience with them but don’t hold any now my saving priority has switched back to long term goals.
When the £50 prizes were available before reducing to £25, my mum won £50 nearly every month! We used to call it a pleasure purse and go and have a lunch in then 80s/90s We liked them, better than the Lottery &Tax free.
The unseen impact of inflation over the long term makes premium bonds unnatractive, until you look at the alternatives. It's so difficult to build wealth long term in this country unless it's in a pension or ISA wrapper.
I put in £500 each for my two kids into premium bonds about 14 months ago they have won nothing yet. However I am just leaving that there for them until they are 18. Just a token amount giving them a chance to win lol. I have already written this money of if it grows that’s a bonus.
I have a few quid stashed in premium bonds for no reason other than my savings are out of sight, out of mind. I'm not reliant on any income from them. I'm 66 and at this stage of the game, there is an argument for not saving at all. I do it because old habits die hard. Plus the twinge of excitement when the draw is made and i check the app. Yes, I too need to get out more!
I've held them when the interest rate was 0.1% and over 10 years it paid out 1% a year as an average. I also went over 12 months at a time without a prize. Now you can get better returns elsewhere so they aren't there anymore. Good for easy access piggy bank with a few go on a lottery each month. Not an investing stratagy though, and maybe i should have done that but until finding Damien and also wanting the easy access/ not being in a position to lock up the money long term I didn't consider investment. I think PBs have a place but they aren't the one and only as many people who are financially uneducated may believe.
That. Was. Amazing. If these are the types of video you want to make moving forward then I am all for it! I only hold bonds in an investment fund but listening to this, you said something about making saving more exciting. I think this could be a great product for my boy, get him exciting about saving
Agreed good place for emergency funds and instead of doing the lottery. I just did the calculation for my winnings and I am getting £191 per month average so far.
24million Brits. Never knew this well invested us Brits are. We do love them Damian !!!! Don’t we. I have held 50k twice while have money free between purchases elsewhere. I heard once something like 20-40% have the max 50k!! You may have mentioned it in the video
My parents have 50k each and have had that for years, and they make a consistant income.from them every year. I asked and dad said its on and off but generally it average out to about 200 quid a month
My premium bonds are my emergency fund. Easy to forget and easy to get at. And Camelot don't buy your ticket back If you don't win. So may not make much but it's safe, stands a chance of growing substantially and is there when I need it to save me selling my investments.
I had £10 in them from the late 80's i think and unsurprisingly never won a thing! In my late 40's i had a bit more to spare each month and for the first time in life had more than a few hundred available to save each month but with the crap interest rates of recent times i thought it might as well be in premium bonds with the chance of winning,got upto about 5.5k before winning my first 25 quid. i like them and the chance to win and dont really care that its not the best investment,since getting up to around 20k i get far more regular small wins and have earned around 5% in last year.Since the interest rates gone up been putting new savings elsewhere for guaranteed rates but in no hurry to get rid of the PB's i already hold. and once the other things are earning enough to be taxable will prob buy more premium bonds as i like em!
My son has a fair amount of premium bonds for a 6 yr old, every time we think of switching to an Isa he gets a premium bond win. In the last 12 months hes won around £300, which is a around a 10% return on his holdings, me on the other hand, i have very little at 46 and havent won in years. as long as h'es winning I dont mind, its his future house deposit etc.
Good place to park cash with instant access and no tax implications. Sometimes convenience is more important than scraping every last drop of interest.
May I add the point that unlike normal investments, premium Bonds go towards reducing the UK government's deficit? So there is a common good resulting from output of purchasing a bond.
I've won £125 over 2 years with just over 2 grand - much better than I'd get with any savings account. A good emergency fund. I tend to just stick £30 a month in and forget about it.
This video is the first in a new series where each month we will examine whether popular ways to save and invest actually live up to their promises. Please drop your suggestions below for what else you want me to cover.
Fantastic idea Damien! I'm definitely here for the journey.
Gold
Uranium
Gold&Silver please. Thanks. Love your videos.
Great video. I'd be interested in a look at investing in classic cars and similar depreciating assets that people convince themselves are a good investment.
The production quality on your videos is really getting next level. Watching the journey is such a joy. Love to see it.
Thank you so much! Only just getting started I want to really see what a finance video can be and currently I am held back by my own lack of skills
Walking around the barrier into the "fortress of a compound" at the end 🤣🤣
ruclips.net/video/BpRZSPNZY7w/видео.htmlsi=fRtAF5kFv_JMAI8K
“Because sometimes, it’s really hard to actually do your own ideas” 😄
@@wheeldo Its an empty building been like that for years :) They moved out and built houses as you can see in the video.
As a high rate tax payer the fact they are tax free, safe as can be and can be accessed whenever make it a no brainier for emergency fund.
Totally right. Easy to transfer the money in and kinda forget about.
Agreed.
Yep, its the tax free element that makes the difference. On average my bonds makes more than saving accounts because of how much the savings would get taxed
A cash ISA is tax free too...
What looollll. Have you maxed out your sipp and isa
I've my emergency fund in premium bonds. I find it handy as I'm not tempted to spend it as its out of my current account. Also i do it instead of the lottery for a small bit of excitement in an otherwise rather dull existence 😂
Exactly the same reasons as myself. 🙂
😂
They are fantastic! Every friend abroud is jelous we have them here.
That's EXACTLY how I view mine! As an emergency fund, that's safe, and not easy to spend, and can win you money! I won in November, December, January, and March! A tidy sum too!
Premium Bonds are far better than the lottery. Unlike the lottery you don't lose money if you don't win.
The production value on these videos is really starting to show, love the content keep up the good work.
I stopped my DD to lotto around mid 2021. I basically just took my £25 DD for Lotto and instead used it to get premium bonds.
I was lucky to win £100 last October which now has my pot at £1125. That’s more than I have seen in return from lotto in a 5 year period. I’d go as far as to say with lotto I was massively out of pocket. This swap was and still is a no brainer for me. When pairing up against lotto.
I've won £1100 since October. £50k holdings as it's basically my deposit for a house.
@@Loundsify Why not use a Lisa? Or have you mixed your Lisa out?
Plus you still have £1125 cash 💴
@@slabbygabby well my logic was this was my lottery alternative.
I also am currently paying a mortgage on my first property. And I dont max out my ISA so I didn’t see a benefit in LISA. Unless I’m missing something
It's highly liquid (withdraw when needed), risk-free (guarantee capital preservation) and tax-free, with high potential upside (albeit low chance). Certainly has its unique place and value amongst the heavily-taxed British. As you said, it's a tax-free shelter for the people (especially those who can't afford to hire accountants to setup companies/FICs to dodge tax), so it's doing good for the public
Agree with everything you’ve said, apart from it being risk free.
The very real risk is that you don’t win anything, and are losing out on gains elsewhere.
Let’s take the average £5k investment and the 5% return that Damien mentioned. Investing £5k after 20 years at 5% you end up with £13.5k - a gain of £8.5k.
If you put your money into Premium Bonds and don’t win anything you still only have your original £5k - which every year is losing buying power because of inflation - especially these days.
It is not risk free at all. Your risk is an £8.5k loss
And that’s at a low 5% rate.
Investing in the S&P 500 averages around 9% over 20 years - meaning your £5k would on average become £30k. That’s a £25k risk
Couldn’t disagree more. It’s guaranteed capital deterioration (inflation), not preservation, and there is almost no chance of an upside. Yes, buying an index fund carries risk of downside (mostly in the short term), but compare the returns from any year since records have begun - the opportunity cost is enormous.
The British are not heavly taxed, for instance our annual income tax free allowance is double most other european countries. Among those countries with universal health care we have low taxation and if you think the US is lower taxed would you really want to put up with their apalling labryinthine multilayered tax system? - even before you consider that ferociously high cost of healthcare there (where also your care is ultimately capped by the limits of your insurance unless you are very rich )
@@BanthahI agree money de-value over time in the past century, so the wisdom was to flee to hold real assets. But picking the right stock/fund from S&P 500, and time the market right, is not easy for layman. 80% people loses in stock market and funds; I believe there are too much misinformation in the financial market and mis-sales driven by commission and management fees. I still think the loss in real value due to inflation, is the lesser evil compared to stock/funds' investment loss from mis-sale/misinformation (and this hasn't consider capital gain and income tax yet)
@@jabberwockytdi8901British are heavily taxed compare with Singapore and Hong Kong (no capital gain and dividend income tax), and no N.I or 20%/40% income tax thresholds and compulsory pension that may extend to age 71+
This is a solid video! I've been keeping most of my emergency fund and house deposit in Premium Bonds for the last 2-3 years for the exact reasons you describe at the end. I've found the golden amount to hold is between £20k and £25k for "luck" and payout reasons. Using the MSE calculator, I worked out that keeping less than £10-15k or greatly increased how much luck factors into the winnings.
In my personal situation I've found I've been better off with PBs compared to best interest savings I had access to by about £100 in the last year. It definitely needs to be compared to savings account as opposed to an investment. Obviously in my case I should've invested 2-3 years ago, but I may need quick access to the money, and I'm not eligible to use a LISA for house purchase.
Additional rate payer here, yes PB are where I stick my emergency fund. It's liquid, safe, and if I'm lucky enough to win (usually between £25-£100 a month) I don't pay any tax.
One aspect you didn't highlighted is the security of premium bonds. It's important to note that NS&I is government-backed, ensuring the safety of funds in the event of bank failures or similar circumstances. This makes premium bonds a secure alternative option for holding money also.
8:17 Damian this is one of the most important things I have ever heard you say that I don’t think a lot people understand it! Could you cut this into a short to expand its reach!! This I feel aligns with your purpose/goals 😉
I have heard it all before but did enjoy the way you presented it.
For me Premium Bonds are my emergency cash fund due, as you said, to the tax free return. Once I have 20k in my ISA each year then spare cash goes into bonds.
Make sure you pump your SIPP to £60k max before you do! You can spend a SIPP on commercial property, gold bullion at the royal mint, stocks share etc!
@@nikoc3585 That locks it away until you hit retirement age though. If I have a crisis then premium bonds are an easy access option.
And it's all at risk enjoy the rest of your life being poor by the day no one understands that you have a counterpartie and when we have another crisis which is going to be 2008 on steroids banks are insolvent no deals no loans and no deposits get ready for the banking bust by design you'll own nothing and be happy
Finally, someone from a younger generation than myself giving good quality investing advice. Keep it up mate…loving the “out and about” style of video too, it’s a good concept, makes everything feel like a mini documentary rather than someone sat in a boutique studio rattling off shite…that’s when the viewers attention span falls off, keep up the good work pal💯👍🏻
Superb explanation, I have a tiny £500 in premium bonds I've had for a while but I've wasted untold amounts on the lottery. Will follow your suggestion and pay into my bonds instead.
What a video Damian! Loved the new format, loved the structure of the video and the fact that it contained everything that it needed and still wasn’t boring or too long. Bit of history, a few puns and jokes, maths and taxes of it all and then the personal reference and your personal take.
Great video overall, keep up the good work!
I had Premium Bonds since I was a kid in the 90's. Not once did I win any amount. I had forgotten I had my bonds until last year, then I hit up NS&I and sold them. I walked away with £1800. That's £1800 that had sat there NOT accruing interest for almost 3 decades.
Do you know if that was the original amoun? Going that far back any winnings would most likely have been posted to you. I know from the web dashboard you can choose to automatically pay back into and buy more PBs now but don't know if the same was the case going further back.
That is sad. If you got even 5% on that each year and reinvested, you'd be looking at over £6000.
@@Al_Does_Stuff yeah, I've got the original paper documents from when my Gran bought them for me. It's the original amount.
@@JHA854 that's exactly what I said that to my dad when I cashed out. Based on my experience alone I couldn't recommend Premium Bonds to anyone.
@@DeeJayFahrenheit that does suck then I wonder a little if they've managed to computerise everything entirely successfully at times. It must be a headache having damn near 70years of info with a huge amount of it having been transferred from paper copies
Your videos are just getting better and better. Going on location, and interspersing these historical videos is awesome!
Thank you very much! Glad you enjoyed those points as it makes the extra effort all worth it
Essentially, if you struggle with good financial habits (such as paying yourself first and leaving your savings alone) then premium bonds can be a helpful tool to help you save. They are not investments in my view, but a lottery ticket where you loan the government money and you might get a prize over your entire life, with the benefit of not affecting your Capital Gains Tax :) People on the internet stating it has a "yield " claiming the chance to win is an effective interest rate is at best misrepresentation and at worse a terrible lie.
But it's still nice when you win a couple of hundred quid and Camelot didn't get to keep it.
Ah if only John major had been a statesman of Harold Macmillan stature.
With ISA’s maxed out, as couple we have the max allowance of £100k. It will be 19 months at the end of March.
I have had double the return over that period compared to my wife.
Against the best savings accounts we are only slightly down on what we would have earned after tax.
We are happy to accept that.
I think the original problem was referring to this "investment" as "bonds."
I've won just under £1000 in a bit over a year of holding bonds. Pretty happy with them and they're a safe portion of my portfolio. I've got my pension set to high risk funds for more exposure, and it's doing well. My Vanguard stocks ISA is doing well lately also. Nowadays I just sling £25 into Premium bonds every month as a constant trickling in that's a safety net fund also just in case. When I win, it's a happy bonus.
Yes providing the government doesn't go bankrupt...
@Jalleur14325 if the government has gone bankrupt, we've got big problems anyway. Would uave probably withdrawn all the money before that to pay for food and water 😆
My "rainy day" savings are in Premium bonds. No more, no less. Pretty much instant access and a possibility of winning makes it an attractive option for me.
My take - ignore the big prizes because you won't win them (and if you do, it a nice exception to the rule). Focus on the steady stream of £100 and below prizes (if you hold enough bonds). With £50k held, I normally win zero two months a year, £300+ two months year, and the rest average out at £100 or so. Total over the last 12 months is £1700, tax free, so not too bad.
Also don't totally ignore the mid range prizes, over the last 20 years I've one on £1k prize (I only had £30k invested back then) plus one £500 prize - so these come up once a decade or so. This variability makes it futile trying to compare the "investment rate" with other ways of saving, one lifetime is too short to average out these effects.
I think this proves the point Damien is making. Thanks for sharing.
The fact you get cash out is nice, however even at 30k 1k winnings is about 3% assuming the rest of the year ran even with your averages (which it probably wouldn't as your averages are for 50k) your hitting 9% tax free return for the big win year.
Taking your 50k and your average return it's actually about 3.4% YoY which is a bit meh. I think PBs are a good emergency fund as it's a bit of a set and forget with no tax implications but not great for wealth creation.
I do pay into premium bonds regardless as I find it convenient to have as a ready cash source which can be useful for throwing into ISAs and the like at the start of the year. I do however wonder if with my level of income I'm better off elsewhere.
@@kieron8051 That is assuming you haven't already filled up your ISA allowance. The real question is whether its better to put it into a regular ETF and pay capital gains or park in premium bonds for tax free growth. Given market exposure through pensions and ISA, my view would be to go the NS&I route for at least a certain amount as its a risk off asset to balance you out.
Ouch! This is very unlucky, I’ve less than 30k invested and won 10 times over the last 6 months…none of them £25 either.
In between here, also less than 30k but about 10 wins over 12 months, you got lucky with none of those being £25! @@KyleGoslan
Ive had my house fund parked in there for 2 years now. 22-23 i got a 4% return and 23-24 i hit 8%, so im pretty happy! Only ever had a couple of months with no prizes at all and most the time i've had a couple of hundred quid.
I love PB. I use them to save for big one off expenses such as our family holiday to Florida and now saving for our wedding next year. For me they're risk free and I might win some money along the way (which i have done). Loving all your videos Damien 🤩
Yeah I also save my tax money in them! They have a special place in my financial heart
@@DamienTalksMoney the risk-off nature of them vs the stock market where most people will have their pensions & ISA's invested is part of the attraction of premium bonds - parking your tax value in there is a great idea!
Damien On Location and Studio Damien works well and helps break up the story telling, would love to see more of that! Keep it up Damo!
-Max
The instant access is also a big plus. It's where ive stashed my deposit for a first home and Im getting better returns than with instant access savings accounts. With the unrealistic caps on help to buy it seemed the best way to go.
Have you considered a LISA?
@@schopesonline I live in London, so it's the same threshold
It is not instant access mate, they give themselves up to two working WEEKS to credit your account, yes it can be credited sooner but there is no guarantee!!! I have just been told 8 days before they will pay back my bonds.
I am closing the account next week due to loss of faith in nsandi (Government backed) than means nothing anymore, wait for the New budget and what follows?
put it this way spend a £1. On lotto and it's gone wbut save those pounds up and buy premium bonds then you've a chance of winning something or cash them in and get your money back
I just checked.
I got a return of 2.9% from premium bonds in the last year.
When interest rates were 0 PBs paid 1%.
I'm not complaining.
Not for the individual - but great for the government
That merge at the end from voiceover to continuing the sentence outside NS&I was smooth... didn't go unnoticed!
💁🏼♂️
Well I've had £40,000 invested at one time, however with £21,500 invested I recently won £10,050 which sure reaffirms my faith in NS&I. I would rather take a no loss gamble than give banks my monies to make themselves rich, whilst rewarding me with next to nothing.
Probably not a good investment. But if you're self employed or someone who (like me) gets most of their income from dividends, it's not a bad place to use as a "tax reserve". Putting money aside that you know you'll have to pay to the taxman eventually. So, not as a saving strategy but so you don't get a tax bill you can't pay.
I agree completely it’s not an investment and with inflation you lose a little but I still do it.
Have you done a video on trading 212? They pay interest on any uninvested cash but your money is invested in a financial product so doesn’t get the fscs financial protection. I opted out
3.5% for me last year.
£50 this year in January and £200 in March.
I'm not complaining, this year off to a good start.
If you're a higher earner the tax free prizes from premium bonds are worthwhile like you said Damien. I've had two maxed out accounts at premium bonds for a few years and the fact i don't need to pay tax on the winnings is why i keep it running.
My wife and I both have the maximum PB holdings, and have done quite well.
Winning something most months. Winnings are paid straight into our bank accounts.
I have £50k in premium bonds and on average I get over £200 a month so I don’t think that’s too bad
If the Bank Rate is above the rate of both CPI and Core inflation, and you want risk-free gains, then you should max out your personal savings allowance (if you have one), then max out a Cash ISA, and then max out your Premium Bonds - every year, in that exact order.
The problem is that there is a feedback loop in the personal savings allowance. Hence me changing the amount I pay into my pension AVC twice this year.
Premium Bonds = Middle-class Lotto
Not a fair comparison? You don't get your stake back with lotteries...
@@JohnBeeblebrox It's a fair comparison. It's still a lottery; you're just gambling with the interest.
It’s like a lottery but just not for chumps, you get entered into a draw every month and can always redeem your initial capital/ amount paid for a ticket.
I once dated a girl who advised me to put my savings in premium bonds and I literally had to stop myself from laughing in her face when she said it 😂
Stick 50k in & achieve average or below average winnings & the tax free aspect is actually relatuvely attractive (assuming you are already using up your yearly savings income tax free allowance)
This is pretty much the main selling point though (beyond the offchance of winning big)
Reason I hold Premium Bonds, is because I love the thrill of knowing I have (a tiny) chance of winning big. I use the money I'd otherwise be spending on Lotto tickets.
I know it's not an effective investment alone, but it slightly balances the high risk of my stocks and shares ISA, and means I'm not loosing money playing the lottery.
My Stocks and Shares ISA always seems like a far bigger gamble than Premium Bonds.
Never done the lottery as always seen it as a way of paying more tax. Premium Bonds were great after I had to come out of pension fund due to LTA rules and maxed out ISA. Rate is comparable to good savings, your money is safe and there is a chance...
I am biased as I got lucky and won £50K last year. So my annual return was over 100%
Premium Bonds are my fave place to have my emergency fund! Plus I’ve won over £400 in the past year on just under £2500 of premium bonds. Also I just love the excitement of the month around draw time! 😂
Me too, I used to spend money on the lottery, now I put money into PB each month.
Had £300 for 15 years, never won a penny so cashed out and parked it somewhere with more predictable returns.
In 2018 and 2019 had an investment of about 6700. I had originally invested 23000 but drawn some out . For each of those two years I won 10 months out of the 12 giving me 12 x £25 wins as two of the months I won two . The following year I won once , I invested a further £10000 but won a couple of times. So I withdrew and now have my money in savings
I had just over a thousand pounds in my account when I won £5,000 last year. I’ve decided to withdraw all the money and look at investing instead since I don’t think I’d ever win on it again.
I know several people with Premium bonds, some win all the time some hardly at all, so maybe some batches of numbers are luckier than others. Luck is chance and probability at play, the fact that you won £5000 doesnt affect your chance of winning the same amount the next month or the one after that. With your luck I'd have kept £1000 of the winnings and put the other 4k in more PB's. If you win nothing again for the rest of your life it's still not cost you anything as you kept £1000 of your winnings, and you would still have £5000 safely stored away.
Ironically your chance of winning would be six times what it was before
Over the last 12 months my NS&I maximum holding Annual Percentage Rate was 2.4% tax free. My wife’s APR is 4.1% tax free. It is FUN. My 2 Stocks&Shares ISAs are returning 17% & 18.9% but just aren’t as much fun.
I have had bonds since my birth day in 1961 and have added to them over the years, after some early small wins, I have just checked and have won £25 only in the last 10 years!. I bought some Rolls Royce shares last year and they are up over 50%, needless to say I will be closing my bond account and invest it in a high yielder with a guaranteed return!
Exactly why I hold £50k of them Damien. Glad you didn't condemn purely on the rates like some do!
I keep a few grand in Premium Bonds as an emergency fund, happy to roll the dice on the opportunity cost of lost guaranteed interest. I certainly don’t consider it an investment, just a safe place to park my back up cash with a small chance of a big win.
I used to work there - it's a secure but not secret location.
One thing you did no pickup on now is that the majority of low prizes are actually £50 or £100 now.
The figure you gave for total PB I think is actually the total invested in all NS&I Products (at one point about 14) and another reason people pile money into these is that it's all covered by the Treasury, not just the first £85K.
'Anyone rich and famous' you can think of has about £4m invested with NS&I (the max across the various products at the time).
Since my premium bond total went above £10,000 my average annual winnings have been just over 5% p.a. I've won £250 once, but all other winning numbers have been £100 or less although it's not unusual for two or even three numbers to win £25 in a given month. I consider it sensible to have some diversification in my cash holdings which is why I own premium bonds, but I do not expect I'll ever get close to having the maximum of £50k invested (and I never considered I'd get close to £30k when that was the limit).
Those bonds are tax free which makes a good difference. And people love positive skewed investments. That's the same reason people prefer lottery like stocks (growth) over value stocks
I got £1,500 last year on the full £50k. For me it's the best place for my emergency fund and I am happy to "pay" for a bit of spice each month when the draw comes around. You never know your luck 🤞🏻
don't buy spice, it is an addictive drug and many people end up on the streets.
Do your winnings compound over the years or are you forced to cash out your winnings.
@@markwilliams4274 If you hold the maximum £50k you have to take the winnings. If you hold less than that you can build your bond total or take the winnings.
But 50k in a 5% savings is £2500
@@thehallstar4642 yes it is but you will then have to pay 40% tax on that.
I dont feel like people use premium bonds as a "serious" investment. They do it for easy no risk (realistically) "fun" with emergancy access if required.
I’ve maxed out on premium bonds as my emergency fund. My money isn’t at risk, I get quick access to it if I need it like if I lose my job or my boiler explodes, etc. it gets more return than my savings account and there’s always the chance of a decent win. I don’t class it as an investment. I have a pension and isa account for that.
In 33 draws, I’ve failed to win a prize on 4 occasions. I’ve averaged 5.2% overall.
Very informative, Damien. I have held some NS&I index linked savings certificates for years as another tax free option. Shame they are so rarely available now!
Index linked. So glad I made the maximum subscription, issue after issue. But even then they rig the return by changing the index to a doctored lower one.
I guess they’re an OK option if you’re fortunate enough to have maxed out your various savings allowances and ISA’s and still have some money to put away tax free.
Savings are not just for future consumption. They are also for peace of mind, e.g. so that you can cover an unexpected cost. For many, this is worth paying a small %
I hold £50k but i don't treat them as an investment. I just like winning something each month, with the chance of £million. Its just for fun.
Personally i think if your someone who plays lottery/scratchcards then your better off buying this since your ticket doesn't expire and you can reclaim the full amount back that you built up over time.
The other option i could see is long term planning for your passing to help with costs.
I had some premium bonds bought for me as a child. When I was old enough to open a kids bank account which paid a good rate of interest, I cashed out my bonds and put them into the account. I think to date, that's been the best "investment decision" I've ever made.
Premium bonds are only worth thinking about for people who have more cash than they know what to do with, i.e. they can max out their premium bonds and just leave it there. The point being that the money is safe and any "winnings" are free of tax.
Nowt wrong with them. Purchased, won prizes, withdrew funds... purchased again & still winning more. I was working class eventually retired, early admittedly.
I've always won more than I'd get from any bank in interest, so it's great as far as I'm concerned.
I love Premium Bonds. It motivated me to start savings, let's remember how important this is. TO SAVE and not SPEND. When we spend the money usually it is 100% loss. If Premium Bond and the hope to win is more motivating than a guaranteed little something, then PREMIUM BOND as the best thing EVER. There is no other investment which makes me so excited that the second working day of the month is here and I can check if I won or not🙂 Thanks for another good video Damien.
For an emergency fund I prefer the Vanguard Sterling Short-Term Money Market Fund paying 5% , 🤷♂️
Put it in as part of my ISA allowance. But obviously everyone has different financial circumstances.
My mum bought me £250 of bonds when I was a baby, I'm currently trying to claim them back so I can put them in my ISA but I'm pretty sure they are still worth only £250 lol. I think I might have one small win since 1997.
We just started doing bonds.
Our reason for it is, we’ve played the lottery for years and never really won more than a couple of quid and we are bad at dipping into our savings.
By using the money we play the lottery with, plus what we save. We are guaranteed to save money and maybe have a chance of winning extra. If we don’t win anything, it’s no big deal because we haven’t lost anything either.
I won lots last year!!!! Very fortunate year considering I only had a few k in it. Ive now put my house deposit into it instead of investments for assurance that I will have the money when we close in a few months :)
I saved my house deposit in bonds as i was unsure when i wanted to buy and also the quick access without being penalised. I gained more in winnings than any savings account would have earned.
We tried PB last year, one year later the PB return out did our ISA's, which had a fixed rate of 2.8% the return from PB was equal to our current ISA rate of 4.1%
You should be able to get a better rate on your ISA than that.
They are a great gateway product. Growing up all I really understood were savings accounts (with terrible interest rates) or the lottery/ gambling.
Premium Bonds are a good way to get your man on the street who might be making “bad” financial decisions to start exploring the wider world of investment products.
It’s an easy sell that instead of spending £50 on lottery tickets, you buy £50 on premium bonds instead - it still tickles the same thrill, but your ticket gets entered every month and you can always redeem your initial capital
Agree with this, it's where I keep my 12 month rainy day fund should something happen, what I win is just a bonus, that's how I see it
It still makes sense to save some money in an ultra safe place even if it doesn’t outrun inflation (emergency fund to avoid even more expensive debt), and premium bonds are perfect for this, with a very small chance of a massive prize!!
Great vid as always. Keep pushing the space - the extra detail and effort in these videos doesn’t go unnoticed!
On tax free income that you cover at the end… one thing I don’t see a lot of people talking about w.r.t. tax free sources here in the uk… the income from Gilts/uk gov bonds are exempt from capital gains tax. Long story short, this makes up the majority of the return on gov bonds (as the bond is typically bought for less than its principle). With higher rates and outdated tax free thresholds on interest income, a lot of people have been putting money into these to achieve a better post-tax return on their cash. Even more relevant now capital gains tax allowance will be 1/4 of what is was. Could be worth running the numbers and exploring this topic in a video while rates are still high. Although this is mainly attractive to people who are higher rate tax payers, past 10k invested interest income (as you mention) and already filled 20k ISA allowance for the year… so limited audience. But gilts are getting more interest because of this.
Cheers, Nick
Its not entirely straitforward but is actually a good idea. There are different gilts and at the moment the short dated are yielding more than the longer term. The interest or coupon on gilts is taxable the gain is not. So the trick is to buy low coupon and maximise the gain element.
@@rupertmiller4718 exactly, a bit of nuance to it, but can be an attractive option
I used them as a quickly accessible place to hold my deposit for a house when I was looking to buy. I would get regular small prizes and even won a grand one month. Overall I had a good experience with them but don’t hold any now my saving priority has switched back to long term goals.
When the £50 prizes were available before reducing to £25, my mum won £50 nearly every month!
We used to call it a pleasure purse and go and have a lunch in then 80s/90s
We liked them, better than the Lottery &Tax free.
The unseen impact of inflation over the long term makes premium bonds unnatractive, until you look at the alternatives. It's so difficult to build wealth long term in this country unless it's in a pension or ISA wrapper.
I put in £500 each for my two kids into premium bonds about 14 months ago they have won nothing yet. However I am just leaving that there for them until they are 18. Just a token amount giving them a chance to win lol. I have already written this money of if it grows that’s a bonus.
I have a few quid stashed in premium bonds for no reason other than my savings are out of sight, out of mind. I'm not reliant on any income from them. I'm 66 and at this stage of the game, there is an argument for not saving at all. I do it because old habits die hard. Plus the twinge of excitement when the draw is made and i check the app. Yes, I too need to get out more!
I've held them when the interest rate was 0.1% and over 10 years it paid out 1% a year as an average. I also went over 12 months at a time without a prize. Now you can get better returns elsewhere so they aren't there anymore. Good for easy access piggy bank with a few go on a lottery each month. Not an investing stratagy though, and maybe i should have done that but until finding Damien and also wanting the easy access/ not being in a position to lock up the money long term I didn't consider investment. I think PBs have a place but they aren't the one and only as many people who are financially uneducated may believe.
I have a little money in premium bonds, but I would recommend putting as much as you can afford into a pension and retiring as early as you can
That. Was. Amazing. If these are the types of video you want to make moving forward then I am all for it! I only hold bonds in an investment fund but listening to this, you said something about making saving more exciting. I think this could be a great product for my boy, get him exciting about saving
This is so weird, I was going to comment on your next vid asking your opinion on premium bonds! Always giving us the content we need!🧡
Personally I put my emergency fund in Premium Bonds, as you have the chance of winning big, but can also take it out easily
Agreed good place for emergency funds and instead of doing the lottery. I just did the calculation for my winnings and I am getting £191 per month average so far.
There’s no one that can touch Damo on video quality right now.
24million Brits. Never knew this well invested us Brits are. We do love them Damian !!!! Don’t we. I have held 50k twice while have money free between purchases elsewhere. I heard once something like 20-40% have the max 50k!! You may have mentioned it in the video
And to Damo's videos I say... Alright alright alright!
HAHA YES! love this.
Lotto= idiot tax
My parents have 50k each and have had that for years, and they make a consistant income.from them every year. I asked and dad said its on and off but generally it average out to about 200 quid a month
I have about 39K in premium bonds - over the last year they returned over 8.5% (the highest prize I won was £1000)
My premium bonds are my emergency fund. Easy to forget and easy to get at. And Camelot don't buy your ticket back If you don't win. So may not make much but it's safe, stands a chance of growing substantially and is there when I need it to save me selling my investments.
I say Max out your Stocks & Shares ISA, Max out your personal savings allowance and then put the rest of your money in Premium Bonds 😊
When I held £30,000 ten years ago, I had a prize of £10,000 after holding the bonds for 6 months. Not a bad return.
I had £10 in them from the late 80's i think and unsurprisingly never won a thing! In my late 40's i had a bit more to spare each month and for the first time in life had more than a few hundred available to save each month but with the crap interest rates of recent times i thought it might as well be in premium bonds with the chance of winning,got upto about 5.5k before winning my first 25 quid. i like them and the chance to win and dont really care that its not the best investment,since getting up to around 20k i get far more regular small wins and have earned around 5% in last year.Since the interest rates gone up been putting new savings elsewhere for guaranteed rates but in no hurry to get rid of the PB's i already hold. and once the other things are earning enough to be taxable will prob buy more premium bonds as i like em!
I have been saying tontine my whole life. my dad always called it a ton-tine . as in the tine of a trident. thanks for correcting me.
My son has a fair amount of premium bonds for a 6 yr old, every time we think of switching to an Isa he gets a premium bond win. In the last 12 months hes won around £300, which is a around a 10% return on his holdings, me on the other hand, i have very little at 46 and havent won in years. as long as h'es winning I dont mind, its his future house deposit etc.
20k ISA. Max cash balance for the £1,000 tax-free interest. NS&I 50k balance. All tax-free. The best investments for tax reasons, in order.
Good place to park cash with instant access and no tax implications. Sometimes convenience is more important than scraping every last drop of interest.
Fascinating level of detail and so well presented. Excellent video. All the best Damien.
May I add the point that unlike normal investments, premium Bonds go towards reducing the UK government's deficit? So there is a common good resulting from output of purchasing a bond.
I don't think it reduces the deficit (hence the payouts), but you are helping to keep the government's debt at home.
Both good points.
I've won £125 over 2 years with just over 2 grand - much better than I'd get with any savings account. A good emergency fund. I tend to just stick £30 a month in and forget about it.