Premium Bond Diary update - May 2005


J

John Smith

At the end of November 2003 I withdrew 30,000 from my Halifax account and
invested it in Premium Bonds. My aim being to see if I could get a better
'return' from the Bonds than from the interest I was receiving from the
Halifax.



Buying the Bonds in November meant that I was eligible for draws from
January 1st 2004.



Winnings so far:



2004



January 2004 1 x £50 cheque - put into the Halifax

February 2004 1 x £50 cheque - put into the Halifax

March 2004 3 x £50 cheques (£150) - put into the Nationwide

April 2004 1 x £50 cheque

May 2004 - NOTHING, NOT A JOT, L

June 2004 - NOTHING, NOT A JOT, L

July 2004 1 x £50 cheque - put into the Nationwide

August 2004 2 x £50 cheques (£100) - put into the Nationwide (Rude blonde
girl on counter)

September 2004 3 x £50 cheques (£150) - put into the Halifax

October 2004 1 x £50 cheque
November 2004 1 x £50 cheque
December 2004 3 x £50 cheque (£150)



So that is £850 for 12 months 'entry' in the Premium Bonds
but technically 13 months of the money not gaining interest in a building
society interest account.



2005



Jan 2005 £50

Feb 2005 £50

Mar 2005 £50 - not doing so good this year.

April 2005 - NOTHING, NOT A JOT L

May 2005 - NOTHING, NOT A JOT L



So, currently, I am doing half as good as I did last year at this time.
 
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C

curiosity

So that is £850 for 12 months 'entry' in the Premium Bonds
but technically 13 months of the money not gaining interest in a building
society interest account.
Bearing in mind this isn't insultingly lower than the after-tax £1200-odd ING
would have paid you, I wonder if you feel - and will continue to feel - it's
worth the shortfall to be in there with the chance of a biggy?
Is there any lower threshold beneath which you'd be persuaded to ditch the
bonds?
 
T

Tim

Actually, if you time the buying/selling correctly, then it is only *just*
over 12 months' interest lost (not 13) -- you could have bought on 30th
November 2003 and sold on 2nd December 2004, losing only 12 months and 2
days interest (plus a few days for money transfer) -- and still been in all
12 draws.

... this isn't insultingly lower than the after-tax
£1200-odd ING would have paid you ...
I assume you mean for a basic-rate taxpayer. A higher-rate taxpayer, of
course (and most people with £30K available to put into PBs will probably be
HRT payers?), would only get around £900-odd after tax.
 
C

curiosity

I assume you mean for a basic-rate taxpayer. A higher-rate taxpayer, of
course (and most people with £30K available to put into PBs will probably be
HRT payers?),
Perhaps - the only person I know who's bought bonds to the full quota pays tax
at the lower rate. Clearly, as you say, it's a better deal otherwise.
 
J

JF

X-No-Archive: yes
John Smith said:
At the end of November 2003 I withdrew 30,000 from my Halifax account and
invested it in Premium Bonds. My aim being to see if I could get a better
'return' from the Bonds than from the interest I was receiving from the
Halifax.
You can expect around a four per cent return. IIR, there was a treasury
raid on prize money about three years ago which knocked the return down
from around six per cent.
 
J

JF

curiosity said:
Bearing in mind this isn't insultingly lower than the after-tax £1200-odd ING
would have paid you, I wonder if you feel - and will continue to feel - it's
worth the shortfall to be in there with the chance of a biggy?
Is there any lower threshold beneath which you'd be persuaded to ditch the
bonds?
The GBP20K I put into ING Direct is paying GBP70 per month net, which is
about ten pounds one per cent more than when the money was in premium
bonds. The ING Direct account does lack that little frisson that those
brown envelopes used to inspire.
 
T

Tim

The GBP20K I put into ING Direct
is paying GBP70 per month net, ...
Net of what? I'll assume just the basic 20% tax, hence interest rate =
5.25% ...
[If net of high-rate, 40%, then interest would have had to be 7.0%.]

...which is about ten pounds one per cent more
than when the money was in premium bonds.
Aren't you a high-rate taxpayer, with all those "Premier" accounts? ;-)
If so, then you'd really only be getting £70 / 0.80 x 0.60 = £52.50 per
month (after high rate tax).
If £70 is only £10 more than "when the money was in premium bonds" (ie they
gave £60pm on average), then the premium bonds were actually doing better
than ING!
 
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B

Bruno

JF said:
X-No-Archive: yes


You can expect around a four per cent return. IIR, there was a treasury
raid on prize money about three years ago which knocked the return down
from around six per cent.
National Savings quote a return of 3.2% APR
bought 2 X £30k at the end of may so I will hanging around the letter box
come July
Had a few 2/ 3 years ago, we tended to get any winings around the mid of the
month.

I must say, in mine and others experinece I have noted that we seem to do
very well at first then things drop off after a while
A friend of mine cash's in once a year then buys back straight away so as
to shuffle then up a bit

I will post here my winnings ( fingers crossed )

Bruno
 
J

John Smith

Bruno said:
National Savings quote a return of 3.2% APR
bought 2 X £30k at the end of may so I will hanging around the letter box
come July
Had a few 2/ 3 years ago, we tended to get any winings around the mid of
the month.

I must say, in mine and others experinece I have noted that we seem to do
very well at first then things drop off after a while
A friend of mine cash's in once a year then buys back straight away so as
to shuffle then up a bit

I will post here my winnings ( fingers crossed )

Bruno
Yes, I have noticed that others I know who have bought recently are doing OK
to quite well so I think there is merit in selling up and rebuying. There
was a post on a financial forum a few years back from a lady in her 70s who
swore that this was why she won so often.
 
A

Alan

In message <_Looe.3621$8m5.1029@newsfe5-gui.ntli.net>, John Smith
Yes, I have noticed that others I know who have bought recently are doing OK
to quite well so I think there is merit in selling up and rebuying.
What is the logic behind this policy? As each bond has an equal chance
of winning any prize there is no reason to sell them. You would actually
lose out during the time between selling and when the newly purchased
bonds become eligible to be entered into the prize draw.

There
was a post on a financial forum a few years back from a lady in her 70s who
swore that this was why she won so often.
Perhaps she had the maximum number with a statistical likelihood of
winning a prize every month.
 
W

wolfetones

John said:
The logic would be that new buyers are duped into buying more of the
things.
Don't be silly. These are sold by National Savings backed by the high
integrity honest New Labour government and, erm, erm. Ok I get your point
..............
 
J

james

X-No-Archive: yes
Tim said:
The GBP20K I put into ING Direct
is paying GBP70 per month net, ...
Net of what? I'll assume just the basic 20% tax, hence interest rate =
5.25% ...
[If net of high-rate, 40%, then interest would have had to be 7.0%.]

...which is about ten pounds one per cent more
than when the money was in premium bonds.
Aren't you a high-rate taxpayer, with all those "Premier" accounts? ;-)
Yebbut I had no idea what HSBC's 'Premier' meant until someone on this
ng kindly explained it to me. I should've guessed that HSBC wouldn't
issue such impressively bound information packs without good reason.
If so, then you'd really only be getting £70 / 0.80 x 0.60 = £52.50 per
month (after high rate tax).
If £70 is only £10 more than "when the money was in premium bonds" (ie they
gave £60pm on average), then the premium bonds were actually doing better
than ING!
I'm sure you're right but I have a sharp as a ferret accountant who
produces imaginative research expenses and even includes 'Radio Times'
as a trade journal. At least I thought they were sharp until I saw an
alarming report in the local paper in which they were prosecuting a tax
miscreant on BEHALF OF THE INLAND REVENUE!

This induced an immediate fainting fit. I made a frantic phone call to
my accountants when I'd recovered my power of coherent speech and a
partner blandly assured me that the Inland Revenue were just another
client. 'Just another client?' I howled. 'They're the enemy!'. He
claimed that he and his partners were used to wearing several hats. Yeah
-- but the one I have to wear is riddled with IR bullet holes.
 
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F

fisherofsouls

My own PB experience goes as follows:
Mar 03 - Buy £6k worth
May 05 - Win £50
Oct 05 - Win £100
Jan 04 - Win £50
- - Return on 1st year of holding = 3.33% (grossed up: 5.56%), so not
too bad
Dec 04 - Win £100
Mar 05 - Win £50
- - Return on 2nd year of holding = 2.50% (grossed up: 4.17%), so
pretty poor

Maybe I should stick the money in my offset account instead !
 

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