Keeping hold of your premium bonds?

It’s hard to know where to save your money at the moment as rates are so poor and even investing in premium bonds with the chance of a big win is no longer worth it.  It used to feel like a way to save tax-free and support the country’s finances in 100pc safety but as the rate is cut again to a paltry 1.25pc the 21 million people with over £60 billion saved should maybe cash in.

The rate of return of course only describes the mean average return, indicating that for every £100 paid in to bonds, on average £1.25 a year is be paid out but not to everyone. With £1,000 saved you’ve a less than 1 in 3 chance they’ll beat a 1.45pc savings account, even with £50,000 in it’s at best 1 in 6. Alongside the falling rate the other factors that used to appeal are no longer quite so special. Since 6th April when the new personal savings allowance (PSA) launched all savings interest is automatically paid tax-free so the premium bonds tax advantage has gone. Also the unique safe haven Premium bonds have enjoyed as they were operated by NS&I and Treasury-owned keeping capital as safe as it gets has changed.  These days all UK regulated savings accounts are protected up to £75,000 per person, per institution, by the Financial Services Compensation Scheme and the maximum you can put in premium bonds is £50,000.

Premium Bonds are certainly not as good as they used to be, but ultimately it’s only worth re-allocating your cash if there’s something better out there.  If you want to try and find the best place to save your money Enable’s IFA’s can help look at the options.

Source: Money Saving Expert

Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Lucky Leister

Enables’ IFA's in Bishop's Stortford know that savers are still having trouble working out how to get any kind of return on near cash holdings. But maybe you could do worse than premium bonds. The January Premium bonds draw made history this year as for the first time there were two £1m Premium Bond jackpots won in the same city and the prize went to one man and one woman.

National Savings & Investments, which operates Premium Bonds, confirmed that are also the first residents of Leicester to become Premium Bond millionaires. NS&I said it had not even had winners from the same county before, let alone the same city or town. Nationwide there are around 900,000 unclaimed prizes says NS&I with a total value of over £40m, including dozens of £10,000 plus prizes so if you haven’t checked your bonds recently maybe you should.

Harold Maxmillan launched premium bonds in the 1956 budget they are a Government-backed savings institution, there is no guaranteed return and the bond's value does not go up with inflation, so you effectively buy into a lottery with a prize draw held every month.

But money invested in the bonds is 100pc protected by the Government, to a maximum investment of £50,000.  They advertise a “rate” of 1.35pc, which is what an individual with “average” luck can expect to receive in prizes over the course of a year. The odds of winning for each £1 bond number are 26,000 to one, and any prizes are exempt from both UK income tax and capital gains tax.

Some current accounts, Isas, fixed rate bonds and other products offer comparable rates at the moment but if you have cash to spare Enables’ IFAs can help you work out how to spread it around.

Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Source: The Telegraph