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News today is that Premium bonds reduce to an average of 0.15% and Income Bonds will drop from 1.15% to 0.01%.
Jeez, the last bastion of low risk Savings... gone.
Still, at least its good to have some savings in the first place, keep stuffing it away!
You'll need those savings for that loaf of bread in January 1st.
BBC article on it yesterday was interesting - tend to forget it is there to raise money for the government, rather than for our benefit. Just got a load of premium bonds for the daughter last month as well
Buy Tesla. IANAFA
IANAFA = i am not a F accountant ?
Most investments (ie, no risk, low reward things) like this only really tracked inflation, so I guess not too bad in and of itself. Had my first £25 win last month, which felt good, and I get a little bit of excitement before the draw.
I guess thats going to go away now.
Thats midly irritating, just bought some for the kids. Although not too perturbed by it. Will just keep topping them up till their both 18ish. Any prize money is just a bonus.
That is a pain in the hoop- I just set up an Income Bond account after just having a 0.1% TSB saver for years. I'll actually be worse off now! I'd deliberately chosen it over the Direct Income one as well.
I will probably do what I should have done in the first place- put it in an ethical savings account and live with the marginally lower interest.
Not sure where you've got your rates from. NS&I site says that from December Premium Bonds will be 1% interest / prize rate. Where've you got 0.15%?
Other than the junior ISA NS&I are now, effectively, paying zero interest.
0.01% on £100 is 1p.
This BBC link?
https://www.bbc.com/news/business-54232018
Horses mouth:
https://www.nsandi.com/interest-rates
NS&I haven't updated their site yet, its not applicable until November.
I'd just transferred to Income Bond grrr
Buy Tesla.
Or Scottish Mortgage Trust, done extremely well out of them and Tesla over the last few years....
I can see negative interest rates coming in within a year at the current rate.....
NS&I have updated.
Nowhere does the BBC article say 0.1% for premium bonds and that is confirmed on the NS&I site. It's down to 1%.
Which is bad, but still not as bad as a lot of stuff.
I'd just set up an NS&I direct saver, so that will be being pulled out again :-/
Yes it's bad compared with some fixed term ISAs but better than most (all?) easy access accounts.
...and you have the chance to win big still.
Nowhere does the BBC article say 0.1% for premium bonds and that is confirmed on the NS&I site. It’s down to 1%.
I read it on Sky early this morning, its since been corrected.
I can see negative interest rates coming in within a year at the current rate…..
There were several news articles stating the BOE were already discussing this.
Not a Financial Advisor. Was about to invest for a year some money I'll need in 12 months. This was the recommended place to do so.
Yes it’s bad compared with some fixed term ISAs but better than most (all?) easy access accounts.
Depends. Because the interest rate on Premium Bonds is calculated taking into account the £1m & 9*£50k prizes each month (etc), if you don't win one of those your own effective rate of interest is likely to be considerably lower.
I've also just bought some premium bonds for the first time, next month will be my first draw. Great timing!
Depends. Because the interest rate on Premium Bonds is calculated taking into account the £1m & 9*£50k prizes each month (etc), if you don’t win one of those your own effective rate of interest is likely to be considerably lower.
According to this page 90% of the prize fund is used for prizes of £100 or lower, so assuming that stays the same from December, and assuming that my maths is right, even if you ignore the prizes from £500 up it'll be a 0.9% effective rate. Still lots of randomness involved of course though!
Because the interest rate on Premium Bonds is calculated taking into account the £1m & 9*£50k prizes each month (etc), if you don’t win one of those your own effective rate of interest is likely to be considerably lower.
For Premium Bonds I calculate an assumed interest rate based on only ever winning a £25 prize. So, my assumed interest rate on the current odds of 1:24,500 is as follows:
1 / 24,500 [odds of winning] * 25 [prize] * 12 [12 draws in a year] * 100 [to convert to a percentage] = 1.22% [claimed interest rate is 1.4%]
My assumed interest rate with the new odds of 1:34,500 is:
1 / 34,500 [odds of winning] * 25 [prize] * 12 [12 draws in a year] * 100 [to convert to a percentage] = 0.87% [claimed interest rate is 1.0%]
According to this page 90% of the prize fund is used for prizes of £100 or lower, so assuming that stays the same from December, and assuming that my maths is right, even if you ignore the prizes from £500 up it’ll be a 0.9% effective rate. Still lots of randomness involved of course though!
Good knowledge, thanks.
The link above has now updated with a statement partly implying blame on Martin "Best Buy"Lewis....
So where do we stick our deposit account money now?? I'd only opened a direct saver earlier in the year when RCI Bank dropped their rate to .57%... So I know I need to move my Direct Saver in November now that's dropping to bugger all too but I don't know where to put it. Any ideas?
@TiRed it still protects an unlimited balance of >£84k if thats a requirement.
With Edd's calculation, does this effectively mean moving everything from Income Bonds and ISA's into Premium Bonds is an effective strategy?
– you may eventually discover, once the novelty has worn off, that you only really fire it up twice a week
Was an interview with Martin Lewis in the Sunday Times this WE, seems a genuinely nice bloke, almost too nice for his own mental health (spend his time crying over other people missfortunes).
Just shoved the proceeds of my house sale into income bonds to tide it over whilst our new house was built - was hopeful that it would pay the monthly rent - not anymore it won't! Notwithstanding the £84k deposit protection - the ball-ache of trying to open multiple new accounts / proof of identity / money laundering regs from a remote location in Scotland isn't worth the hassle of being a "rate tart"
Yep, shoved a bit into income bonds less than a month ago. Guess I'll move that on again now.
Was an interview with Martin Lewis in the Sunday Times this WE, seems a genuinely nice bloke
He was on Desert Island Discs recently and gave the same good impression. Definitely some questionable music choices though 😉