carl0s Posted July 17, 2008 Share Posted July 17, 2008 If I had £10k to do something with, rather than it just sitting in a business account, I'm not sure what to do. A good savings account might give ~5% after tax, and the ISAs aren't much different after the initial incentives have gone away, and allowing for the fact that you need to have a current account before some banks will give you their super ISAs. So I just looked into premium bonds, and the idea sounded nice, 'til I read the moneysavingexpert writeup. Ouch. So here's my idea. Stick £10k in a savings account and use the £500-ish interest to buy 500 lottery lines a year. What do you think? Good idea? Quote Link to comment Share on other sites More sharing options...
tooquicktostop Posted July 17, 2008 Share Posted July 17, 2008 No Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 Should I just aim to keep the £500 for the first year, and the £525 or whatever for the next year and just do that? It just seems like such a small return for what feels like a lot of money. Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 The idea is obviously miles better than premium bonds, but whether it's the best thing to do with the money overall is where I'm stuck. Quote Link to comment Share on other sites More sharing options...
Rayman Posted July 17, 2008 Share Posted July 17, 2008 What about investing it at zopa? And i wudnt do the lottery thing, waste of time. Quote Link to comment Share on other sites More sharing options...
tooquicktostop Posted July 17, 2008 Share Posted July 17, 2008 Use it to pay off any debt or mortgage if you have any, the saving you will make on interest payments over the same year on that debt will be far greater than any interest you will earn in an ISA Quote Link to comment Share on other sites More sharing options...
Jake Posted July 17, 2008 Share Posted July 17, 2008 looked into premium bonds, and the idea sounded nice, 'til I read the moneysavingexpert writeup. Ouch. Ouch? Give me the gist Carl? I'm at work, can't do too much searching about. Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 Ouch? Give me the gist Carl? I'm at work, can't do too much searching about. Well, he has had a very statistical person do a probability calculator, which is nice, but basically the crux of it is that your chances of doing better than even an average savings account are very slim. The odds are incredibly poor, and statistically you're not likely to do well at all. http://www.moneysavingexpert.com/savings/premium-bonds Quote Link to comment Share on other sites More sharing options...
Gaz6002 Posted July 17, 2008 Share Posted July 17, 2008 Well, he has had a very statistical person do a probability calculator, which is nice, but basically the crux of it is that your chances of doing better than even an average savings account are very slim. The odds are incredibly poor, and statistically you're not likely to do well at all. http://www.moneysavingexpert.com/savings/premium-bonds I'm sure there was a thread on here not long ago where people were talking about massive gains by buying premium bonds... maybe they were lucky. Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 Use it to pay off any debt or mortgage if you have any, the saving you will make on interest payments over the same year on that debt will be far greater than any interest you will earn in an ISA I've already done that, have no debt now. I don't have a mortgage.. this 'fund' might eventually help buy a house. Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 What about investing it at zopa? Will look at Zopa later. Think the missus is feeling neglected I wouldn't want to invest in anything remotely risky, and that includes banks that aren't backed/insured/whatever for losses in case of bankruptcy. Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 Well, he has had a very statistical person do a probability calculator, which is nice, but basically the crux of it is that your chances of doing better than even an average savings account are very slim. The odds are incredibly poor, and statistically you're not likely to do well at all. http://www.moneysavingexpert.com/savings/premium-bonds Although it did say that my chance of winning a million was 1 in 152,000, if I had 10,000 bonds. I didn't think that sounded too bad really. But what would my chance of winning the National Lottery be if I had 500 tries, e.g. the interest from £10,000 invested into the National Lottery. Quote Link to comment Share on other sites More sharing options...
Rayman Posted July 17, 2008 Share Posted July 17, 2008 I think its 60/1 to win any prize in the lottery so it really is awful odds, youre better off in the premium bonds. edit 54/1 Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 I think its 60/1 to win any prize in the lottery so it really is awful odds, youre better off in the premium bonds. edit 54/1 For a £100 premium bond investment (minimum allowed), over 1 year, here are your odds. Bearing in mind the national lottery's smallest payout is £10, I think that means for a fair comparison we would need to compare the odds of getting a £1000 payout from premium bonds (from your 100 bonds), which is: 1 in 12,766 Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 17, 2008 Author Share Posted July 17, 2008 Actually that's not true, because your £100 isn't actually 'spent'. All that's spent is the interest that you would have gained, which is £6 from an ISA. Hmmm. Needs more thought. Quote Link to comment Share on other sites More sharing options...
buster Posted July 17, 2008 Share Posted July 17, 2008 spend it on me:D i always need money Quote Link to comment Share on other sites More sharing options...
MarkR Posted July 17, 2008 Share Posted July 17, 2008 I've just done something with my 11k I had lying around. I put £5000 in a halifax guaranteed saver that gives 6.25% if you leave it there for a year. If you drop below £5000 or make more than 1 withdrawl you drop to 5% or there abouts. This may sound like nothing but there's method in my madness. Halifax also have a regular saver account. You can deposit £25-£500 a month for a year and get 10%, however if you have £5000 in the guaranteed saver you get 12%. The remaining £6000 is in icesave in a high interest account being drip fed at 500/month into the regular saver, totalling 11k plus the interest from all. I also have an ISA, but I worked it out and it earns me more interest in a year than my ISA will (thanks to the 12%) Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 18, 2008 Author Share Posted July 18, 2008 I've just done something with my 11k I had lying around. I put £5000 in a halifax guaranteed saver that gives 6.25% if you leave it there for a year. If you drop below £5000 or make more than 1 withdrawl you drop to 5% or there abouts. This may sound like nothing but there's method in my madness. Halifax also have a regular saver account. You can deposit £25-£500 a month for a year and get 10%, however if you have £5000 in the guaranteed saver you get 12%. The remaining £6000 is in icesave in a high interest account being drip fed at 500/month into the regular saver, totalling 11k plus the interest from all. I also have an ISA, but I worked it out and it earns me more interest in a year than my ISA will (thanks to the 12%) How would you calculate the actual interest on that drip-feed then? As it's 12% for the year, but the capital starts off at 1/12th of what it'll be in the 12th month, and increases by a 12th of the final total each time. Do they effectively give 1% interest each month? You're not going to get 12% interest on £6000 are you, 'cause that's annual interest, and the only money that's actually been in there for a whole year is £500. Quote Link to comment Share on other sites More sharing options...
AlanM Posted July 18, 2008 Share Posted July 18, 2008 I am drip feeding one of themas well. The easiest way to work it out is to use the financial functions in Excel, I forget which one it is offhand Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 18, 2008 Author Share Posted July 18, 2008 I am drip feeding one of themas well. The easiest way to work it out is to use the financial functions in Excel, I forget which one it is offhand I have OpenOffice Calc, I'm sure that will do the same thing. I'm not allowed to have Excel because it's a bad thing apparently Quote Link to comment Share on other sites More sharing options...
marbleapple Posted July 18, 2008 Share Posted July 18, 2008 In relation to premium bonds, I read some where that the less you invest the less likely you are to win. I.e. he probability of winning is much greater if you buy a large 'chunk' in one go. I can't wwhy myself but that is what I read. Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 18, 2008 Author Share Posted July 18, 2008 In relation to premium bonds, I read some where that the less you invest the less likely you are to win. I.e. he probability of winning is much greater if you buy a large 'chunk' in one go. I can't wwhy myself but that is what I read. Well, that's expected, although it makes no difference if you buy a large chunk in one go, or buy that chunk bit-by-bit over a period of time. When it comes to the draw, the more bonds you have the better your chances. Each bond (costing £1 each), is like a a line on the lottery (although it's just a single number). So if you 'invest' £10,000 then you have 10,000 numbers, so when they draw the numbers, the chance of you having one of the drawn numbers is obviously higher than if you only had 1 number. Quote Link to comment Share on other sites More sharing options...
MarkR Posted July 18, 2008 Share Posted July 18, 2008 How would you calculate the actual interest on that drip-feed then? As it's 12% for the year, but the capital starts off at 1/12th of what it'll be in the 12th month, and increases by a 12th of the final total each time. Do they effectively give 1% interest each month? You're not going to get 12% interest on £6000 are you, 'cause that's annual interest, and the only money that's actually been in there for a whole year is £500. I used a calculator on one of the money saving forums. You enter the interest rate, and how much you put in each month as well as the tax bracket you're in... Quote Link to comment Share on other sites More sharing options...
colsoop Posted July 18, 2008 Share Posted July 18, 2008 you don't mention how much risk you are willing to take on ? Quote Link to comment Share on other sites More sharing options...
carl0s Posted July 18, 2008 Author Share Posted July 18, 2008 I used a calculator on one of the money saving forums. You enter the interest rate, and how much you put in each month as well as the tax bracket you're in... Thanks, I just used one of them "After 1 year you would have: £6,383.25" So it works out to be about 6.38%, but that's on top of the interest that Icesave give you. Depending on what that is, this might be an interesting idea. How do you calculate the interest that Icesave will give you, bearing in mind there's actually zero money in there for a whole year, as it starts off at £6000 and decreases by £500 a month. ? Quote Link to comment Share on other sites More sharing options...
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