Around the time I was born in 1971 I was given £7 in premium bonds, each bond £1 in value.
None of those 7 bonds has ever one a prize ... until now!
One came in with a £25 win. So I thought I'd see just how lucky I've been.
Currently, the minimum purchase of premium bonds is £100 (ie 100 units, they are still a £ each)
Since October 2009, the odds per £1 unit winning any prize has been 24,000 to 1
If you have 'average luck' the rate of return should equal 1.50%. All prizes are tax-free
So what is my £1 from 1971 worth? Well, I have data available till 2010. In 2010, £1.00 from 1971 is worth
£11.00 using the retail price index or £19.60 using average earnings
So my £25 looks good value, but of course the other £6 of bonds have never won, so I am about level.
An alternative way of looking at it, without getting complicated or worrying about inflation , is just to divide the £25 return by the number of years held (call it 40) and that gives 0.625% on average (again, forget compounding!) a year.
So on that score, I'm about 2.5x less lucky than average.
Fingers crossed for the £million prize next month then...
Showing posts with label premium bonds. Show all posts
Showing posts with label premium bonds. Show all posts
Wednesday, 5 September 2012
Friday, 22 October 2010
Dear Diary, Friday
Friday 15th
A trip to the gym first thing makes it three times in one week – first time for a while, so start the day and end the week feeling good about that.
A round of client telephone calls this morning. The first is to obtain further details from a client who had provided basic info but not really enough for me to do my job. I do understand that for a client one of the hardest parts (and possibly boring parts) of financial planning is providing all the data.
However it is imperative that I do have everything to hand so that I can provide the best possible advice. The devil is in the detail as is often said. I am also fond of saying ‘you don’t know what you don’t know’ and this is very true in financial planning. It is easy for the law of unintended consequences to come into play with an element not thought important to a client ending up having, say, tax implications on other planning carried out.
Have an interesting conversation regarding premium bonds. I used to be a giant fan of premium bonds but nowadays the overall returns are down , the odds are of winning a prize are lower, the odds of winning a big prize are lower, as always the value purchased doesn’t keep pace with inflation… There are so many reasons NOT to have premium bonds these days but there is also something to be said for the thrill of receiving a winning cheque, even if only £50! And of course someone somewhere is winning a million. But unfortunately, fun aside, I don’t recommend premium bonds for pure financial reasons these days. It is a shame that National Savings have pulled so many of their products. In just a few short years since the banks needed propping up and savers needed to be given guarantees in once private institutions (a la Northern Rock) National Savings has gone from a wonderful institution to a shadow of its former offering.
Round off the morning with a rare (for me) business lunch with a client who works in a private members club. The food, as ever, is exquisite. I opt for the fish, aiming to be healthy but must admit to pangs of envy as my companion’s chunky chips are delivered to the table!
From here to the school run and straight off to watch my son play 5-a-side.
I hope you have enjoyed this week’s diary with a little insight as to what I do, who I do it with and where I do it.
As can be read over the last 5 blog posts, the life of an IFA (or me, at any rate) will not be making it into the pages of ‘Hello’ magazine anytime soon but I also hope you have read that I practise what I preach in that it is not all work, work, work and that a balance is needed. Being a financial planner is all very well and I love the financial, tax, insurance and investment work I do – when I am at work I work hard - but I also encourage clients to spend it where necessary, to enjoy life, to take time with their family and have their money work for them sometimes rather than always working for the money.
A trip to the gym first thing makes it three times in one week – first time for a while, so start the day and end the week feeling good about that.
A round of client telephone calls this morning. The first is to obtain further details from a client who had provided basic info but not really enough for me to do my job. I do understand that for a client one of the hardest parts (and possibly boring parts) of financial planning is providing all the data.
However it is imperative that I do have everything to hand so that I can provide the best possible advice. The devil is in the detail as is often said. I am also fond of saying ‘you don’t know what you don’t know’ and this is very true in financial planning. It is easy for the law of unintended consequences to come into play with an element not thought important to a client ending up having, say, tax implications on other planning carried out.
Have an interesting conversation regarding premium bonds. I used to be a giant fan of premium bonds but nowadays the overall returns are down , the odds are of winning a prize are lower, the odds of winning a big prize are lower, as always the value purchased doesn’t keep pace with inflation… There are so many reasons NOT to have premium bonds these days but there is also something to be said for the thrill of receiving a winning cheque, even if only £50! And of course someone somewhere is winning a million. But unfortunately, fun aside, I don’t recommend premium bonds for pure financial reasons these days. It is a shame that National Savings have pulled so many of their products. In just a few short years since the banks needed propping up and savers needed to be given guarantees in once private institutions (a la Northern Rock) National Savings has gone from a wonderful institution to a shadow of its former offering.
Round off the morning with a rare (for me) business lunch with a client who works in a private members club. The food, as ever, is exquisite. I opt for the fish, aiming to be healthy but must admit to pangs of envy as my companion’s chunky chips are delivered to the table!
From here to the school run and straight off to watch my son play 5-a-side.
I hope you have enjoyed this week’s diary with a little insight as to what I do, who I do it with and where I do it.
As can be read over the last 5 blog posts, the life of an IFA (or me, at any rate) will not be making it into the pages of ‘Hello’ magazine anytime soon but I also hope you have read that I practise what I preach in that it is not all work, work, work and that a balance is needed. Being a financial planner is all very well and I love the financial, tax, insurance and investment work I do – when I am at work I work hard - but I also encourage clients to spend it where necessary, to enjoy life, to take time with their family and have their money work for them sometimes rather than always working for the money.
Subscribe to:
Posts (Atom)