Financial Advice needed

[Abyss]

Several years ago my mum recalled a story of my late dad buying £25 premium bonds in my name the year I was born. I never knew that I owned premium bonds and thought maybe I could have won a big prize many years ago and would have never known about it because I did not have the certificates. Spent some time enthusiastically tracking down the premium bonds updating all the contact and address details and then speaking to premium bond customer services about how many (and how much money I had accumulated in prizes) in the last 40 years. Drum roll please in the past 40 years I had won zero, zilch, narda in any prizes and the premium bonds customer services explained to me that it is not uncommon for small denominations of premiums bonds to never win any prizes regardless how long customers keep them for.

As the premium bonds were the 1st present my late dad gave me I keep them to this day but in hindsight I would have preferred he bought a single full sovereign. In 1978 £25 could have purchased sovereign worth in today's money £340 while the premium bonds worth £25 in 1978 and today still worth £25 42 years later......

[sixgun]

11 hours ago, Kman said:

Yeah I'm 99.9% sure they create bank reserves

Bank reserves aren't money

Some of this extra currency is entering the system, going onto the High Street. All these stimulus programmes - they are creating currency and putting it out. A few months back i heard something about the BoE creating currency which the Government paid bills with - there were no Gilts involved, it was 'unsterilised cash' and this is inflationary.

The next point is, more currency in the system, going onto the High Street is not necessarily a bad thing IF the economy is expanding. It is a necessary thing. The problem arises when currency is created and there isn't a similar increase in value in the economy. The result is there are more GBP, EUR, USD chasing the same amount of value - the result is usually inflation. During the scamdemic, economies have contracted significantly. There is less value in the economy but at the same time there is more currency entering circulation. This again can be inflationary, what is holding inflation back is the decline in money velocity (another sign of a sick economy).

The final point is why are the central banks hosing vast numbers of digits onto bank balance sheets? It is not b/c things are good. It is b/c things are very bad. Many banks are in a precarious situation. The current economic monetary system cannot afford for a big bank to collapse. There would be a crisis of confidence and the daisy chain of liabilities between High Street and central banks would take the house down. One big bank comes down, there is contagion - the liabilities of that bank brings another one down and it snowballs. The whole thing runs on confidence b/c there is nothing to back any of it up. It is a con trick but we know that - which is why we stack precious metal.

 

[MancunianStacker]

With regards to an emergency fund cash (guaranteed loss each year), Premium Bonds (guaranteed loss each year), instant access account or current account (guaranteed loss each year).

Anything else has capital risk or access restrictions attached. You really just don’t want to be selling PMs at a loss 1-6 months down the line because you have no cash for an emergency or unexpected bill.

DYOR and take your own financial advice.

[HighlandTiger]

34 minutes ago, Abyss said:

while the premium bonds worth £25 in 1978 and today still worth £25 42 years later......

£25 in 1978 is equivalent to £145 in 2020 taking into account inflation. So on inflation alone, you are £120 down. 

This shows just how bad PB are.  

[MancunianStacker]

2 minutes ago, HighlandTiger said:

£25 in 1978 is equivalent to £145 in 2020 taking into account inflation. So on inflation alone, you are £120 down. 

This shows just how bad PB are.  

If you buy a £25 bond on its own it’s very unlikely the computer will land in your “number”. Have 100 or 200 in a single block and you’ll do rather well like myself and my parents. We averaged 1.5% last year.

My Diploma Qualified F.A colleagues always use PBs for our client’s emergency funds (no commission in it for them) but I’m sure an unqualified bloke off the TV is correct.

I will consolidate my purchases into bigger blocks over the years, to create more chances of a win.

[Roy]

Well, not quite HT.

If you put £25 in a current account in 1978 then yes, but with PBs there is always a chance of a prize.

I take it y' nae a gambling man?

[JunkBond]

My PB return for the six months I have held them is 2% which is fine for my spare cash (emergency fund), also it's a bit of fun looking forward to the beginning of the month.

 

 

[HighlandTiger]

Just now, Roy said:

Well, not quite HT.

If you put £25 in a current account in 1978 then yes, but with PBs there is always a chance of a prize.

I take it y' nae a gambling man?

Being an ex-bookie, I think I've seen enough of the dangers of gambling  

3 minutes ago, MancunianStacker said:

My Diploma Qualified F.A colleagues always use PBs for our client’s emergency funds (no commission in it for them) but I’m sure an unqualified bloke off the TV is correct.

The "unqualified bloke" that has lobbied to the government on behalf of joe public and made more changes to UK law on finance than any person in history,  

PS, "Diploma Qualified FA colleagues" are not experts on statistics.  Neither is Martin Lewis, so he got someone who was, a post-doctoral cosmology statistician (someone who calculates star movements) who had the requisite probability skills, and created an algorithm to build a Premium Bonds Calculator.

Statistics when talking about probability are hard for the average person to get their heads around. I have an, A level in Maths and Statistics, and I had problems myself in understanding probability at the time. However over time, and especially working as a bookie, I managed to get my head around it.

But like everyone says, DYOR

 

[HighlandTiger]

13 minutes ago, Roy said:

Well, not quite HT.

If you put £25 in a current account in 1978 then yes, but with PBs there is always a chance of a prize.

I take it y' nae a gambling man?

No, what I quoted was how much £25 in 1978 is worth today. Nothing to do with current account interest. 

[Roy]

2 minutes ago, HighlandTiger said:

No, what I quoted was how much £25 in 1978 is worth today. Nothing to do with current account interest. 

Fair point. Actually, interest rates weren't bad in '78 so perhaps it did increase, to be decimated through inflation later.

[Kman]

My view on investing is that if you have spare time/money the world is full of opportunities, constant opportunity, there is definitely no lack of opportunity

What's lacking is the knowledge to identify and take advantage of them

I think it's very difficult to have a lump sum and say "ok go invest it right now and make money" - It's much easier to learn as much as you can and wait for the opportunities to present themselves

What are the chances of a major mint releasing a coin in the next year or two that will achieve a massive premium? it's nailed on,100% that will happen we just don't know when or what yet (maybe next great engravers series depending on mintage)

Same with stocks, other collectibles, everything and anything 

[Pete]

3 hours ago, HighlandTiger said:

For anyone who believes Premium Bonds are good, It's worth listening to Martin Lewis of Money Saving Expert. I first heard this thoughts on this a few weeks back on Radio 2 and he put this article up as well. It certainly opened my eyes. I personally wouldn't ever bother with bother with PB after reading this.

But as usual DYOR. 

https://www.moneysavingexpert.com/savings/premium-bonds/

As for Martin Lewis - a group of 14 of us endured a very long flight delay from France. A couple of us claimed compensation using company A and others using company B with one person adamant to follow the advice provided by Lewis. We all received full compensation except the person who stuck to the Lewis method. After 6 months this person gave up and claimed using one of our methods. I need to read the article on PBS but my experience over the past 20 years has been good.

[Roy]

13 minutes ago, Kman said:

My view on investing is that if you have spare time/money the world is full of opportunities, constant opportunity, there is definitely no lack of opportunity

Absolutely.

But when just about everything is at an all time high, you may be rewarded most for your patience.

[silenceissilver]

10 hours ago, Roy said:

Exactly.

Oops! Of course, £5500 is 6 months of living expenditure!

OMG, it sounded like such a lot of money at first but without an income, you'll burn through that very quickly. Thinking back, I was getting through £1000 a month 30 years ago 😬

Unless you own your property, surely you'd need £1000 a month for living expenses? (Please advise, non-uk resident.)

I have no clue what most people's spending per month in the UK is. It's certainly possible to get through with 1000 Pounds a month under the right circumstances (no rent, no kids, no mortgage etc). But let's assume 5.5K£ cover 6 months of the questioner's living expenses. Even then it would mean he'd have 100% in cash. I don't think that would be a good idea. Rather than the advice to have 6 to 12 months emergency cash it probably should be a formula along these lines: It should be 6 to 24 months (at the very maximum) BUT it should also not exceed x percentage of your total savings but also that only once a certain treshold is achieved (of let's say 1000£). If we start at 1000 Pounds in total savings, it should be ALL just emergency cash but as the total savings increase to 5000 the cash emergency fund should not increase or very little. After £5000, new long term savings/emergency cash should increase at a proportion of ca 75/25 till you have 6 to 24 months emergency cash (thus long term savings of 18 to 72 months of long term savings) plus, after that, 100% should go into long term savings, every month, unless you have short term saving goals outside of long term savings and an emergency cash fund.  Also, rather than having a sharp cut between 75 and 100%, it should rather be a slowly rising curve.

In reality, the concrete figures in my example of course need to be replaced with variables, depending on your income and your spendings. The figures in the example certainly don't reflect a very high income.

That's all quite complicated, no one in real live follows that all through, exactly, but I think many instinctively do so, roughly

[Paul]

This same question gets asked every so often, why it is folk never seem to suggest to invest in "YOURSELF " 

and is always the best answer in my opinion

* Get that next skill, take that next course, a more skillful YOU makes YOU stand out from the crowd & be more more valuable to other employers

* Invest in a gym membership or personal trainer to improve YOUR health.  If you are able to live & work an extra x10+ years due to better lifestyle will earn you £100,000s+

* Invest in YOURSELF learning how to cook. learn batch cooking. learn how to cook great food for less.  learn how to cook the food that is good for you. your family & extended social circle will thank you for it. learn to not have to rely on fast food or processed food 

* Invest in YOURSELF with private health tests and food allergy tests to check you are not deficient or lacking or you are not eating stuff that is bad for you or affecting your day to day function/performance. Invest in water purification for your home, cleaner water with the extra oogly-booglies removed your body will thank YOU for it every day

* Invest YOUR time better, listening to audiobooks instead of watching football or soaps

* Invest in yourself every day with meditation and positive direction & choices = FREE but how many folk do it

* Invest in a pack of "post it notes" to say what you want from the day, week, month and where you want top be.  Visual affirmations daily make them far more likely to happen/succeed 

* Invest in YOUR business - Purchase the better camera to take better shots, Get the higher PSI pressure washer for your business, to do dirtier jobs easier and faster, invest in learning niche marketing or FB ads

* Invest in marketing YOURSELF further with a bigger social network on LinkedIn. Improve YOUR social circle. Your life will resemble the folk YOU are closest to. Investing your time with losers will result in loser results

* Invest in improving YOUR house to lower utility bills & costs, invest in a ultra efficient boiler to lower your energy costs

* Invest in DOING rather than saying, the path to success is not a straight road and it is the mistakes you make along that road that make you succeed when you choose to learn from them 

* Invest in the highest speed internet so YOU can do YOUR job faster

* Invest in YOUSELF by becoming a "people pleaser", don't be a money ££ chaser leach.  Seek greatness/ By being a people pleaser, solving peoples needs & problems, make it faster/easier/tastier/smaller/better/nicer/softer/cheaper/shinier than your competitor(s).  By being a "people pleaser", money will naturally gravitate to you & happily THROW money at you by simply solving peoples needs better than the next

Note every suggestion has YOU in the the content.

No-one is doing this for YOU - YOU are doing it for YOU 

Investing £5,000 in yourself and self-betterment, will brings dividends many multiples of value far higher than having it sat in a 0.00001% bank, in premium bonds or a useless yellow metal  

 

 

[Pete]

Having now watched Martin Lewis's broadcast i can only say it is load of SH!T.
His argument is totally flawed and ignores the probability of winning prizes.
There is a lottery of winning big but you keep your stake to repeat a month later.
I maintain a record of every win and work out average APR gains and it is much higher than 1%.
I also recently won a £25 prize and a month later one of these numbers won a further £25.
Several other £25 blocks have over the past few years also won a prize.
Lewis says that this is essentially impossible so once again he is full of BS.

 

[Coolsmp]

I once had over 60k in premium bonds for about a year. Won a total of £275 in that time. Needless to say i didn't keep it there after that shifted it to property.

[Paul]

(x2) - £25 prizes today from my NS&i premium bond account on a modest holding of less than £5k  

So prizes are possible to the little guy !

I use it as my instant access rainy day/emergencies fund and move over a small amount over to buy new bonds each week, via standing order so its always done &  just to let it build.

Anything needs done with a three figure £££ plus price tag, car, house, teeth, or similar. Pay it on credit card to get the points and then pay off with money withdrawn from premium bonds. 

that's £75 in interest/prizes in the past year on less than five grand, i wouldn't have got that in a banks savings account.

Might have got nowt to, but that's the luck you take, as @Petesays its like have free entry to the lottery each month without the entry fee    

[HighlandTiger]

8 hours ago, Paul said:

that's £75 in interest/prizes in the past year on less than five grand, i wouldn't have got that in a banks savings account.

Might have got nowt to, but that's the luck you take, as @Petesays its like have free entry to the lottery each month without the entry fee    

 

£75 on £5000 is 1.5% interest, which isn't great, but like you said, it's better than any current savings account.

[HillWalkerDundee]

It is not unheard off for certain business owners to take out a Business Bounce Back Loan and put the money into premium bonds, keep the winnings and repay the zero interest loan at the end of the term.

[Pete]

4 hours ago, HillWalkerDundee said:

It is not unheard off for certain business owners to take out a Business Bounce Back Loan and put the money into premium bonds, keep the winnings and repay the zero interest loan at the end of the term.

Student Loan maybe ??

[Coolsmp]

You do actually have to enrol as a student and pay a large part of the loan to the University so you dont see this money, the Uni does.

[Coolsmp]

On 28/12/2020 at 15:29, Hunter87 said:

I have no interest in stocks and shares as I see it as basically gambling and I am not prepared to loose it. 

Stocks and shares isn't gambling. Its investing into companies to be a part owner. If the company is run well your investment grows and you may also receive dividends but just like gold things go up and things go down but it isnt gambling its probably that you don't really understand it. (Im not trying to be critical of you though)

[Hunter87]

On 07/01/2021 at 08:08, Coolsmp said:

Stocks and shares isn't gambling. Its investing into companies to be a part owner. If the company is run well your investment grows and you may also receive dividends but just like gold things go up and things go down but it isnt gambling its probably that you don't really understand it. (Im not trying to be critical of you though)

 

On 07/01/2021 at 08:08, Coolsmp said:

Stocks and shares isn't gambling. Its investing into companies to be a part owner. If the company is run well your investment grows and you may also receive dividends but just like gold things go up and things go down but it isnt gambling its probably that you don't really understand it. (Im not trying to be critical of you though)

Perhaps your right either way it’s not for me.

[Mrbusiness]

Good question, just keep it in the bank unless you find a smashing good deal,  if I were you I’d start a business. Learn everything there is to know about business and owner occupancy. Once your company starts to turn a profit reinvest the profits in your business. After you are comfortable and have a team that you can trust, invest small portions of the profits into investments you think are fun, interesting and have a good understanding of.  They also need to aid your business to grow its revenues, so keep that in mind. Investing/metals etc is more about capital preservation not getting rich. A business with competitive edge can get your rich quick. 5k is a nice hotel room for the night. Don’t kid yourself into thinking it’s going to matter very much what you do with it until you figure out the above. Acquire financial freedom and passive income above all else first and foremost. Good luck.