Premium bond prize money cut.

[Venger]

9 hours ago, Phil321 said:

...Also as a HRT whose Personal Saving Allowance is well used up....the fact P Bonds are tax free...it was a non brainer. At 1% it still is. 

Why not more bonds and shares? Because my dirty little BTL mortgages (which I pay around 1.7%, but collect the yummy 40% tax relief) remain outstanding and the cash is contra to that. So as S24 kicks in then my mortgages will be repaid. Probably why I advocate S24 so much....tax relief on debt skewers behaviours, even mine.

Mine too, with my SIPP during last few years.   BTLers who have doubled down into big debt and tax relief are on their own, although you get a pass from me for being honest, aware and coming to terms with a lot of the damage behind BTL housing financialisation - with a balanced position and recognising reality (S24 etc and acting against that change of reality), compared to so many other BTLers. 

ERNIE was a landmark building on our car-trips on the motorway to Blackpool to stay with relatives.  'There's ERNIE' a parent would say, and squinted to see this large building in distance and wonder if parent was actually right about it being that building.  Meant we we close.  'ERNIE give me a win on my £100 holding on gift .'   Never did.   Gave up mysticism at 18, when cashed those bonds in.  Best to construct reality and work for success, than be a lazy wisher, although of course a holding is a bit of fun too and may make sense for some with lot of savings to place around, including when HRT, as you explain.   Still I did invest again, but only one £25 win around 2014 on a premium bond holding of around £250 held for 10 years.  I gather they've moved elsewhere in Blackpool, and the old ERNIE site is marked for housing development.

[Venger]

1 hour ago, Democorruptcy said:

 A lot of that also applies to other NS&I products like Income Bonds or Direct Saver that aren't limited to £50k.

Though of course their rates are also dropping soon to 0.75% from 1% and 0.80% to 0.70%

https://www.nsandi.com/our-products

At least it's the same for everyone with these low-saving rates.

Driven more speculation along the way, into higher risk and higher-yield.

See who has any money when the market turns.

[Sour Mash]

2 hours ago, Democorruptcy said:

 A lot of that also applies to other NS&I products like Income Bonds or Direct Saver that aren't limited to £50k.

Though of course their rates are also dropping soon to 0.75% from 1% and 0.80% to 0.70%

https://www.nsandi.com/our-products

Sure - all their bond products are much of a muchness.  The only difference is the expected yield (which is now next to nothing, anyway), whether or not you pay tax on the proceeds and the min/max that you can put in.

But in general, the benefit (for any NS&I bonds) is that you are holding your 'cash' outside the banking system and theoretically, at zero risk.  It's a 'safe'  place to park a cash amount which you might need quick access to.

 

I guess you could try to hold tens of thousands in physical cash in a deposit box somewhere but the system has worked hard to make that as problematic for you as possible.  I'd go so far as to say that £50k in physical cash is damn near unusable as 'liquid' money with which to make large 'opportunity' purchases (say, equities or commodities).

 

[Democorruptcy]

1 hour ago, Sour Mash said:

Sure - all their bond products are much of a muchness.  The only difference is the expected yield (which is now next to nothing, anyway), whether or not you pay tax on the proceeds and the min/max that you can put in.

But in general, the benefit (for any NS&I bonds) is that you are holding your 'cash' outside the banking system and theoretically, at zero risk.  It's a 'safe'  place to park a cash amount which you might need quick access to.

 

I guess you could try to hold tens of thousands in physical cash in a deposit box somewhere but the system has worked hard to make that as problematic for you as possible.  I'd go so far as to say that £50k in physical cash is damn near unusable as 'liquid' money with which to make large 'opportunity' purchases (say, equities or commodities).

 

That's a fair point when considering the difference between Premium Bonds and their other products. People only have the £1k tax allowance on interest income, so people with other taxable income might get an even more derisory net rate!

[winkie]

Savings must be a liability to promise to pay the bearer on demand....pay the minimum to gather interest and hope everyone doesn't want their money out at the same time.

[Digsby]

According to this article it represents a cut from 1.3% to 1.15%

http://www.telegraph.co.uk/personal-banking/savings/premium-bond-prize-cuts-may-2017-odds-winning/

It's my belief that you should hold as a minimum number of bonds an amount that on average gives you a prize every month (as confirmed by the article, about 30,000). Why? Compound interest, of course. I'd rather win £25 every month than £300 every 12. 

The difference is tiny obviously, but it's rational.

[winkie]

All the best savings accounts pay monthly.

[Digsby]

14 minutes ago, winkie said:

All the best savings accounts pay monthly.

Spot on 

[Democorruptcy]

3 hours ago, Venger said:

At least it's the same for everyone with these low-saving rates.

Driven more speculation along the way, into higher risk and higher-yield.

See who has any money when the market turns.

Driven? 

I thought it was all a market, for houses or investments and people just make their own choices. No conspiracy, forcing people to do things they don't want.

[Digsby]

You dare antagonise the veng-miester?

Edited February 8, 2017 by Digsby

[Venger]

44 minutes ago, Democorruptcy said:

Driven? 

I thought it was all a market, for houses or investments and people just make their own choices. No conspiracy, forcing people to do things they don't want.

Market conditions have seen some investors opt for higher risk investments with their capital, in search of higher returns.

Although many have enjoyed good rewards from their choices, in a huge expansion.

Self-driven.    Individual adult market participant choice.   High interest rates, tax-reliefs, all given incentives to people, but ultimately own choice.

SNAP is coming up.   Market choices.  Some see mad-gainz ahead, others are more cautious.  We all see the world slightly differently.   I don't think any market participant should get permission from HPC control, if they want to buy. 

Quote

 

DoctorHousingBubble. 7 Feb, 2017  California Love, wall street

...Even in the post-World War II era the average length of an expansion is 57 months.  We’ve blown right past that.  This June we will hit 84 months of expansion.  What is interesting is that our last Great Recession only lasted 16 months which wasn’t all that much more compared to the historical average of 10 months.  Of course the magnitude was much more profound.  Have people forgotten that recessions are a typical part of the business cycle?  It is also important to note that the Great Recession was the worst recession since the Great Depression in terms of economic impact, and it only lasted officially 16 months.  Welcome to La La Land.

Taking a pulse on sentiment and you would think all is well and we’re in for epic good times.  Black Swans by definition are unpredictable but what we can comfortably predict is that the business cycle will show up again and probably sooner rather than later.  This is something that is well studied in economics:

You can only call a peak once a bust has started.  So by definition, these are hard to predict.  But just look at all the absurd crap shacks out in the market like million dollar shacks in the Bay Area.  And valuations are all out of whack in real estate and tech companies.  Just look at the potential Snapchat IPO:  Funny that the ticker symbol will be SNAP (which coincidentally is also the nation’s food stamp program).  Mania’s have a weird way of playing with people.  It takes living through a couple of housing bubbles and business cycles to understand that while history doesn’t repeat, it does auto-tune and rhyme.