Investment & Investing

Maybe you'll be lucky and get 1million. So yeah perhaps you should. But you might get sod all, as I have.
Tbh you might as well put it in, as leggy said.

I got more than 1% (but less than 2%) from my PB that I had in there for 5 months (a redundancy payment I drew down until I started a new job).

But for two or three months they're pretty much pointless due to the lag before the bonds are eligible for their first draw. As others have said, if you buy bonds today then the first draw they'll be eligible for is the one early January.

I got more than 1% (but less than 2%)

Anecdata: I've received bang on 2.5% over the last year from PBs.

"ISA" just means tax-free wrapper account, you can have cash ISAs where the interest isn't taxed. But yeah, they're not going to grow your money like investing in S&S might do.

oh yeah fuck cash ISAs, with 4.2% inflation you would be losing money on those

spend 98% of the money on packet and the remaining 2% to have a user kick it up ur arse

Threw a chunk of money into PBs the other day, always feel kinda sick making one-off large payments from one thing to another, even if it's all safe. Then read a thing about spend anxiety which I'm not sure helped or not

PSBs
https://www.moneysavingexpert.com/news/2021/11/martin-lewis-premium-bonds-can-beat-easy-access-savings-but-youll-be-better-off-fixing/

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

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oh yeah fuck cash ISAs, with 4.2% inflation you would be losing money on those

Wut?

no youre not... If you make any profit, its not going to be taxed... thats an immediate 20% profit... Or am i missunderstandig it?

A cash ISA contains... cash, not S&S

Worth remembering that the more you have invested with PBs, the better your odds. So if a "house deposit" is 10k, yeah you can't expect to win much (anything) over a couple of months, but if your deposit is 50k you can resonably expect to get something.

Not trying to be pedantic, but as this is the investment thread...

Your odds are exactly the same (albeit with more continuous and less discrete profile) - Your expected return is higher.

Conversely, your capital outlay is higher too.

This means that your normalised return / ROI is the same too.

[Edit1] Hold up - I need to check something, and may be wrong

[Edit2] The discrete / continuous aspect of small / large investments gives you a higher expected return, but this diminishes rapidly as you increase your outlay. The odds of winning a prize are still the same though.

10k to get £75 lol

7.5 times BoE base rate.

(I got £75 in a single month of ~£15k of PBs.)

Or am i missunderstandig it?

Yes. When inflation > interest rate you always loose money regardless of the tax free status

thats an immediate 20% profit...

I think its more like a 20% extra on your profit when you think about it, not on capital. So at the end of the day (year), still less than inflation.

On another note. All this chatter about ISAs... Correct me if Im mistaken, you only need to consider this if youre about to exceed your capital gains tax free allowance (£12300) in a given tax year, right?

Correct me if Im mistaken, you only need to consider this if youre about to exceed your capital gains tax free allowance (£12300) in a given tax year, right?

true. but you "use it or lose it" with ISAs. if you have been saving for a number of years +/- you do achieve a significant return over that one year, you will be kicking yourself if the money isn't within an ISA wrapper

I ilke pedantry!

I guess it is harder to equate odds and ROI in this instance as there are discrete prizes. This describes what I meant better than what I wrote:

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For context I started 2020 with ~25k in debt (for setting up a business, which Ive sold mid-covid at face value of the debt, worth the experience), but the GME thing sparked an interest, and I started to educate myself on investing. Thankfully I dont have a gambling problem, but rather a methodical approach to these things so most of my "plays" revolve around Zacks.com ratings, and earnings of companies I know more of. Still, for now its just a few £k that Ive got on my account, and I really dont have to worry about exceeding the tax free allowance this tax year...

BUT I did put around 25% in an ISA (before the capital gains tax free allowance consideration), and its obviously a lot less...stimulating? In a good way. Its just sitting there, up 10% since I put my money in, and a lot less volatile than the stocks Im watching on a daily basis...

Depends exactly how those returns are coming about. Interest has an allowance of £1,000 down to £0 for high earners (those taxed at 45%).

I think cash savings is just pissing away money at the moment especially so I have everything I save apart from emergency funds in a Vanguard FTSE Global All Cap ISA. The way I understand it, that money tracks the global economy and if the entire global economy tanks long term I don't think my cash savings would be worth much either. So that is my reasoning.

I watched a video about inflation the other day (Economics Explained on Youtube) and he made a good point. At the moment commodities markets have in reality gone to shit. Timber, gas, grains etc are all up in price because there are supply issues that were triggered by the pandemic. This should mean a stock market fall as these raw materials and energy are the foundation of economic progress. However, the S&P 500 is up, everything is still booming. This suggests that inflation has driven down the value of money so much that the stock market looks good in comparison, not because it is actually in good health.

Disclaimer: This is not financial advice. Don't listen to me or do anything as a result of what I say.

That would apply to a cash ISA, but not a S&S ISA, right? And interest tax on savings is a separate thing from capital gains tax as far as I understand.

⚠ Long boring post alert, skip if you're not a nerd ⚠

I wanted to look into this minimum investment horizon or whatever you want to call it myself. The received wisdom (as given up thread) is not to invest if you're going to need the money in less than 5 years. So here's some data to back that up to some degree.

I took the "Vanguard Global Stock Index Fund - Investor Accumulation" (I think this is similar to Vanguard FTSE All Cap fund but that has only been going since 2005) and plotted up the return over each period of the specified length since March 1978. So, the question is, if I bought this fund at a random point between now and 1978, and I held it for the specified period of time, how would I do? If you want to invest for 3 months, for example, you take each 3 month period since 1978 (March to June, May to July, ..., Sept to Jan 1979, ..., up to Sep 2021) and plot them as a distribution. The boxes are the quartiles with the line in the middle being the median return over that period. The whiskers are worst/best case. This is obviously crude baby statistics compared to what actual investment people do but it does give some idea. Note this is not a percentage - a return of "3" means your £1k becomes £4k

What does it mean?

If you're holding for less than 3 months it's almost a coin flip on whether you gain money or lose money. After leaving it invested for 1 year there's a 75% chance you've not lost money and a 50% chance you've gained more than 14% (pretty good). After 3 to 5 years there is a decent chance (>75%) of an actual return of around ~15%. But even after 10 years you only have a 90% chance of gaining money!

Worst case scenarios: if you buy this fund for 1 month you could lose 18%. Over 3 months you could lose 26%. Over 12 months you could lose up to 40%. Even after 5 years you could end up down 37%.

If you have a pile of cash and you want to put most in savings and risk a little bit in S&S to try to match inflation - would that work? If you had £10k for 2 years, say, put £2k in S&S for ~9% a year and £8k in savings at 1% - you'd expect to end up with £10537 (a measly 5% over 2 years) but absolute worst case you might get something like £9300. £10k in 1% savings gets you £10201. Or to put it another way, you're gambling with £700 to try to win around £300, potentially a bit more - which isn't too bad, but it's probably easier to just find £15/mo in your budget that you can pay in instead.

Long story short, don't buy S&S for the short term I suppose

To add, common wisdom says you shouldn't try to time the market if you're a long-term investor, which is largely true. If you're drip feeding then by all means get in whenever. But with a lump sum timing it wrong will hurt and it'll take quite a while to get back to break-even depending on how severe the correction is. This cannot and will not last, and when a proper correction happens there'll be a lot of bag holders around...

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i think its wise to have an S&S ISA for safer investing like ETFs, managed funds etc. (typically where the majority of one's money is). Then you can have a degiro/t212 for more "fun" trading. that is personally what i have