Premium Bonds big win odds drop

The chances of winning big on Premium Bonds dropped yesterday.

National Savings and Investments (NS&I) reduced the rate of return on its prize fund from 4 per cent to 3.8 per cent from the start of 2008, in response to December’s cut in the Bank of England’s base rate.

While the chances of winning– 21,000 to one per £1 bond – and the number of £1 million jackpot prizes remain the same, the spread between large, medium and small prizes will be skewed further towards small prizes of £50 and £100.

Million of Brits have money invested in Premium Bonds, totalling £36 billion.

Unlike other investments, there is no risk involved in the scheme – but unlike other savings products, there is no guarantee that investors will make anything at all.

The Times noted in 2007 that the chances of winning nothing at all with a £1000 Premium Bonds stake was 60 per cent, while the chances of getting a better-than-inflation return on £1,500 was around 20 per cent.

Tags: England's base rate, savings products, National, The Times, bank, Business Finance

Market volatility increases attractiveness of buy-to-let

The recent fluctuations in the UK stock markets have caused a lot of financial concerns among investors.

Originally caused by the meltdown of the US sub-prime mortgage sector, the current turbulence in credit markets might lead some to look elsewhere to grow their assets.

Mortgage Trust commented today that some landlords are finding safer bets in the buy-to-let market.

According to their research, 32 per cent of new landlords have cited control over their investment was a major factor behind their decision to enter the market.

This represents a four per cent rise over the same question asked by the company in January.

Managing director at Mortgage Trust John Heron commented: “When investing in stocks and shares, your only option if you don’t like the way an investment in a fund or company is performing, is to sell.

“With buy-to-let, landlords are in the driving seat. As financial markets become increasingly volatile, this level of control will become more attractive to investors.”

Mr Heron also claimed that the spiralling base rate of interest – which the Bank of England has raised five times in the last year – had also led investors to become “increasingly risk averse”.

Tags: stocks and shares, way, Trust, United Kingdom, buy-to-let, bank of england

Child trust funds proving popular

More than 2.6 million children in the UK now hold a child trust fund (CTF) with the scheme proving popular among parents, according to the economic secretary.

Ed Balls said the results were “encouraging” and pointed out that around three quarters of the accounts had been opened up by parents with little prompting from the government, showing that they are looking after the financial future of their children.

Mr Balls said that HM Revenue & Customs was planning to remind all new parents of the opportunity to set up a CTF within their child’s first eight months, if parents have not done it themselves.

“I want to encourage parents, grandparents and whole families to use the Child Trust Fund not just as a saving tool but as a way of teaching children about money and savings,” the economic secretary said.

CTFs were introduced in 2002 as a savings tool for all children born after September 1st of that year.

The government provides a £250 voucher to start off the fund and then, when the child reaches seven, adds a further £250 on top.

Tags: voucher, CTFs, scheme, saving, savings tool, new parents