With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).
I'm thinking the same.
I've not entirely got my head round the tax on savings bit yet ...
With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).
I'm thinking the same.
I've not entirely got my head round the tax on savings bit yet ...
With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).
I'm thinking the same.
I've not entirely got my head round the tax on savings bit yet ...
Interest is now paid gross. It's your responsibility to tell HMRC how much interest you recieved in any given tax year. Basic rate taxpayers can earn £1000 in interest before any of it is taxed. 40% taxpayers can earn £500 before any is taxed.
With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).
I'm thinking the same.
I've not entirely got my head round the tax on savings bit yet ...
Interest is now paid gross. It's your responsibility to tell HMRC how much interest you recieved in any given tax year. Basic rate taxpayers can earn £1000 in interest before any of it is taxed. 40% taxpayers can earn £500 before any is taxed.
I don't pay tax so it looks like I can earn £5000 in interest plus a couple of grand as I have a pension that brings in £10000 taking me up to my personal allowance. I'm going to have to do some calculations before trying to take advantage of the interest rate increase! Haven't filled in a tax return for years. UGH
Bear in mind the institution paying the interest to you will also report it to HMRC, so if you under declare there's a chance you'll be caught. (not aimed at you, Arsene, just a general point)
With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).
I'm thinking the same.
I've not entirely got my head round the tax on savings bit yet ...
Interest is now paid gross. It's your responsibility to tell HMRC how much interest you recieved in any given tax year. Basic rate taxpayers can earn £1000 in interest before any of it is taxed. 40% taxpayers can earn £500 before any is taxed.
I don't pay tax so it looks like I can earn £5000 in interest plus a couple of grand as I have a pension that brings in £10000 taking me up to my personal allowance. I'm going to have to do some calculations before trying to take advantage of the interest rate increase! Haven't filled in a tax return for years. UGH
Good article in the FT from Paul Lewis of BBC MoneyBox. It will be paywalled for most of you but I can share this clip, which is a more coherent version of what I been been banging on about above, and also our favourite subject, Premium Bonds. But he also deals with the mortgage side, which will be interesting for more of you
One strange effect of the rapid rise in the cost of borrowing — gleefully passed on by the high street banks as their third quarter results have shown — has been that the return paid on cash exceeds that on shares. With their value plunging — the FTSE All Share index is down over 8 per cent since the start of the year — the yield from equities in the form of dividends has risen to 4 percent. But there is now a risk-free option to get a one-year return of 4.6 per cent with RCI Bank and a five-year annual return of 5.05 per cent with Close Brothers in their fixed-term savings accounts. The deposit is not at risk provided it is divided up into £85,000 parcels and so covered by official guarantees. Even National Savings & Investments is paying 1.8 per cent on its Income Bond and 1.75 per cent tax-free in its individual savings account (Isa). Money with NS&I is safe to any amount up to the NS&I investment ceiling — for example, £2mn in its Income Bond. Short-term safety and certainty is now found in cash. At the latest count in April more than a million people had the maximum £50,000 in premium bonds which now pay prizes worth 2.2 per cent tax-free — though if you discount the big ones, which you will normally not win in a lifetime, the average return is 2 per cent. An extraordinary £100bn was held that month by those with more than £20,000 bonds out of a total of £117bn in bonds. The maximum is per person so couples can have £50,000 each and put up to £50,000 each into earmarked accounts for children or grandchildren.
The often forgotten part on premium bonds is the tax free element on any winnings, especially for higher rate tax payers makes the return much greater.
I think it's also dangerous to compare shares v cash over such a short time frame, and not forgetting a large proportion of shares (or funds) held by most members of the public are in pensions so again the tax free/efficient element needs to be factored in.
I've earned about £1200 on 50 k in PBs in the last year so negligible when set against how much I am losing against the cost of living rise which will probably cost me in excess of £5k in real terms value by April.
Thing is, what do you do with any "prizes" you get from NS&I ? If you have the maximum £50k you can't re-invest the money and so the interest is paid out. If you just bank that into your usual current account then you aren't really gaining anything, because I expect it will just be swallowed up by your normal expenditure. Really need to set it aside somewhere.
European Stockmarkets doing well so far today. France up 3%, Germany up 2.4% and the FTSE100 up 2.3%. This followed Hong Kong being up 5% overnight.
Eyes all turned to the US. If they follow suit then it will be a good end to the week and a good week overall with the FTSE100 up almost 5%.
crisis....what crisis.
It's certainly been a roller coaster!
I moved pension provider in June. In July it was up £33k, August down £1k, September down £29k! October up £14k and so far this month up £4k but that won't include any rises today.
European Stockmarkets doing well so far today. France up 3%, Germany up 2.4% and the FTSE100 up 2.3%. This followed Hong Kong being up 5% overnight.
Eyes all turned to the US. If they follow suit then it will be a good end to the week and a good week overall with the FTSE100 up almost 5%.
crisis....what crisis.
Bear market rally.
Wise up and join the "rate-catchers" (as they call themselves on the MSE forums discussing cash accounts
Longer term I still believe the stock market will give greater returns especially if you contribute on a. monthly basis, the increase in interest rates is great (for savers) but many (like my father in law) had no idea they'd be taxed on anything over £1k (or £500) assuming outside an ISA.
European Stockmarkets doing well so far today. France up 3%, Germany up 2.4% and the FTSE100 up 2.3%. This followed Hong Kong being up 5% overnight.
Eyes all turned to the US. If they follow suit then it will be a good end to the week and a good week overall with the FTSE100 up almost 5%.
crisis....what crisis.
Bear market rally.
Wise up and join the "rate-catchers" (as they call themselves on the MSE forums discussing cash accounts
Longer term I still believe the stock market will give greater returns especially if you contribute on a. monthly basis, the increase in interest rates is great (for savers) but many (like my father in law) had no idea they'd be taxed on anything over £1k (or £500) assuming outside an ISA.
Sure, I agree, but I'm now convinced that for 6-12 months I'll be better off keeping cash in those rapidly increasing interest bearing accounts, rather than feeding in monthly, which was the plan, and what I was doing up until around August. I'm a fair bit older than you, and since I no longer get rental income, and don't get taxed on dividends as a non-resident, I have a decent allowance to work with for cash deposits. I might have a different view if I were 15 years younger (and UK resident). But I don't like the look of the global economic situation at all. Too many risks at the same time.
Apologies if this has been mentioned recently but annuity rates are getting a bit more interesting. Taking 25% tax free and sticking out for two to three years at just sub 5% seems like a sensible move? Might not be for everyone but getting more attractive than it has been for years.
I’m 65 an will hit state pension next year in September. As I spent most of my working life in a DB pension scheme and was contracted out. So despite having 44 full contribution years, I’m some way off full state pension. Looking online at UK GOV if I contribute no more in NI I will receive £153 per week. However, if I pay up for the 5 years between my last contribution and retirement, this will increase to £179.
So £26 a week more or 52x£26 = £1352 per annum.
It appears I only have to pay about £4200 to get this extra. So £1352 x4 = £5408. Paying 20% I get my money back in 4 years.
So after that I’m On £1352 (plus increases) each year until I die.
Has anybody any experience of this ? Does what I saying sound correct, or is there a flaw in my workings.
I’m 65 an will hit state pension next year in September. As I spent most of my working life in a DB pension scheme and was contracted out. So despite having 44 full contribution years, I’m some way off full state pension. Looking online at UK GOV if I contribute no more in NI I will receive £153 per week. However, if I pay up for the 5 years between my last contribution and retirement, this will increase to £179.
So £26 a week more or 52x£26 = £1352 per annum.
It appears I only have to pay about £4200 to get this extra. So £1352 x4 = £5408. Paying 20% I get my money back in 4 years.
So after that I’m On £1352 (plus increases) each year until I die.
Has anybody any experience of this ? Does what I saying sound correct, or is there a flaw in my workings.
Your workings sound about right. A mate of mine paid in about 6k to put his wife on a full state pension. That was around 7 years ago. The longer you live the more you will benefit.
I’m 65 an will hit state pension next year in September. As I spent most of my working life in a DB pension scheme and was contracted out. So despite having 44 full contribution years, I’m some way off full state pension. Looking online at UK GOV if I contribute no more in NI I will receive £153 per week. However, if I pay up for the 5 years between my last contribution and retirement, this will increase to £179.
So £26 a week more or 52x£26 = £1352 per annum.
It appears I only have to pay about £4200 to get this extra. So £1352 x4 = £5408. Paying 20% I get my money back in 4 years.
So after that I’m On £1352 (plus increases) each year until I die.
Has anybody any experience of this ? Does what I saying sound correct, or is there a flaw in my workings.
My mum did this as she was a few years short, cost her about £3k and payback was in about 5 years. Sadly she died a year after starting drawing - but it was still the right thing to do.
I’m 65 an will hit state pension next year in September. As I spent most of my working life in a DB pension scheme and was contracted out. So despite having 44 full contribution years, I’m some way off full state pension. Looking online at UK GOV if I contribute no more in NI I will receive £153 per week. However, if I pay up for the 5 years between my last contribution and retirement, this will increase to £179.
So £26 a week more or 52x£26 = £1352 per annum.
It appears I only have to pay about £4200 to get this extra. So £1352 x4 = £5408. Paying 20% I get my money back in 4 years.
So after that I’m On £1352 (plus increases) each year until I die.
Has anybody any experience of this ? Does what I saying sound correct, or is there a flaw in my workings.
I'm going through this right now. I was overseas for 18 years. Perhaps it's because I'm dealing with the overseas department but I'd advise doing this asap. I wrote to them four months ago and I'm still waiting for my figures.
Echo above comments re paying in to get extra state pension. We did this for my wife last year and she is now reaping the benefit. Only argument for not doing is if you are in very bad health imo. However be prepared to get a bit frustrated with ringing HMRC to get this done due to their idiotic bureacracy.
Re my beef with Vanguard Life Strategy 20% fund it seems the FT at least agrees with me..."No FT, no comment" as the ads used to say...
Vanguard’s low-risk UK strategies upended
The rare tandem fall in bonds and stocks this year has claimed another victim. Vanguard’s £34bn UK Lifestrategy funds range has performed exactly the opposite of the way many retail buyers would expect, writes Joshua Oliver.
Its 80/20 bonds to equity fund, supposedly the safer end of the range, has lost 16 per cent in the first 10 months of the year. At the risky end of the spectrum, a fund with 80 per cent in equities is only down 9 per cent, according to Morningstar data.
This is a problem for Vanguard and other providers of funds that are “balanced” between bonds and equities since vehicles with more bonds are marketed to retail investors as being safer and less prone to losses in a downturn.
The fact that bond-heavy funds have lost more in this sell-off is contrary to industry conventional wisdom and may make for some awkward conversations with clients.
Vanguard’s troubles stand out in part because of its market share in the UK retail market. LifeStrategy held three of the top five spots on the most-bought list at DIY platform Interactive Investor in the year to September.
And its UK range is also especially interesting because Vanguard includes a “home-bias” in the funds, which otherwise take market exposure based simply on market cap. The 35 per cent tilt towards UK bonds has made matters worse as gilts have been hammered by political turmoil.
Vanguard says it has a “huge amount of sympathy” for investors facing losses, but is not going to change it the way it invests. It thinks correlation between bonds and equities will drop.
“When times are tough, human nature sets in. It feels like something is broken but it’s not,” said James Norton, head of financial planners at Vanguard UK. “Exceptions do happen, and this year is essentially one of those exceptions.”
So there it is. I've been done by Kamikwasi's moron tax.
Re my beef with Vanguard Life Strategy 20% fund it seems the FT at least agrees with me..."No FT, no comment" as the ads used to say...
Vanguard’s low-risk UK strategies upended
The rare tandem fall in bonds and stocks this year has claimed another victim. Vanguard’s £34bn UK Lifestrategy funds range has performed exactly the opposite of the way many retail buyers would expect, writes Joshua Oliver.
Its 80/20 bonds to equity fund, supposedly the safer end of the range, has lost 16 per cent in the first 10 months of the year. At the risky end of the spectrum, a fund with 80 per cent in equities is only down 9 per cent, according to Morningstar data.
This is a problem for Vanguard and other providers of funds that are “balanced” between bonds and equities since vehicles with more bonds are marketed to retail investors as being safer and less prone to losses in a downturn.
The fact that bond-heavy funds have lost more in this sell-off is contrary to industry conventional wisdom and may make for some awkward conversations with clients.
Vanguard’s troubles stand out in part because of its market share in the UK retail market. LifeStrategy held three of the top five spots on the most-bought list at DIY platform Interactive Investor in the year to September.
And its UK range is also especially interesting because Vanguard includes a “home-bias” in the funds, which otherwise take market exposure based simply on market cap. The 35 per cent tilt towards UK bonds has made matters worse as gilts have been hammered by political turmoil.
Vanguard says it has a “huge amount of sympathy” for investors facing losses, but is not going to change it the way it invests. It thinks correlation between bonds and equities will drop.
“When times are tough, human nature sets in. It feels like something is broken but it’s not,” said James Norton, head of financial planners at Vanguard UK. “Exceptions do happen, and this year is essentially one of those exceptions.”
So there it is. I've been done by Kamikwasi's moron tax.
And this is why punters should take advice & not just go for the low cost option (I know you haven't done that @PragueAddick 😉). An adviser can be actively moving monies around & not just leaving money sitting in Bond funds that are losing money.
Vanguard seems to suggest that it will all come right for the bonds and gilts they have in that fund. Do they have good grounds for that, or is it a case of "well they would say that..."
Vanguard seems to suggest that it will all come right for the bonds and gilts they have in that fund. Do they have good grounds for that, or is it a case of "well they would say that..."
Listening to a few fund management companies the consensus is that Bonds are about to make a recovery.....but again, as you say, they would say that wouldn't they 🙂.
Slow re-action on last weeks 0.75% rate rise. First out traps I can see is Kent Reliance who have passed on the whole 0.75% raising their current easy access from 2% to 2.75%.
Re my beef with Vanguard Life Strategy 20% fund it seems the FT at least agrees with me..."No FT, no comment" as the ads used to say...
Vanguard’s low-risk UK strategies upended
The rare tandem fall in bonds and stocks this year has claimed another victim. Vanguard’s £34bn UK Lifestrategy funds range has performed exactly the opposite of the way many retail buyers would expect, writes Joshua Oliver.
Its 80/20 bonds to equity fund, supposedly the safer end of the range, has lost 16 per cent in the first 10 months of the year. At the risky end of the spectrum, a fund with 80 per cent in equities is only down 9 per cent, according to Morningstar data.
This is a problem for Vanguard and other providers of funds that are “balanced” between bonds and equities since vehicles with more bonds are marketed to retail investors as being safer and less prone to losses in a downturn.
The fact that bond-heavy funds have lost more in this sell-off is contrary to industry conventional wisdom and may make for some awkward conversations with clients.
Vanguard’s troubles stand out in part because of its market share in the UK retail market. LifeStrategy held three of the top five spots on the most-bought list at DIY platform Interactive Investor in the year to September.
And its UK range is also especially interesting because Vanguard includes a “home-bias” in the funds, which otherwise take market exposure based simply on market cap. The 35 per cent tilt towards UK bonds has made matters worse as gilts have been hammered by political turmoil.
Vanguard says it has a “huge amount of sympathy” for investors facing losses, but is not going to change it the way it invests. It thinks correlation between bonds and equities will drop.
“When times are tough, human nature sets in. It feels like something is broken but it’s not,” said James Norton, head of financial planners at Vanguard UK. “Exceptions do happen, and this year is essentially one of those exceptions.”
So there it is. I've been done by Kamikwasi's moron tax.
Sorry, Prague, I've let it go a few times now but have to call this out ;-)
It was bugger all to do with a 2bn pound tax cut and not just because it wasn't likely to cost anything in reality and wasn't going to be introduced until April, way after any OBR reviews spending plan.
14 years of cheap money, an extra GBP 1,500 billion of borrowing in 'unfunded' budgets since 2008 (to use the current vernacular, what used to be called borrowing), ignoring flu pandemic strategies and shutting down the world's economy for two years, plus years of listening to Putin-funded Climate Marxists is what has caused this; 'this' being inflation. Now inflation is out of control, no-one is going to lend any government money if they as much as try to grow the economy by the usual means, unless they happen to be lucky enough to own the reserve currency. Note that Biden is pumping another USD 3 trillion of -'unfunded' - handouts into their economy.
The BoE announcing QT the day before the last budget and the governor scaring the markets shitless that evening with his portents of doom .... then quietly dropping said QT a week later, once the damage was done and the objective secured, is where the smoking gun resides. Retaliation for sacking Tom Scholar, I was reliably and gleefully (to use a BBC term) informed by a couple of people on the inside. They actually risked blowing up the economy and nearly brought their own pension fund down, in order to 'get rid of the extremists', so they claimed to me.
As for the bond traders I know, they didn't give a flying f*ck about the tax cuts, although there were plenty that were happy to get on the bandwagon, once the crisis had been triggered and there was easy money to be made. Then they bought heavily on the dip and locked in very safe, secure returns for the next couple of years.
Still think it was all down to the two jokers scheming in the Richard I? Note that the US bond market has had its worse year since records began. i.e. worse than 2008, worse than 73/74, worse than Vietnam and the two world wars, worse than the 30s. 2022 has it's very own column in terms for how many standard deviations it is away from median returns. No 45p tax rate or Brexit there. This reckoning has been coming for a long time, I would say since 2001. And there is an extremely long list of culprits that sank us into heavy debt that are delighted that so many people have bought the Kamikwasi explanation.
Comments
(not aimed at you, Arsene, just a general point)
Interest rates are returning to the old normal
One strange effect of the rapid rise in the cost of borrowing — gleefully passed on by the high street banks as their third quarter results have shown — has been that the return paid on cash exceeds that on shares. With their value plunging — the FTSE All Share index is down over 8 per cent since the start of the year — the yield from equities in the form of dividends has risen to 4 percent. But there is now a risk-free option to get a one-year return of 4.6 per cent with RCI Bank and a five-year annual return of 5.05 per cent with Close Brothers in their fixed-term savings accounts. The deposit is not at risk provided it is divided up into £85,000 parcels and so covered by official guarantees. Even National Savings & Investments is paying 1.8 per cent on its Income Bond and 1.75 per cent tax-free in its individual savings account (Isa). Money with NS&I is safe to any amount up to the NS&I investment ceiling — for example, £2mn in its Income Bond. Short-term safety and certainty is now found in cash. At the latest count in April more than a million people had the maximum £50,000 in premium bonds which now pay prizes worth 2.2 per cent tax-free — though if you discount the big ones, which you will normally not win in a lifetime, the average return is 2 per cent. An extraordinary £100bn was held that month by those with more than £20,000 bonds out of a total of £117bn in bonds. The maximum is per person so couples can have £50,000 each and put up to £50,000 each into earmarked accounts for children or grandchildren.
I think it's also dangerous to compare shares v cash over such a short time frame, and not forgetting a large proportion of shares (or funds) held by most members of the public are in pensions so again the tax free/efficient element needs to be factored in.
Eyes all turned to the US. If they follow suit then it will be a good end to the week and a good week overall with the FTSE100 up almost 5%.
crisis....what crisis.
I moved pension provider in June. In July it was up £33k, August down £1k, September down £29k! October up £14k and so far this month up £4k but that won't include any rises today.
Wise up and join the "rate-catchers" (as they call themselves on the MSE forums discussing cash accounts
It appears I only have to pay about £4200 to get this extra. So £1352 x4 = £5408. Paying 20% I get my money back in 4 years.
A mate of mine paid in about 6k to put his wife on a full state pension.
That was around 7 years ago.
The longer you live the more you will benefit.
However be prepared to get a bit frustrated with ringing HMRC to get this done due to their idiotic bureacracy.
Vanguard’s low-risk UK strategies upended
The rare tandem fall in bonds and stocks this year has claimed another victim. Vanguard’s £34bn UK Lifestrategy funds range has performed exactly the opposite of the way many retail buyers would expect, writes Joshua Oliver.
Its 80/20 bonds to equity fund, supposedly the safer end of the range, has lost 16 per cent in the first 10 months of the year. At the risky end of the spectrum, a fund with 80 per cent in equities is only down 9 per cent, according to Morningstar data.
This is a problem for Vanguard and other providers of funds that are “balanced” between bonds and equities since vehicles with more bonds are marketed to retail investors as being safer and less prone to losses in a downturn.
The fact that bond-heavy funds have lost more in this sell-off is contrary to industry conventional wisdom and may make for some awkward conversations with clients.
Vanguard’s troubles stand out in part because of its market share in the UK retail market. LifeStrategy held three of the top five spots on the most-bought list at DIY platform Interactive Investor in the year to September.
And its UK range is also especially interesting because Vanguard includes a “home-bias” in the funds, which otherwise take market exposure based simply on market cap. The 35 per cent tilt towards UK bonds has made matters worse as gilts have been hammered by political turmoil.
Vanguard says it has a “huge amount of sympathy” for investors facing losses, but is not going to change it the way it invests. It thinks correlation between bonds and equities will drop.
“When times are tough, human nature sets in. It feels like something is broken but it’s not,” said James Norton, head of financial planners at Vanguard UK. “Exceptions do happen, and this year is essentially one of those exceptions.”
So there it is. I've been done by Kamikwasi's moron tax.
It was bugger all to do with a 2bn pound tax cut and not just because it wasn't likely to cost anything in reality and wasn't going to be introduced until April, way after any OBR reviews spending plan.
14 years of cheap money, an extra GBP 1,500 billion of borrowing in 'unfunded' budgets since 2008 (to use the current vernacular, what used to be called borrowing), ignoring flu pandemic strategies and shutting down the world's economy for two years, plus years of listening to Putin-funded Climate Marxists is what has caused this; 'this' being inflation. Now inflation is out of control, no-one is going to lend any government money if they as much as try to grow the economy by the usual means, unless they happen to be lucky enough to own the reserve currency. Note that Biden is pumping another USD 3 trillion of -'unfunded' - handouts into their economy.
The BoE announcing QT the day before the last budget and the governor scaring the markets shitless that evening with his portents of doom .... then quietly dropping said QT a week later, once the damage was done and the objective secured, is where the smoking gun resides. Retaliation for sacking Tom Scholar, I was reliably and gleefully (to use a BBC term) informed by a couple of people on the inside. They actually risked blowing up the economy and nearly brought their own pension fund down, in order to 'get rid of the extremists', so they claimed to me.
As for the bond traders I know, they didn't give a flying f*ck about the tax cuts, although there were plenty that were happy to get on the bandwagon, once the crisis had been triggered and there was easy money to be made. Then they bought heavily on the dip and locked in very safe, secure returns for the next couple of years.
Still think it was all down to the two jokers scheming in the Richard I? Note that the US bond market has had its worse year since records began. i.e. worse than 2008, worse than 73/74, worse than Vietnam and the two world wars, worse than the 30s. 2022 has it's very own column in terms for how many standard deviations it is away from median returns. No 45p tax rate or Brexit there. This reckoning has been coming for a long time, I would say since 2001. And there is an extremely long list of culprits that sank us into heavy debt that are delighted that so many people have bought the Kamikwasi explanation.