Since I got interested in financial independence and what to do with my money it’s consumed a fair amount of my time. A solid hobby, if you will. Each month, I invest my surplus green beans into my Vanguard Stocks and Shares ISA account or my AJ Bell LISA. Many members of the family prefer to opt for Premium Bonds.
Because I’ve been doing lots of reading around the subject of investing, I discussed my interests with my family; namely The Wife, Dad, Mum and Bruv. One of the reasons I started the blog is because The Wife was getting pretty fed up (she’s been nothing but supportive, really) of me going on and on and thought it would be a good idea for me to get it all off my chest in a blog, where I’m sure I’ll eventually run out of things to say.
I talked to my Bruv about opening a Junior ISA for his newly born son (absolute belter) and he was on board. I suggested that he might want to look up which he might get a better rate of return for over the long term based on his tolerance to risk. Additionally, I may have talked down the quality of his £20k investment into Premium Bonds.
I felt pretty smart, like. Before I talk about how I fall on my ass, Have a look here at what Money Saving Expert, Martin Lewis thinks about Premium Bonds.
Yesterday, I gets a call from The Bruv.
Me: Hello mate, how’s it going?
Bruv: All good mate. What do you think about Premium Bonds, again?
He said this with real delight. A look like ‘mate, you’re so wrong’ with a smattering of uncontrollable excitement smeared over the top. It could only mean one thing…
Me: How much you won?
Bruv: Five grand!
Now don’t get me wrong, I’m proper delighted for him, his fiancé and my little nephew. £5k will make a world of difference to them and he’s going to get a new (2nd hand) car with his ‘winnings’ that will be more appropriate to the needs of a young, beautiful family. He won’t need to save and he won’t need to finance. I’m chuffed to bits with what he’s doing with the money.
If we look at the numbers that Martin Lewis provides:
Bruv was one of only 87 winners of the £5g’s. His actual shot of winning 5k was 20,000 in 440,818,953 which works out that he’ll win this prize once in every 22,040.95 draws. Which means that, on average, he walk away with £5k once every 1,836.74 years. He’s such a ‘jousey dog’ (his words, not mine) to have ‘won’ the money in the 20 something’th draw he was in. He’ll probably shut me up for good and ‘win’ another £5,000 in the next 12 months.
The bigger issue for me is all that he’s not going to be interested in ever shifting his money away from the Premium Bonds. To him, I’ve potentially lost all credibility in discussing with him the things I’ve learned along the way. He’s up 25% on his investment this year and I’m breaking even, there or thereabouts (thanks to the free £1k from my LISA). Therefore, to my Bruv:
Premium Bonds > Stocks and Shares ISA
and ever more shall be so.