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Premium Bonds or Premium Rip Off?

The average return for Premium Bond holders is currently 1.25% and is about to be cut to 1.15% from May 2017.  This might sound OK in the current economic climate of low interest rates, but when you consider there are 2 prizes of £1Million paid out each month that are included in these averages you can understand why getting returns are becoming less and less frequent for the small £100 holders.  The NS&I even admit that there is now only a 30,000-1 chance of getting a return for every £1 ticket (that is like Leicester City winning the premiership six times).  Or in other words if you hold £30,000 you have a 50/50 chance of getting a return each month – and that will probably be only £25.

Recent disclosure and regulatory rules now mean that the website and literature the NS&I produce must tell you the following before investing:

Premium Bonds are not for savers who: 

• want a regular income 

• are looking for guaranteed returns 

• are concerned about inflation eroding their savings 

• want to buy them as a gift, unless for their child or (great) grandchild 

If you want to gamble or speculate with a small amount £100 – £500 then I would say go for it.  But if you are a serious investor and have somewhere near the now maximum allowed £50,000 I would strongly suggest shopping around to see what returns you can get for your money.

If you are resident in Spain, there are Spanish Compliant Bonds that can give you a much better average return than Premium Bonds are offering.  Please do not let your money continue to erode in real terms.  Be wise, it might be time to give Ernie the boot.

 

Other News

Reclaiming the QROPS Transfer Charge – Clarification of Regulations

HM Revenue & Customs has introduced new regulations to make it easier to reclaim the QROPS overseas pension transfer charge. The rules came into effect on April 25, 2019 following a decision by the House of Commons on April 3, 2019.

The Pension Schemes (Information Requirements – Repayment of Overseas Transfer Charge) Regulations 2019* outline the necessary procedures for recovering the charge in cases where it has been incorrectly levied or a change in the member’s situation means that the charge is no longer applicable and a retroactive exemption can be applied.

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BLACKTOWER VIEW – Tips from the Top

John WestwoodJohn Westwood, Blacktower Financial Management’s Managing Director, founded the firm in 1986 after previously forging a career with Schroder Financial Management that saw him develop a reputation as one of the leading financial advisers in London.

In 1999, John founded Blacktower’s first European office, in Portugal’s Algarve region, and since then he has been instrumental in ensuring that the Blacktower group moves from strength to strength. However, despite his ongoing commitment to innovation, he continues to operate at the “coal face”, providing advice to many high-net-worth clients within the European and international markets.

In this week’s Blacktower View article, John reflects on the thirty-plus years he has spent working as a wealth manager and financial adviser, while also offering some useful advice for investors and business people alike that he would now give his younger self.

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