Charlotte Beugge: Happy 60th birthday Premium Bonds!

It is five years since the Junior Isa started. Then it is Ernie’s 60th birthday this month: and the old boy is going strong, picking the winning numbers for Premium Bonds without complaint, despite conspiracy theorists (and bad losers) claiming he ignores their bonds.

The fact is, even if you hold tonnes of bonds your number is not likely to come up.

The chance of any single £1 bond winning a prize in the monthly draw is about one to 30,000 and the odds of picking up a £1m jackpot roughly one to 31bn.

So why do people pick them? Safety? All monies with NS&I are 100 per cent protected. But then, you can only put £50,000 into Premium Bonds – if you had that amount in a UK bank account it would also be 100 per cent covered.

So maybe it is because Premium Bond prizes are tax-free. But how many pay tax on savings anyway these days? Maybe the 1.25 per cent return on the prize fund attracts savers: after all, it is more than you will get on most savings accounts.

Given that Premium Bonds are all about luck, then you are not going to get 1.25 per cent on your money – you may get nothing at all. Or you could win £1m. And that of course is the reason we buy Premium Bonds – because there is a remote chance – a really, really remote chance – that we might win a million.

And is there any other way of saving that allows such harmless daydreaming? 

Junior Isas can not hold a candle to the fantasy-provoking Premium Bonds. However, they seem to be chugging along OK with around three quarters of a million accounts opened in 2015-16. But lurking in the shadows – uninvited to the Jisa birthday party – is the Child Trust Fund. This gave kids born between 2002 and 2011 a cash kick-start from the government, but was superseded by the cash incentive-free Jisa – and from 2015, you could transfer from CTF to Jisa.

According to Hargreaves Lansdown, there are about 900,000 CTFs with no contact details for the parents. That is hardly surprising. Many of these may have only the government contributions in them, without savings added by the child’s relatives. As the parents were not engaged in the first place, why on earth would they be bothered to keep a watch on something they never asked for?

America and freedom for business

Of course, there is an even more important event this November: the presidential election. It is daft to second guess the result, but at the time of writing Hills is trumping Trump.  

And a victory for Clinton might be good for investors, as the Democrats are seen to be more generous with government spending and therefore good for US companies. A table published in Forbes magazine shows that since 1929 the average total return on the S&P 500 for the four-year term of the presidency is 16.6 per cent for the Republicans, 57.4 per cent for Democrats.

The highest was 205 per cent for the first term of Democrat Franklin D Roosevelt’s presidency (1933-37); the lowest -77 per cent for the 1929-33 presidency of Republican Herbert Hoover.

But, as Forbes points out, “it would be a mistake to conclude that stock returns were higher because a Democrat held the presidency” – influences on market performance are far more complex than that.

As Robert Siddles, manager of Jupiter US Smaller Companies investment trust, said: “Politics makes little difference to US equities (Reagan being an honourable exception). America is about freedom to get on with business: government of business, by business and for business.” So there you go: the election result does not matter anyway.

The cost of funerals

Britons do not like talking about death or money: and certainly never the two combined. When it comes to funerals, we need to change. The typical funeral now costs £3,675 according to the Royal London National Funeral Cost Index.

Unsurprising then that the same report says funeral debt in the UK has risen to £147m with the typical amount borrowed to cover funeral costs £1,601. The first funeral I arranged was my husband’s, seven years ago.

I cannot remember precise figures, but it certainly cost more than £3,000. I do remember feeling a bit cheese-paring for refusing proffered bells and whistles. I also remember the eventual bill was higher than the estimate, but I was too grief stricken to argue. I paid up, but it left a bad taste. 

The second was my mother’s earlier this year. The funeral director understood her dislike of fuss and religious ceremony meant we did not want an elaborate do. He did not make us feel mean and said more were choosing the simple option. Sadly, the Royal London figures would suggest that, nationally, this is not the case. 

Charlotte Beugge is a freelance journalist