4 ms·

It's interesting that one of the tax free investment/savings choices in the UK is basically a lottery.

by manojlds 2y ago

thom 2y ago
You’re not risking any capital though, if you mean Premium Bonds.
- anotheracc88 2y ago
  Even better, pay that money into a pension and buy a lottery ticket.
  - hinkley 2y ago
    Pensions sort of already are a lottery. Can’t collect if you’re dead. Live to 95 and they help a lot. Though inflation will still getcha in the end.
    - anotheracc88 2y ago
      Yes if you choose annuity but you can also buy those with regular cash so it's as relevant here as price of tea. Pensions are more tax efficient and offer a better option of investments (companies) than what is effectively fiat interest going into a lottery pool. If you have cash in premium bonds you might die young then pay inheritance tax. Better give your kids cash earlier to live off or invest to avoid this, and so they can over-stuff their pensions ;). Not many people think that far ahead (60 year horizon)
      - hinkley 2y ago
        Some young adults in my life have grandparents who just hit this point, and are trying to set up gifting money to the grandkids in the form of brokerage accounts.
    - petesergeant 2y ago
      > Pensions sort of already are a lottery Annuities maybe, but those aren’t the only kind of pensions
      - kgwgk 2y ago
        That seems the definition of pension. You may be thinking of something else. pension a regular income paid by a government or a financial organization to someone who no longer works, usually because of their age or health
        petesergeant 2y ago
        The first line of the Wikipedia article on pensions is more accurate than wherever you’ve pulled that from: > A pension (/ˈpɛnʃən/; from Latin pensiō 'payment') is a fund into which amounts are paid regularly during an individual's working career, and from which periodic payments are made to support the person's retirement from work. A pension is a financial instrument. There’s no need to purchase an annuity, which means a pension organised correctly can be passed on to your children or spouse, and there’s no lottery or gamble angle.
        kgwgk 2y ago
        > wherever you’ve pulled that from A dictionary: https://dictionary.cambridge.org/dictionary/english/dictionary https://dictionary.cambridge.org/dictionary/english/dictiona... The wikipedia definition is strange. A pension is not a fund. A pension fund is a fund! (There is also a wikipedia page for that!) Apart from that how is “regular income paid by to someone who no longer works“ different from “periodic payments made to support the person's retirement from work” anyway?
        petesergeant 2y ago
        Because you missed the original distinction, which is that an annuity — a product purchased using your pension savings where all the value is lost when you die — is not the same as other pensions, where for example you have stocks and shares paying dividends, in a pension wrapper, and those pass on to your estate when you die. The word pension is overloaded. A SIPP is a pension, the state pension is a pension, and people refer to their annuity as pensions too. > A pension is not a fund. A pension fund is a fund! The word fund is being used in two different ways here. A pension is a fund, but is not a Pension Fund.
    - throwaway2037 2y ago
      By this reasoning, isn't buying equities also gambling? Hint: It is not.
      - Nullabillity 2y ago
        Why not?
        throwaway2037 2y ago
        What is about HN where numerous posters do not believe that investing in the US or EU stock markets is better than completely random outcome, like roulette red/black? Man, this place is weird sometimes. What the fuck are you investing in for retirement if not stocks? Sea shells!!?? I hereby quote Brandolini's law: > The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.
        Nullabillity 2y ago
        > What is about HN where numerous posters do not believe that investing in the US or EU stock markets is better than completely random outcome, like roulette red/black? Err, you could start by not making wild inferences and replying to assertions that weren't made. A single investment is basically gambling. Where it moves is largely impossible to predict or (for a nobody like me, who wouldn't have the means to engage in market manipulation) control. You can reduce the randomness/risk by spreading out your investment across multiple stocks. That's just the central limit theorem. For the market as a whole, on a long enough timescale, the historical aggregate trends upwards, but is still effectively random. > What the fuck are you investing in for retirement if not stocks? I can be critical of something and still acknowledge the reality that I am effectively forced to engage with it. I generally invest in a few index funds to reduce the variance and mental overhead, but it's still there. --- In one way it's much worse than "mainstream" gambling: its value depends on society holding the shared delusion that stocks (both in general and yours in particular) are actually worth something. That leads some people to become incredibly invested in maintaining that delusion, since they know what's at stake for them. This thread could be considered an example of where that mentality leads. And as you said yourself: > The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.
- hgomersall 2y ago
  Indeed, premium bonds are just a slightly more "entertaining" way of allocating interest. Just as arbitrary as the MPC, but potentially a much higher rate (probably not though).
- manojlds 2y ago
  You are losing your savings interest. You are gambling that money away.
  - thom 2y ago
    I've always earned roughly the same from Premium Bonds as the equivalent savings, and it's tax free. Doesn't seem a terrible deal as long as you're filling your ISA up each year. Plus you have a frisson of excitement every month.
derriz 2y ago
I'm pretty sure all gambling winnings are tax free in the UK? Thank the power of the horse racing/gaming/gambling lobby. Many years ago when I lived there, I had an IG Index account - who market themselves as a "financial spread betting" service. At the time, you could buy/sell futures and options with them but it was presented in a way that emphasized that you were "spread betting" - but the mechanics were the exact same and expiries all lined up with the obvious counterparts in the liquid futures space. So because you were NOT investing but gambling, "winnings" were tax free. I just googled and they're still going - presumably still offering the same betting "service". It's funny to see the efforts that scam and pure gambling services go to to try and present themselves as staid and serious "investment" business while IG Index offered access to well-regulated financial markets but kept reminding you that you were betting.
- ahoka 2y ago
  No gambling taxes? Must be a money laundering heaven.
  - justincormack 2y ago
    there are taxes, but they are largely on the earnings of the gaming companies
    - thanksgiving 2y ago
      It makes sense though if I think about it. In theory, all the money wagered is money that has already paid income tax at some point so why tax it again?
      - throwaway2037 2y ago
        Because gambling is so terrible for your society!
      - funnybeam 2y ago
        That’s true of anything you pay money for
duiker101 2y ago
For those unaware, this comment is referring to premium bonds in the UK[1]. It is a very interesting system, I agree! But there are quite a few parts of the system that make it way more fair than a lottery. Most obviously, it doesn't cost to enter. So the most you can "lose" is a missed interest income from putting the money in another source. After that, it's definitely the fact that the algorithm is designed to both pay a certain percentage of people and always have specific return. [1] You are also limited to how much you can enter to 50k. With all that in mind, at the end of the day it feels like many small wins over time, with the super random chance of occasionally having a big-ish payout. It's definitely designed to feel like a lottery, but in reality is way more akin to normal savings than a lottery. [1] https://www.nsandi.com/products/premium-bonds https://www.nsandi.com/products/premium-bonds
- teruakohatu 2y ago
  In New Zealand this scheme was called "Bonus Bonds" and was wound up on 26 February 2024. Interest was charged on "wins" just like any other income. Apparently the average return was a paltry 1.5%.
  - julianz 2y ago
    Everyone knew someone's uncle who swore blind that he made heaps on the bonus bonds and had all his money "invested" in there, but I received some around my 10th birthday and they never struck a single prize. In 40 years.
penguin_booze 2y ago
Tax man: Did you earn your daily bread by working your arse off? Gimme some of that money. Also tax man: Oh did you get that money by luck? Good for you, man. Also tax man: Did you get inherit money by having been born into a wealthy family? Gimme some of that money. Also tax man: Were you born into the royal family? Good for you, man. Pardon me, I mean, your highness.

It's interesting that one of the tax free investment/savings choices in the UK is basically a lottery.

thom 2y ago

You’re not risking any capital though, if you mean Premium Bonds.

anotheracc88 2y ago
Even better, pay that money into a pension and buy a lottery ticket.
- hinkley 2y ago
  Pensions sort of already are a lottery. Can’t collect if you’re dead. Live to 95 and they help a lot. Though inflation will still getcha in the end.
  - anotheracc88 2y ago
    Yes if you choose annuity but you can also buy those with regular cash so it's as relevant here as price of tea. Pensions are more tax efficient and offer a better option of investments (companies) than what is effectively fiat interest going into a lottery pool. If you have cash in premium bonds you might die young then pay inheritance tax. Better give your kids cash earlier to live off or invest to avoid this, and so they can over-stuff their pensions ;). Not many people think that far ahead (60 year horizon)
    - hinkley 2y ago
      Some young adults in my life have grandparents who just hit this point, and are trying to set up gifting money to the grandkids in the form of brokerage accounts.
  - petesergeant 2y ago
    > Pensions sort of already are a lottery Annuities maybe, but those aren’t the only kind of pensions
    - kgwgk 2y ago
      That seems the definition of pension. You may be thinking of something else. pension a regular income paid by a government or a financial organization to someone who no longer works, usually because of their age or health
      - petesergeant 2y ago
        The first line of the Wikipedia article on pensions is more accurate than wherever you’ve pulled that from: > A pension (/ˈpɛnʃən/; from Latin pensiō 'payment') is a fund into which amounts are paid regularly during an individual's working career, and from which periodic payments are made to support the person's retirement from work. A pension is a financial instrument. There’s no need to purchase an annuity, which means a pension organised correctly can be passed on to your children or spouse, and there’s no lottery or gamble angle.
        kgwgk 2y ago
        > wherever you’ve pulled that from A dictionary: https://dictionary.cambridge.org/dictionary/english/dictionary https://dictionary.cambridge.org/dictionary/english/dictiona... The wikipedia definition is strange. A pension is not a fund. A pension fund is a fund! (There is also a wikipedia page for that!) Apart from that how is “regular income paid by to someone who no longer works“ different from “periodic payments made to support the person's retirement from work” anyway?
        petesergeant 2y ago
        Because you missed the original distinction, which is that an annuity — a product purchased using your pension savings where all the value is lost when you die — is not the same as other pensions, where for example you have stocks and shares paying dividends, in a pension wrapper, and those pass on to your estate when you die. The word pension is overloaded. A SIPP is a pension, the state pension is a pension, and people refer to their annuity as pensions too. > A pension is not a fund. A pension fund is a fund! The word fund is being used in two different ways here. A pension is a fund, but is not a Pension Fund.
  - throwaway2037 2y ago
    By this reasoning, isn't buying equities also gambling? Hint: It is not.
    - Nullabillity 2y ago
      Why not?
      - throwaway2037 2y ago
        What is about HN where numerous posters do not believe that investing in the US or EU stock markets is better than completely random outcome, like roulette red/black? Man, this place is weird sometimes. What the fuck are you investing in for retirement if not stocks? Sea shells!!?? I hereby quote Brandolini's law: > The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.
        Nullabillity 2y ago
        > What is about HN where numerous posters do not believe that investing in the US or EU stock markets is better than completely random outcome, like roulette red/black? Err, you could start by not making wild inferences and replying to assertions that weren't made. A single investment is basically gambling. Where it moves is largely impossible to predict or (for a nobody like me, who wouldn't have the means to engage in market manipulation) control. You can reduce the randomness/risk by spreading out your investment across multiple stocks. That's just the central limit theorem. For the market as a whole, on a long enough timescale, the historical aggregate trends upwards, but is still effectively random. > What the fuck are you investing in for retirement if not stocks? I can be critical of something and still acknowledge the reality that I am effectively forced to engage with it. I generally invest in a few index funds to reduce the variance and mental overhead, but it's still there. --- In one way it's much worse than "mainstream" gambling: its value depends on society holding the shared delusion that stocks (both in general and yours in particular) are actually worth something. That leads some people to become incredibly invested in maintaining that delusion, since they know what's at stake for them. This thread could be considered an example of where that mentality leads. And as you said yourself: > The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.
hgomersall 2y ago
Indeed, premium bonds are just a slightly more "entertaining" way of allocating interest. Just as arbitrary as the MPC, but potentially a much higher rate (probably not though).
manojlds 2y ago
You are losing your savings interest. You are gambling that money away.
- thom 2y ago
  I've always earned roughly the same from Premium Bonds as the equivalent savings, and it's tax free. Doesn't seem a terrible deal as long as you're filling your ISA up each year. Plus you have a frisson of excitement every month.

derriz 2y ago

I'm pretty sure all gambling winnings are tax free in the UK? Thank the power of the horse racing/gaming/gambling lobby. Many years ago when I lived there, I had an IG Index account - who market themselves as a "financial spread betting" service. At the time, you could buy/sell futures and options with them but it was presented in a way that emphasized that you were "spread betting" - but the mechanics were the exact same and expiries all lined up with the obvious counterparts in the liquid futures space. So because you were NOT investing but gambling, "winnings" were tax free. I just googled and they're still going - presumably still offering the same betting "service". It's funny to see the efforts that scam and pure gambling services go to to try and present themselves as staid and serious "investment" business while IG Index offered access to well-regulated financial markets but kept reminding you that you were betting.

ahoka 2y ago
No gambling taxes? Must be a money laundering heaven.
- justincormack 2y ago
  there are taxes, but they are largely on the earnings of the gaming companies
  - thanksgiving 2y ago
    It makes sense though if I think about it. In theory, all the money wagered is money that has already paid income tax at some point so why tax it again?
    - throwaway2037 2y ago
      Because gambling is so terrible for your society!
    - funnybeam 2y ago
      That’s true of anything you pay money for

duiker101 2y ago

For those unaware, this comment is referring to premium bonds in the UK[1]. It is a very interesting system, I agree! But there are quite a few parts of the system that make it way more fair than a lottery. Most obviously, it doesn't cost to enter. So the most you can "lose" is a missed interest income from putting the money in another source. After that, it's definitely the fact that the algorithm is designed to both pay a certain percentage of people and always have specific return. [1] You are also limited to how much you can enter to 50k. With all that in mind, at the end of the day it feels like many small wins over time, with the super random chance of occasionally having a big-ish payout. It's definitely designed to feel like a lottery, but in reality is way more akin to normal savings than a lottery. [1] https://www.nsandi.com/products/premium-bonds https://www.nsandi.com/products/premium-bonds

teruakohatu 2y ago
In New Zealand this scheme was called "Bonus Bonds" and was wound up on 26 February 2024. Interest was charged on "wins" just like any other income. Apparently the average return was a paltry 1.5%.
- julianz 2y ago
  Everyone knew someone's uncle who swore blind that he made heaps on the bonus bonds and had all his money "invested" in there, but I received some around my 10th birthday and they never struck a single prize. In 40 years.

penguin_booze 2y ago

Tax man: Did you earn your daily bread by working your arse off? Gimme some of that money. Also tax man: Oh did you get that money by luck? Good for you, man. Also tax man: Did you get inherit money by having been born into a wealthy family? Gimme some of that money. Also tax man: Were you born into the royal family? Good for you, man. Pardon me, I mean, your highness.