national savings premium bonds

satnamji

I am a new member to this site and enjoyed Martin's recent radio conversation on Radio 2. I have looked at the site and am very impressed at the great lengths of trying to save money tips.

I have come in to some money and am looking at investing in the Premium Bonds offered by the Post Office. Has anybody out there any experience with these? I am looking at investing soon and would be grateful if anybody could give me some feedback as to whether these bonds are a safe bet or not and how good are the chances of really getting a return?

Thank you very much for your help.

smartsaver

Hi and welcome  :)

I had 30k of 'stoozed' money in premium bonds for about 6 months but cashed them in as I was guarenteed to earn more in interest than I gained in bonds... It's a gamble... you are more likely to win the lottery than scoop the million on bonds..  :'(

Having said that, bonds are safe and you will get your money back.

sergeant121

The chances of any bond winning the £1m Premium Bond prize is 1 in 24 Billion (so the maximum holding of £30,000 has 30,000 chances - one in 800,000.

The chance of a ticket winning the National Lottey is 1 in 14 million.

As the Americans would say, "Do the math."

Milarky

This would equate to a player in the National Lottery paying £10 per draw - and so having 10 times the chances of picking the winning numbers. There is 1draw per month with Premium Bonds, so that would 'cost' a National Lottery player 12 x £10 or £120 pa. But what that overlooks is that the National Lottery Jackpot winner - whilst not guaranteed to win even £1 million [where the Jackpot gets split between many winners] still pays an average of SEVERAL million per Jackpot winner!

[I wonder what the average is - anyone know?]

satnamji

Thanks for the advice, I have read the notes on winning the milloin and I am glad to hear that this is a safe bet.

I wanted to know if the return on the small winnings was equivalent or more than the interest gained by putting the money into ISA's or 1 year fixed savings accounts?

Does anyone now! Can anyone help me with this? Thank you.

sergeant121

Thanks for the advice, I have read the notes on winning the milloin and I am glad to hear that this is a safe bet.  

I wanted to know if the return on the small winnings was equivalent or more than the interest gained by putting the money into ISA's or 1 year fixed savings accounts?

Does anyone now!  Can anyone help me with this? Thank you.

National Savings nominally attribute an interest rate of 3.2% to Premium Bonds (winnings aren't taxable, so that's nett). If your bond isn't 'drawn' though, you get 0%!

I read some time ago (when the maximum holding was still £20,000) that someone with the maximum holding could expect to win one prize every month.  If each of the 12 was £50, the annual return on £20,000 would therefore be 3% - roughly the same as that 3.2% nominal figure.  

smartsaver

Over the six month period I won £100 in 2x£50 wins one month and 3 other wins of £50.00. For 2 months I won nothing..

I get better returns in my Cahoot 5.65% though this account is now closed to new customers.

Unless you were very lucky you would get more in an ISA. It is 'luck' though ... you MIGHT win a lot..

Milarky

It is now much more likely that a large premium bond holding will match the headline 'interest' rate due to recent major rejigging of the prize fund distributions as explained here. The original discussion of this point was posted here with the title: ''Losing at Premium Bonds''

[Basically, there are now many more £100 prizes than before!]