Premium bonds...how does it work exactly?

lukemed1

Hi everyone

excuse me if this has been posted elsewhere but I can't seem to find it!

How exactly does the premium bond thing work?

how much can you buy bonds for?

I currently put £5 per week on the lottery, but have heard that with premium bonds, you don't loose your initial investment-is this true? Also, how do you get your original investment back if i didn't want them anymore?

best wishes

Luke:beer:

SO171NOT

It's simple! Each bond costs £100 and is entered into a prize draw each week. Once a month there is a £1m prize draw. You don't lose your investment as you simply sell your bond back. Buy premium bonds at the Post Office. The maximum amount of bonds used to be £16,000 but this may have changed recently. Register your bonds and National Savings will tell you if you win. More details can be found at [url]https://www.nsandi.co.uk:D[/url]

ReportInvestor

Hi Luke,

Maximum per individual = £30,000.

Each bond is actually £1, but the minimum initial investment is £100 and you can go in £10 steps above £100.

After a delay of one month, your numbers get entered into the prize draw.

Prize fund pays currently pays out 3.15% of its value per annum and the prizes are tax free.

The equivalent rate for a savings account for a basic rate taxpayer = just under 3.94% gross. In fact you can currently get 5.2% if you put your money in the Landsbanki IceSave account. so one argument goes that you lose out twice by "investing" in premium bonds - a) because of a poor rate of return and b) because the average holder won't achieve the 3.15% due to the effect of the larger prizes like the £1million ones.

But if you like a small gamble and can afford to have inflation eat away at your original investment, it could be right for you.

And then you can come back to MSE and discuss whether ERNIE is truly random .

MSE link - lottery v premium bonds discussion

lukemed1

thanks guys!

how do you sell them back tho?

best wishes

Luke:beer:

ReportInvestor

I gather you may be able to do it via the website, although I didn't think it was very clear what the procedure was ( surely NSI aren't wanting to hang onto our money, are the they?).

However this instruction on the website looks foolproof enough :

".....you can contact us and we will send you a form or just ask for a Premium Bonds repayment form and pre-addressed envelope at any Post Office branch. Return your completed form to us together with the Bonds to be cashed in. We will normally pay the money directly into your bank or building society account, but you can ask for a warrant (like a cheque) if you prefer. We’ll issue your payment within eight working days of receiving your form."

southernscouser

Also there are now 2 x £1million prizes. And if you buy them before the end of this month they are eligible for the Xmas Draw where they are doing 5 x £1million draws. Or so Alan Sugar tells me!

ReportInvestor

Does that decrease everyone's chances of winning a prize, or is it an extra Christmas "giveaway" from Gordon ?

They are certainly advertising the 5 X £1m December prizes (I think the norm is 2 per month).

southernscouser

ReportInvestor wrote:

Does that decrease everyone's chances of winning a prize, or is it an extra Christmas "giveaway" from Gordon ?

They are certainly advertising the 5 X £1m December prizes (I think the norm is 2 per month).

Well without hijacking the OP's thread I was wondering this?

I maybe wrong but I thought the prize money came from the interest everyones investments earnt! I assumed it was 'all' the interest they earnt aswell!

ReportInvestor

To ss

It's a marketing exercise by Gordon to get in the punters so that he can fleece them even more over the years to come .

"To fund the extra jackpots, we are increasing the prize fund interest rate by 0.15% pa for the December 2006 and June 2007 draws. We will adjust the percentage shares of the prize fund allocated to each prize band to ensure that the overall distribution of prizes remains roughly as it would have been."

IIRC - for those who are desperate enough to fall for this marketing exercise - 31st October is the cut-off date for the December draw.

Rest assured that RI will not be participating .

seven-day-weekend

ReportInvestor wrote:

To ss

It's a marketing exercise by Gordon to get in the punters so that he can fleece them even more over the years to come .

"To fund the extra jackpots, we are increasing the prize fund interest rate by 0.15% pa for the December 2006 and June 2007 draws. We will adjust the percentage shares of the prize fund allocated to each prize band to ensure that the overall distribution of prizes remains roughly as it would have been."

IIRC - for those who are desperate enough to fall for this marketing exercise - 31st October is the cut-off date for the December draw.

Rest assured that RI will not be participating .

S-d-w has already invested a year ago, so I'll be waiting for the phone call in December!:rotfl:

Cypher

how do you sell them back tho?

I think there is a form you get from the Post Office and send into them, its apparently a fairly quick process (1 week) although I assume thats the time for them to send you the cheque and you then still have to cash it.