Premium Bonds Article Discussion Area

david78

You buy entries in a monthly prize draw (in £100 chunks) and can win tax free prizes. At any time you can have your savings back. There's a chance to win big, but an even bigger chance you won't win anything at all. Only really worth it for higher rate tax payers who already have ISAs and other savings and investments, and who have the capital to buy a lot of bonds (more than £15k). For most people the mini cash ISA is better.

munk

Premium bonds are vaguely similar to a lottery in that you put your money into the 'pool' of money along with everyone else and then every so often (monthly?) a winner is picked out at random. However unlike the lottery, the money you put in can be taken out at a later date - although importantly say you put in £1000 one year ago and you take out your £1000 today, you will be less well off in real terms because of the effects of inflation eroding your original £1000's value.

In this way instead of earning interest on your investment, you'll theoretically get a number of payouts over time - although of course how much those payouts will be is fairly random (though there's a calculator on this site somewhere I believe that can calculate what the chances of you winning will be).

There's also a good article on this site about the pros/cons of premium bonds - the gist iirc is that premium bonds aren't an efficient investment even compared to high interest savings accounts.

Whatever you do if you have an unallocated ISA slot then use that up first, it's by far the best investment you can make if you don't need to access the money for a while and want to see it grow tax free.

Jonbvn

MSE has a great article on this subject.

Premium Bonds
Are they worth it?

robp

As above, Cash ISA would be a sensible choice first.

Premium Bonds for a bit of fun, although in the many years I've held them they have provided no fun at all.....

Crabman

In addition to the article, try the Premium Bonds Calculator

(thread merged with premium bonds article discussion :beer: )

parkersages

It is a disgrace that NS&I claim that you do not lose with premium bonds. A friend and his wife have £60k between them in PBs and this month won absolutely nothing. Had they invested in one of the savings rates currently available they would have received £300 So this is what was gambled and what they lost, in addition to the value of their holding going down with inflation. Yet the ASA will not take action on advertising that is not truthful, misleading etc.,

Jonbvn

parkersages wrote: »

It is a disgrace that NS&I claim that you do not lose with premium bonds. A friend and his wife have £60k between them in PBs and this month won absolutely nothing. Had they invested in one of the savings rates currently available they would have received £300 So this is what was gambled and what they lost, in addition to the value of their holding going down with inflation. Yet the ASA will not take action on advertising that is not truthful, misleading etc.,

The trouble is that they deliberately make sure the wording of any such statements are open to (mis)interpretation. This means that if they are legally challenged they are covered. However, Joe Public continues to think he is onto a winner, when in fact the opposite is true.

Brunbjorn

Hi People

Thought I'd visit this discussion. I've had £400 of PBs for well over a year which have won absolutely nothing.
Judging by all the comments I've seen, I need a four or five figure sum to get on the 'score-sheet'!
So - I'll be cashing mine in as soon as possible

The_Bleurk

Yes thats a deliberate title.

Brun you will typically have to wait about another 4 years for a prize. £400 will generate 1 win every five years could be sooner could be later it depends on nothing but chance. When it does it will most likely be for £50.

£400 in a high rate account for 5 years at say 4% net will get you £86 - so which is it - a definite £86 or a likely £50 and a chance at the big time at a cost of the difference - £36 over five years (60p a month).

Your call....

miaxmia

parkersages wrote: »

It is a disgrace that NS&I claim that you do not lose with premium bonds. A friend and his wife have £60k between them in PBs and this month won absolutely nothing. Had they invested in one of the savings rates currently available they would have received £300 So this is what was gambled and what they lost, in addition to the value of their holding going down with inflation. Yet the ASA will not take action on advertising that is not truthful, misleading etc.,

You cannot quote on an individual month - tell us about what your friend one the month before or the month before that or even over the past year!