NS&I Premium Bonds Alternatives?

skellington

I'm looking for some advice on what would be a better return on my investment than NS&I Premium Bonds.

I currently have around £30,000 in Premium Bonds, but with the win rates being cut drastically, I'm starting to question if they're still the best option. I know Premium Bonds are secure, but their returns are unreliable — especially with the recent prize fund rate dropping from 4.15% to 4.0% in January 2025, and another cut to 3.8% planned for April 2025.

I'm now considering alternatives that could maximize my money's return without taking on too much risk. Ideally, I'd like something relatively safe but with better, more consistent returns.

What should I be looking at with this amount of money? Are there any good savings accounts, fixed-rate bonds, or other investment options that people would recommend?

Appreciate any advice!

eskbanker

If you're looking for consistent returns then premium bonds are never intended for that!

Alternative taxable or tax-free savings accounts shown at:

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
https://www.moneysavingexpert.com/savings/best-cash-isa/

Newbie_John

Best savings ISA out there, keep £25 of interests and play rest on lottery 😅

Consistent returns, safe capital and excitement of premium bonds!

But more serious, overpay mortgage? Increase pension top ups and spend £30k etc. varies a lot on your situation.

george4064

Unfortunately you cannot maximise your return without taking more risk, that's the nature of the beast!

If you do not need access to the money in the short-to-medium term, you may wish to consider investing. Either a smal amount in a passive global equity fund, or perhaps a larger amount in a multi-asset fund. Be sure you get comfortable with the fund(s) you end up investing in, and if you stick with it through all cycles of the market you should be fine (provided you invested in a fund that's suitable for your risk tolerance and that you invested funds you won't need at short notice).

grumpy_codger

george4064 said:

Unfortunately you cannot maximise your return without taking more risk, that's the nature of the beast!

Even getting just more than 4%?

And, IMO, when risk is involved real 'maximising' turns into probability, not certainty.

InvesterJones

george4064 said:

Unfortunately you cannot maximise your return without taking more risk, that's the nature of the beast!

I don't agree. It's very possible to take less risk than premium bonds and get a better return. For those with tax shelters/allowances available, fixed rate or easy access savings are available with higher returns. For those paying tax on interest then gilts held to maturity give better return. Both are less risky (volatile).

Kim_13

Family Building Society Windfall Bond? 

Currently pays the Base Rate less 1%, so some guaranteed interest and some prizes available to be won on top of that. They can change the rate though and until recently it tracked the BOE rate with no deduction.

Albermarle

I'm now considering alternatives that could maximize my money's return without taking on too much risk. Ideally, I'd like something relatively safe but with better, more consistent returns.

If you want your money to be 100% safe then you have to stick to savings accounts, which pay a bit more than PB's average prize rate.
If you want to maximise return you need to invest, and take some risk to hopefully get better returns. This is more suitable for money you will not need for some years. 
Or you can have a mix of both.

HSC_2

0.35% drop isn't much of a drop for PBs, despite the way it's being reported as "slashed" rates.   I would stick with the tax-free prizes if you're winning enough to beat inflation because you never know!   I've had 4.2% so far from them this year.

Didi62

You still have good chance of winning with the amount of bonds you have. Stick with them you may won a million 

Albermarle

Didi62 said:

You still have good chance of winning with the amount of bonds you have. Stick with them you may won a million 

That is a bit unlikely. I forget the exact figure but it is something like if you have the full £50K in PBs, you will on average win a Million once  every 30,000 years.