NSI Premium Bonds

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82109950#Comment_82109950

Yes I should have said that unlike most gambling with premium bonds you don't lose your stake.

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/82110417#Comment_82110417

The money you have saved in premium bonds isn't your stake.

You are staking, i.e. gambling, the interest of 4.35% on the money you have saved in premium bonds.

So obviously you can lose your stake. That's what the gamble is.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82110477#Comment_82110477

I suppose that is one way to look at it. I tend to think of the stake as the money you hand over to the bookie but if it is never at risk …

mills112

premium bonds is a gamble, where you are gambling with the interest paid. like someone had said, i also kept a running score of my premium bond wins and it has always been less than interest from my fixed one year savings rates.

i am a high rate tax payer so the premium bond is good for me for tax reasons.

i would say that premium bonds is good for that chance of winning a big prize and it can be exciting each month to see what prizes you have won. if you put in 50k, you should win prizes most months, but i would expect that the winnings on average will be less than a fixed rate savings account.

PixelPound

4.35% is the headline rate, minus the top prizes probably means the median is probably nearer 3.8%.

Still, if maxed out most tax free options, then a basic rate player would need a taxable account paying 4.75%.

mrcrumb

https://forums.moneysavingexpert.com/discussion/comment/82109454#Comment_82109454

I wasn’t quoting from the website, though I may have used the similar wording. You can get a more realistic estimate of “likely” return by only adding up the low value prizes.

mills112

https://forums.moneysavingexpert.com/discussion/comment/82109106#Comment_82109106

if they took away the tax free status, then i wouldn't bother. the chance of the premium bonds outperforming a fixed rate savings account is nil for me and i have held premium bonds for many years. they have never been great returns if you ignore the tax free status for me.

Section62

https://forums.moneysavingexpert.com/discussion/comment/82110615#Comment_82110615

…but i would expect that the winnings on average will be less than a fixed rate savings account

A fairer comparison would be with an EA savings rate though as Premium Bonds are effectively easy access.

StewedApple

https://forums.moneysavingexpert.com/discussion/comment/82110477#Comment_82110477

I'd agree with this, I regard premium bonds as somewhat akin to an easy access account (and use it for that purpose). It would be foolish to hold all savings in premium bonds but as part of an overall strategy it makes sense - how much an individual holds would depend on their overall portfolio and current needs.

My understanding is that the draw resets each month, potentially one could win a million pounds every month with a £50 stake and never win with a £50k stake - statistically I suspect the odds are different.

mills112

https://forums.moneysavingexpert.com/discussion/comment/82111172#Comment_82111172

that is true, but people tend to put money into premium bonds that they don't need quick access to as you have to stay in it to win it, so you need to be there for a while for the statistics to work out, if you want to win anything.

dipping in and out isn't going to be a profitable stragety with premium bonds, so i would think that if people didn't put the money into premium bonds, they would put it into a long term savings account.