Premium Bonds

jennyhicks

A couple of my friends have money in preium bonds and they have won a couple of prizes over the years. I don't like to ask how much money they have invested as I know with the bonds, the more you have, the greater your chance of winning. What are people's views on them, I would especially like to know if it is worth investing a small amount of around £1000 or if is not worth it.

isofa

This is very well covered in various threads, especially the main Premium Bonds Article Discussion Area, have a read.

Also take a look at the PB Calculator.

If you really are after a return and £1000 is all you have to put away, you'll be better off in savings, but if it's just some extra to dabble with, give it a go, although you will never loose the capital, if you aren't winning at least the inflation figure a year, effectively your £1000 is loosing value (due to inflation).

However there is always a chance you'll win a big prize, a few thousand up to the elusive million!

grebbo

With a £1,000 I'd put it in a cash ISA.

Most people on here hate Premium Bonds. However I think they're great if you're a higher rate tax payer.

The best instant access savings account is 6.5% which is 5% after basic tax. Considering real inflation is running at about 10% then I see it as a waste of time having cash earning 5% interest.

I prefer taking a gamble that I'll earn more tax free from PB's.

I do think they're only worthwhile though if you have the £30k maximum in PB's and you've maxed your cash ISA, equity ISA, have other investments etc.

Aegis

grebbo wrote: »

With a £1,000 I'd put it in a cash ISA.

Most people on here hate Premium Bonds. However I think they're great if you're a higher rate tax payer.

The best instant access savings account is 6.5% which is 5% after basic tax. Considering real inflation is running at about 10% then I see it as a waste of time having cash earning 5% interest.

I prefer taking a gamble that I'll earn more tax free from PB's.

I do think they're only worthwhile though if you have the £30k maximum in PB's and you've maxed your cash ISA, equity ISA, have other investments etc.

I dispute the fact that real inflation is running at 10%, but even assuming that it is, you run the chance of being -10% down in real terms if you have a Premium Bond holding, while at least you know what the damage is going to be using a cash account.

All in all, I'd be looking at index-linked savings certificates long before I touched Premium Bonds, and before I went near those I'd want to have a reasonably holding in savings accounts for instant access, using those instead as medium-term emergency funds.

looby-loo_2

I have won 3 x £50 this year from £2000 investment so I'm ahead

CLAPTON

you're simply gambling with the interest you could otherwise earn.
if you win £1,000,000 its a great investment, if you win very litttle its a poor investment.. exactly like all gambling.