NS&I Premium Bonds are like a bank account that you can put money into and take out when you want. Rather than interest, like in a bank account, they have monthly prize draws and if you are lucky you win. The more money you put in, the more bonds you have and the chances of you winning are higher.
The odds of winning are 24,500 to 1 with an annual tax free prize fund rate of 1.4%.
You can win anything from Ā£25 to Ā£1 million every month.
Ask in our office whether or not to put money into premium bonds and youāll spark a heated debate between Karen and me.
Karen = forĀ Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Me = against
I donāt like premium bonds as you might win money every month on them, but you might not.
I have some clients who love them as they regularly win Ā£25 – Ā£75 on them and others who havenāt had a penny from them.
I donāt like the uncertainty, the way you could win or not. I donāt think you can get a good return and Iād prefer to invest the money to get potentially much bigger returns on the stock market (unless of course you win that elusive Ā£1m prize!!) Martin Lewis seems to think that most people would be better off in a bank savings account rather than having Premium Bonds and he has done the maths.
Karen however disagrees with me. Some of our clients win regularly on them, as she does, and Karen compares them to a bank account. In a bank account you are taking the same level of risk as it is all in cash, but you know that the interest rate is currently rubbish. Compared to premium bonds where you can āwinā money. And who doesnāt love winning?! Or the chance to win Ā£1m?!
That plus they are backed by the Government, so āsecure as housesā.
So, if you want, like Karen, a secure, low risk place to store your cash with the potential for better returns than a bank account, but also the chance to win nothing, consider premium bonds. If, like me, you want to take more risk to get potentially even greater returns, then consider stocks and shares.
