NS&I Premium Bonds - Opinion


(Richard) #1

Hi guys, me again :slight_smile:

So what are peoples experience of bonds? My father-in-law and his wife swear by them and my wife wants to put some money into them eventually as the amount you could win would be better than the interest rates on most savings accounts.

Just want your thoughts :slight_smile:


#2

I generally find the older generation seem to love these (not everyone of course :smiley: )

I have a few thousands worth, purely because it stops my wife playing the National Lottery (as it appeases her desire to be in with a chance of winning something).

I believe the statistics show that the interest generated from premium bonds is lower than a mid/high paying interest account.

But… There’s no chance of losing anything (if you ignore inflation), and there is always that chance you may win…

I won’t be putting much more in, as I’d rather see some actual interest gained.


( related to Monzo CEO, Investor in Monzo ) #3

Being from the older generation -

Ive “won” 1.05% tax free in 8 months all £25 prizes nothing bigger, obviously the draw is the bigger prizes, but ERNIE isn’t giving me any…yet … and in reality, Ive had my money tied up for the 8 months when inflation has been 2% + …so…bit of a waste of time , except for the remote - very remote possibility of the big one :slight_smile:


(Ray) #4

I also put some money into Premium Bonds on the premise that unlike the National Lottery I can get my stake back. I treat it as ‘gambling money’. The amount put in is (in muliples of £100) the number of weeks I have lived since turning 16. My wins have been a fraction above the ‘average luck’ but this is due to one £100 win and I will no doubt revert.This calculator gives your ‘average luck’ and pretty graphs, for the amount invested https://www.moneysavingexpert.com/savings/premium-bonds-calculator/


(Nick) #5

Unless you’re going to put a massive amount in, your odds of winning will probably be too low to be worth it.

My grandparents gave me some premium bonds when I was, I think, 18. I don’t recall winning anything from them in all these years. :expressionless:

I should probably look into reclaiming my stake now, actually. So this thread has proved a useful prod for me, thanks :sweat_smile:


(Matt C) #6

I put in £500, which is small money, and have removed it because the chances of me winning anything are minimal. I would rather go for the guaranteed interest (no matter how small) instead of a slim chance I may win £25.


(Gareth) #7

I find them useful as an out-of-sight emergency fund. I expect I can survive the 3 day withdrawal period and it makes it a bit less inaccessible to avoid bad spending. Plus it’s a risk-free way to play the lottery (albeit boring).

Won £25 once, so it’s currently on par with 1.5% high interest savers. I do expect that to drop down though.


#8

My dad loves premium bonds, it is low risk low reward (average). It depends what your risk tolerance is.

Personally I would prefer to pump money into the markets or use platforms like chip (or the next big thing) to boost savings.

Each to their own :sunglasses:


(Thomas Horne) #9

I had £20 worth from when I was born up unto I was 26… I won nothing; decided I’d be better off with the £20 in my pocket. :rofl:


#10

Premium bond returns are a better deal for those paying higher rates of tax as they are considered winnings and so tax free.


#11

Additionally, more people know about the product now and the popularity greatly reduced likelihood of returns.

The older generations know the product and the tax benefits. My dad is aware of alternatives, but is quite content with the devil he knows. He would prefer security over returns and is at a stage in his life where he is comfortable.

I think it will comes down to risk appetite and where you are at in your savings journey. If you are 60, the volatility of other options is less inviting to you than a 25 year old. Bonds vs equities vs savings accounts (etc).

I would rather invest in the markets and strategic ups than have Premium Bonds. Just my two cents.


#12

I have the max invested and my winnings make about 2% a year for me. When I had only one or two thousand invested I won about £25 a year. So if you can afford the max amount then you could make a fair return compared to what banks currently pay withthe interest rates being so low, any smaller amounts I wouldn’t bother with very poor chance of winning.