Premium Bonds , serious consideration
Discussion
We have a £10k 1 year bond maturing very soon , and the rates for such bonds barely get above 0.5% , the BS we are with is offering 0.015% or
£1.50 per 1K . On line searches of investments with protection get up to 0.65%
With such low return we are thinking taking a chance on Premium Bonds
Interestingly Martin Lewis is not dismissive of them if you have a large block , The supposed return is 1% . I know I will get as many opinions as there are members of this forum . But I would be interested in any large block holders experience .
As a point of interest my parents gave me £5 in bonds when they first came out in 1956 equal to around £105 today I have NEVER won anything , OH bought a £1k block a few years ago and in just about the first draw they were in , she won £1k !
£1.50 per 1K . On line searches of investments with protection get up to 0.65%
With such low return we are thinking taking a chance on Premium Bonds
Interestingly Martin Lewis is not dismissive of them if you have a large block , The supposed return is 1% . I know I will get as many opinions as there are members of this forum . But I would be interested in any large block holders experience .
As a point of interest my parents gave me £5 in bonds when they first came out in 1956 equal to around £105 today I have NEVER won anything , OH bought a £1k block a few years ago and in just about the first draw they were in , she won £1k !
There’s a thread on here that’s been quite long running, it’s got ‘not had a bean for ages’ in the title or something, but obviously don’t be swayed by the title alone!
I think you’ve covered all the bases already to be honest. As far as I understand it, each £1 in bonds is like a lottery ticket each month. Prizes are in set values (£25 being the lowest). On *average* bonds will give a return, as the prize fund is 1% if the total bonds in existence. In practice your % return depends on your holding (if your £5 bond wins £25 you’ve done well in % terms).
The bigger investment you have, the more ‘lottery tickets’ you’re buying so the bigger chance of getting a prize, hence Martin Lewis analysis about the amount you have to have in bonds to make it more likely you’ll be getting the 1% return.
I look at it in these terms: leaving the money in a fixed ISA or something guarantees the outcome, with very small return. If I put the same into PBs there’s a risk of small inflationary loss, and a tiny risk I might win a lot of money. I’m happy with that.
We put some into PBs in Oct (nowhere near the max, but above the Martin Lewis tipping point calc), have already beaten the rate of the ISA the money was previously in.
Edit to add: I also have the £5 bond my parents purchased in Jan 1982. It’s never won anything...
I think you’ve covered all the bases already to be honest. As far as I understand it, each £1 in bonds is like a lottery ticket each month. Prizes are in set values (£25 being the lowest). On *average* bonds will give a return, as the prize fund is 1% if the total bonds in existence. In practice your % return depends on your holding (if your £5 bond wins £25 you’ve done well in % terms).
The bigger investment you have, the more ‘lottery tickets’ you’re buying so the bigger chance of getting a prize, hence Martin Lewis analysis about the amount you have to have in bonds to make it more likely you’ll be getting the 1% return.
I look at it in these terms: leaving the money in a fixed ISA or something guarantees the outcome, with very small return. If I put the same into PBs there’s a risk of small inflationary loss, and a tiny risk I might win a lot of money. I’m happy with that.
We put some into PBs in Oct (nowhere near the max, but above the Martin Lewis tipping point calc), have already beaten the rate of the ISA the money was previously in.
Edit to add: I also have the £5 bond my parents purchased in Jan 1982. It’s never won anything...
Edited by johnpsanderson on Monday 1st February 10:52
If you need the cash to hand then I don't think its much worse than anything else and of course you get a (very small) chance of a big win, so theres a bit of a gamble element to it.
If you don't need the cash longer term you could look to an S&S ISA, where your return rate will almost certainly be higher, but does have more risk attached.
If you don't need the cash longer term you could look to an S&S ISA, where your return rate will almost certainly be higher, but does have more risk attached.
As others have mentioned, the chance of getting an average 1% return increases with the number of bonds you hold. In the past 12 months I returned 0.9% on a 50k holding. Therefore I've had marginally less than average return...but better than anything else with zero risk. What i am saying is please do not expect a 1% return on a 10k holding. Your holding is likely to beat the BOE base rate, but PB is about probability.
towser44 said:
How did I miss that ? I suppose as the thought is fresh in my mind , did not think to have a look around .Cheers .I get the feeling I could do worse with my money , now taking a serious look at our ISAs as well .
I'm fortunate to have £50k invested and last year got £750 in multiples of £25. I think I never had a blank month. Jan 2021 was a blank. That's a simple 1.5% in my book
There's no risk and as interest rates are so low if you win nothing you have lost very little in terms of savings rate interest
There's no risk and as interest rates are so low if you win nothing you have lost very little in terms of savings rate interest
I just use premium bonds as my cash savings account for short term savings. With online account management you can cash them in quickly, usually 2-3 days and the money is in your bank should you need it. They offer a better return than my banks savings account and always the chance of a larger win each month.
stichill99 said:
I bought £20k 12 years ago. Last year I received a return of 1.4% so better than a savings account. This year so far I have a 500% return. I have topped my PB up to the max with part of my win so you have nothing to lose!
Nice win!There is a theory that says you may as well cash them all in if you get a big win - you aren’t getting another!
I hope you prove that wrong.
bogie said:
I just use premium bonds as my cash savings account for short term savings. With online account management you can cash them in quickly, usually 2-3 days and the money is in your bank should you need it. They offer a better return than my banks savings account and always the chance of a larger win each month.
Isn't there a period before they are entered into their first draw, which effectively reduces the rate of return particularly in the short-term ?Lily the Pink said:
Isn't there a period before they are entered into their first draw, which effectively reduces the rate of return particularly in the short-term ?
AIUI, your PB's won't be entered into the draw for the first month, but so what? It's a lottery with your investment returned pdq should you need the funds.Just invested another £40k as my Guaranteed Growth Bond is maturing and the NS&I are only offering 0.4% for another 3 years in the same, so it's a simple choice, and easily reinvested, in PB's.
Lily the Pink said:
bogie said:
I just use premium bonds as my cash savings account for short term savings. With online account management you can cash them in quickly, usually 2-3 days and the money is in your bank should you need it. They offer a better return than my banks savings account and always the chance of a larger win each month.
Isn't there a period before they are entered into their first drawI've got about £28k split between my wife and I.
We used to win most months and it worked out just a bit more than you would get in a decent savings account.
However since the well publicised cut in prizes our winnings have definitely gone down.
The only advantage it has for me now is the money is 100% safe and it can be withdrawn with a few days notice.
But for financial gains I'd look elsewhere.
Rob_125 said:
As others have mentioned, the chance of getting an average 1% return increases with the number of bonds you hold. In the past 12 months I returned 0.9% on a 50k holding. Therefore I've had marginally less than average return...but better than anything else with zero risk. What i am saying is please do not expect a 1% return on a 10k holding. Your holding is likely to beat the BOE base rate, but PB is about probability.
The probability of each bond being drawn is equal. The average rate of return is not dependent on the total holding. That would be like saying if you bought ten lottery tickets that your chance of winning is more than 10 times the chance from a single ticket...which it isn’t.Drawweight said:
I've got about £28k split between my wife and I.
We used to win most months and it worked out just a bit more than you would get in a decent savings account.
However since the well publicised cut in prizes our winnings have definitely gone down.
The only advantage it has for me now is the money is 100% safe and it can be withdrawn with a few days notice.
But for financial gains I'd look elsewhere.
We aren't talking about risk investment, that may (should?) return more than the NP&I premium bonds, but as a safe haven for immediate cash should you need it, plus a chance to win a few quid (or more We used to win most months and it worked out just a bit more than you would get in a decent savings account.
However since the well publicised cut in prizes our winnings have definitely gone down.
The only advantage it has for me now is the money is 100% safe and it can be withdrawn with a few days notice.
But for financial gains I'd look elsewhere.
), it's a no-brainer to shove a few thou into that Govt scheme.Could always go to Ladbrokes I suppose?
nammynake said:
The probability of each bond being drawn is equal. The average rate of return is not dependent on the total holding. That would be like saying if you bought ten lottery tickets that your chance of winning is more than 10 times the chance from a single ticket...which it isn’t.
The second table at https://www.moneysavingexpert.com/savings/premium-... disagrees with you.There are non immediately obvious effects with small holdings, the expected rate of return and minimum prize size, unless you assume an infinite holding period.
Mrs and I have £100k premium bonds poised to pay off the mortgage. It’s been in there since this time last year - we were jumpy about stocks and shares isa over the period we would need the money.
Our return has been around 1% but only won £25 this month so the rolling average is down.
If you need the money in the short term they are a good option but for a longer period holding you can do a lot, lot better.
Our return has been around 1% but only won £25 this month so the rolling average is down.
If you need the money in the short term they are a good option but for a longer period holding you can do a lot, lot better.
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