December 13th 2024.
Do you have any NS&I Premium Bonds? If so, you might want to pay attention to a recent announcement from Martin Lewis. The founder of Money Saving Expert shared his thoughts on the likelihood of winning through this savings scheme. According to him, it only becomes a worthwhile investment if you have a certain amount of money.
For those who are unfamiliar, Premium Bonds are managed by the government-owned National Savings and Investments. Customers can deposit anywhere between £25 to £50,000 in a secure account and the earnings are not subject to taxation. While these investments do not earn any interest, each £1 bond is entered into a monthly draw where 121 billion bonds are eligible for prizes ranging from £25 to £1 million.
Although it is possible to win with just one bond, the chances of winning increase with a larger number of bonds. However, Martin believes that there are better options for savers. He wrote on X, "Why do so many people give children Premium Bonds? Premium Bonds are only a decent bet if you have a big sum, like £10,000 or more, and you pay taxes on your savings interest. Most kids have neither. With £1,000 invested for a year, even with average luck, you won't win anything."
Some people disagree with Martin's viewpoint, citing their own experiences of earning good returns with Premium Bonds. One commenter said, "Completely disagree. We've had returns that easily outstrip interest rates." Another added, "Statistically, I've had better luck with Premium Bonds compared to other investments, especially during lockdown when interest rates were low."
However, there is some truth to Martin's statement. In the December draw, a total of £62 million was distributed among 20,791 high-value prizes. The two lucky millionaires held £50,000 and £33,275 worth of bonds. The odds of winning something with each bond is 22,000 to 1, and the chances of winning one of the top two monthly prizes of £1 million is approximately 1 in 60 billion per bond. In comparison, the odds of winning the National Lottery jackpot is roughly 45 million to 1.
But, there are always exceptions and it all comes down to luck. In the latest draw, one person won £100,000 with just a £25 investment and others won with as little as £1,000. So, while it may be wise to have some Premium Bonds, it may not be a good idea to put all your savings into it. After all, as the saying goes, "You have to be in it to win it."
If you're still unsure about where to invest your money, Martin Lewis has a helpful calculator on the Money Saving Expert website. It can help you determine whether you're likely to earn more with Premium Bonds or a traditional savings account. Many higher-rate taxpayers prefer Premium Bonds because the earnings are tax-free. Others enjoy the excitement of the "game" or the flexibility of being able to withdraw without any fees.
However, according to NS&I, Premium Bonds may not be suitable for those looking for a regular income, guaranteed returns, or protection against inflation. They also may not be the best option for joint savings accounts. Do you have any stories about winning big with Premium Bonds? If so, we'd love to hear from you. You can get in touch by emailing us.
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