Premium Bonds Review
Name: Premium Bonds
Description: Premium Bonds are a government backed prize draw based savings account where you can win up to £1m every month.
A great way to save in the short to medium term as your money is guaranteed by the Government and you can potentially win £1m
- £1m prize potential
- Easy access
- Potentially better returns in the stock market
- Three month waiting list for entry
App & Platform
I should first disclose before reviewing premium bonds that I have been one of the lucky ones. I have won, my parents have won and my children have won. I’m sure my review would be different if I’d been saving with NS&I for 30 years and never won, but I have and just like horse racing, if you win it is great, if you lose it is terrible.
Ever since I was born my parents and grandparents have bought me premium bonds. Just £10 every birthday, but we still won every now and again. Nothing major, back in the days when you got letters about how your winnings had been reinvested. It was my first introduction to investing, and to be honest it was great. The message was clear.
If you save in stead of spending you will end up with more money than you started with.
Over the years, I’ve dipped in and out of Premium Bonds, because let’s face it saving is the most boring thing in the world. Even with interest rates so high and the possibility that you can earn 5% on your money, that is still a pretty dull return. If you put £10,000 of your hard-earned money in a fixed bond at 5% you’ll earn £500 a year. But, if you put £10,000 in Premium Bonds you might just win £1m.
I’ve always used Premium Bonds as a safe place to store money that I might need in a few years. So the interest return is fairly negligible compared to the potential wins and the benefit of winning a million quid.
Chances of winning Premium Bonds
I’ve never actually won anything massive but Premium Bonds are like playing the lottery, but you get your money back. You’d have to be an absolute idiot to buy £10,000 worth of lottery tickets because the odds are 45 million to 1 to win an average of £6.5m ( in 2022). But, if someone told you that you could play the lottery every month, but get your money back, I think you’d be a little more inclined to have a punt.
If you’re interested this is what I’ve won over the years
- I’ve personally had lots of small wins and won £500, spent it on a weekend away.
- My family won £25k and took us around Africa for a month, we went on safari to the Ngorongoro crater and climbed Mt Kilimanjaro.
- My middle child won, £1,000 from £100 – we reinvested it in premium bonds, put some in her GoHenry JISA and bought her a laptop for her dyslexia.
I don’t think there are any comparable savings products on the market. Premium Bonds are unique, because they are government-backed, have a sense of humour (numbers are picked by ERNIE), and amazingly for the UK Government, customer service is fantastic. You can call them, live chat, and email, or if you are that way inclined you can send a letter.
You can see a list of some other prize draw savings accounts here, but they are mainly marketing gimmicks.
Should you buy Premium Bonds?
Yes, you should.
- If you have a little bit of money – you can’t lose, if you don’t win you can get your money back
- If you have lots of money – you need to spread your risk around lots of savings accounts in case they go bust and have a better chance of winning
- If you might need your savings back soon – sure you have to save for three months before your bonds are entered into the draw, but you’re still in with a chance and can get your money back quickly
- If you are a long-term saver – to be honest there are better returns elsewhere for long-term savers, but you can’t put a price on dreams, hope, and what-ifs…