Anyone know much about premium bonds?

TheBigCheese · 30 Apr 2011 at 09:30

This might help.

ColourPurple · 30 Apr 2011 at 10:07

With £100 in premium bonds for around the past ten years I've won a £25 prize once, which is ahead of the expected returns. I wasn't expecting to gain anything and was pleasantly surprised when I received the £25 cheque.

Spektor · 30 Apr 2011 at 10:12

There are better things to invest in that will give you a sure return. Premium bonds are basically you gambling against the interest rate you could have in an ISA or w/e. There is a very decent chance you will lose out on it altogether, but of course you may find one day you just got a few thousand. But the odds are just insane with them, they make the national lotto almost look like a coin toss.

If you have a bit of cash to invest that isn't mission critical, do it. If you're genuinely saving for your future and the investment is important, don't.

Jpinner · 30 Apr 2011 at 10:15

I brought £1,000 in premium bonds just before Christmas and I won £25 when they were entered into their first draw

Vonhelmet · 30 Apr 2011 at 12:19

ColourPurple said:
With £100 in premium bonds for around the past ten years I've won a £25 prize once, which is ahead of the expected returns. I wasn't expecting to gain anything and was pleasantly surprised when I received the £25 cheque.

1.03^10=1.35 so you're £10 behind what you could have got with a 3% investment, which aren't hard to come by.

daver · 2 May 2011 at 20:35

Moses said:
Definitely not .

So it seems I had a letter this weekend saying that one of my bonds is to mature in July and I can't renew it

Presumably the others will be the same when they mature

Apparently they were taken off sale because they gave the NS&I an 'unfair advantage' over other banks and building societies. Supposedly going back on sale this summer at RPI+1%

CliffyG · 2 May 2011 at 20:38

Had some since i was a kid. Won a hundred quid and im 32 lol. No idea how many i have though.

aardvark · 2 May 2011 at 20:47

vonhelmet said:
As an investment, they're worthless, as you're all but guaranteed to lose out to inflation.

i agree - they are pointless.

iviv · 2 May 2011 at 20:54

TheBigCheese said:
This might help.

What he said, though this page has more info on how it actually works. Two key quotes from the article:

In a typical draw, each bond's chance of winning a million is over 40 billion to 1.

The value of prizes paid out is determined by an interest rate, which is currently 1.5%, though it changes, usually following a change in Bank of England UK rates. This means if you owned every Premium Bond in existence, the amount won over a year would be equal to 1.5% of what you put in. So very roughly, on average for every £100 put into Premium Bonds, you'd expect a £1.50 annual return.

Yet because of the way the prizes are allocated, the majority of people will win much less than the interest rate anyway.