I know what you’re thinking and no, I have not been sponsored to write this. I think for the first time, I finally have some proper grip on my savings, and I owe it all to premium bonds. As I write this, however, there is something I want to point out. When I say “earn extra money with premium bonds” I would like to emphasise the word extra. It is not something that will make you rich (unless you get really lucky), but I am certainly glad I started investing!

What are Premium Bonds?

Premium bonds are an investment product by NS&I. You can invest as much as you like and a minimum of £25 (March 2019). The difference between investing in premium bonds and a savings account is that there is no interest on a premium bonds account. Instead, you are entered into a monthly prize draw, where you can win between £25 and £1 million tax-free cash.

How do Premium Bonds work?

You can invest a minimum of £25 to get yourself started and you can keep buying bonds until you reach the maximum holding level of £50,000. For every £1 you invest, you receive a unique bond number. So if you invest £100, that’s essentially 100 lottery tickets!

They can be bought for yourself or on behalf of your child, grandchild or great-grandchild. You must be at least 16 years of age if you wish to invest in premium bonds for yourself. But this means that you can start investing in college! Just be sure to speak about it with family members before making a final decision.

Who are Premium Bonds for?

There are many reasons why people invest in premium bonds, but if you’re after a regular income and guaranteed returns, then this may not be for you.

However, I think it’s a great option for short-term savings. I’m using my account as a way to save for my travels. Larry and I invest £100 each on payday and we have already won £25 after 3 months of investing. If we invest £1000 by the end of the year and don’t win anything else, that £25 is still more than double the average interest rate!

Will I lose any Money?

Nope! Although the investment process works like a lottery, you’re not actually “buying” anything. That money sits in your account until you decide to withdraw, whether you win anything or not.

Should I choose Premium Bonds over a Savings Account?

I’m very much aware that Money Saving Expert isn’t the biggest fan of Premium Bonds, but I’d rather share my personal experience than throw statistics in your face. At the end of the day, it is completely up to you! From my personal experience, it’s a risk-free option that is a little bit exciting if you just so happen to win. If you don’t, your money is tucked away safely for when you are ready to invest in something you have had your eye on for a while.

1 Comment

  1. Howardicomo

    I’ve been contemplating premium bonds for some time now, but this was truly helpful. Thank you so much for your advice and personal take on it!

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