Premium Bonds: The actual odds of profitable a prize revealed as most are ‘lacking out’

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Your help makes all of the distinction. Learn extra The actual odds of profitable a prize by means of Premium Bonds has been revealed as a private finance knowledgeable weighs in on how worthwhile the favored financial savings possibility actually is.

Premium Bond holders are ready a mean 3.5 years to win a single prize, new evaluation from Octopus Cash has discovered. In 9 out of ten of those instances, this prize is value lower than £2,000.

These findings imply financial savings in Premium Bonds are more likely to be “quietly shrinking in worth,” Octopus Cash CEO Ruth Handcock says, calling into query whether or not this fashionable monetary product is the most suitable choice for savers.

Hundreds of thousands of individuals within the UK now have some financial savings in Premium Bonds, with the government-backed scheme holding greater than £127 billion throughout 24 million accounts.

<img src="https://static.independent.co.uk/2023/06/30/16/88b85ca917c0dd43581bc781a57d7c04Y29udGVudHNlYXJjaGFwaSwxNjg4MjIzODgz-2.30020024.jpg" srcset="https://static.independent.co.uk/2023/06/30/16/88b85ca917c0dd43581bc781a57d7c04Y29udGVudHNlYXJjaGFwaSwxNjg4MjIzODgz-2.30020024.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2023/06/30/16/88b85ca917c0dd43581bc781a57d7c04Y29udGVudHNlYXJjaGFwaSwxNjg4MjIzODgz-2.30020024.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Millions of people the UK now have some savings in Premium Bonds" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Hundreds of thousands of individuals the UK now have some financial savings in Premium Bonds (PA Media) The funding product from Nationwide Financial savings and Funding (NS&I) offers savers with a novel alternative to win money prizes relatively than accrue curiosity as with an everyday financial savings account.

Every month, each account holder is entered right into a draw with prizes starting from £25 to £1 million. Every £1 entered has a 22,000-to-one probability of profitable, with £25 being the minimal and £50,000 the utmost.

The brand new evaluation additionally reveals how a lot is perfect to carry in Premium Bonds to spice up the prospect of profitable a prize. Over the previous 5 years, 94 per cent of jackpot winners held over £10,000, whereas three quarters of them held over £25,000.

For many who do win prizes, it's exceedingly uncommon that this might be anyplace near the highest prize. In 2024, 88 per cent of prize winners received lower than £2,000, whereas solely 0.32 per cent received over £10,000.

An accompanying survey of two,000 Premium Bond account holders discovered that the principle motive for selecting the product is the perceived lack of threat, adopted by the tax-free standing of a win and the opportunity of a big return.

<img src="https://static.independent.co.uk/2024/10/22/11/109a4b4c47f9e611b42084923a9d70f6Y29udGVudHNlYXJjaGFwaSwxNzI5Njc5MDU5-2.77197523.jpg" srcset="https://static.independent.co.uk/2024/10/22/11/109a4b4c47f9e611b42084923a9d70f6Y29udGVudHNlYXJjaGFwaSwxNzI5Njc5MDU5-2.77197523.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2024/10/22/11/109a4b4c47f9e611b42084923a9d70f6Y29udGVudHNlYXJjaGFwaSwxNzI5Njc5MDU5-2.77197523.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Over £4.25 billion has been held in Premium Bond accounts that have had no activity over the past decade" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Over £4.25 billion has been held in Premium Bond accounts which have had no exercise over the previous decade (PA Wire) Nonetheless, over £4.25 billion has been held in Premium Bond accounts which have had no exercise over the previous decade. This implies the cash has accrued zero curiosity throughout this time, which it could have carried out in an everyday financial savings account.

Ruth Handcock, CEO of Octopus Cash commented: “Whereas merchandise like Premium Bonds may go nicely for some, others are lacking out on methods that would develop their wealth and ship stronger returns over time. Premium Bonds are unlikely to outpace inflation, so your cash could seem ‘secure’ but it surely’s quietly shrinking in worth over time.

“The reality is that tens of millions of individuals might be getting extra from their cash, however they want entry to inexpensive, personalised recommendation to assist them work out what’s proper for them - one thing that solely 9 per cent of individuals within the UK at present obtain.

“We need to empower individuals with the arrogance to discover choices that assist them obtain their long-term targets – not simply depend on merchandise that really feel ‘secure’ or like a ‘fast win’ however fall quick in the long term.”

An NS&I spokesperson stated: “Premium Bonds are one of many nation's favorite financial savings merchandise, providing bond holders the joy of the opportunity of profitable tax-free prizes every month whereas understanding their funding is secure and safe, backed by a 100 per cent authorities assure.

“Each Premium Bonds quantity has a separate and equal probability of profitable a prize every month, nevertheless the extra Bonds you have got, the higher your possibilities of profitable, and the faster chances are you'll win a prize.”