Premium(?) Bonds
Many of our clients hold Premium Bonds. Many report winning ‘regularly’. I don’t think we only meet lucky clients, so what really is the deal?
The reality is that as a percentage of all the money held in premium bonds (about £67M) the payouts equate to 1.15% per annum interest. That is under half the current rate of inflation so Premium Bond money is currently losing its buying power. The odds of winning the £1m jackpot per £1 bond are about 1 in 33bn. In my book, that’s not much of a chance!
Many of our clients have held these bonds for many years and although they do offer quick access to the cash if needed and there is no investment risk, one wonders if the money could have been put to better use on the stock market.