PREMIUM BONDS Made £0 You can go on the app to see if you’ve won anything
Raelene Rawlings, 45, is a content manager from Fife.
WHAT SHE DID
While Raelene had heard of premium bonds, she’d never considered investing in them. With her £100, she applied for 100 premium bonds on the NS&I website (nsandi.com). Each bond has a value of £1 and has an equal chance of winning the monthly prize draw (prizes range in value from £25 to £1m). Once her application had been accepted, she set up the NS&I app on her phone, which she found made it easy to check the results of the draw each month. ‘I imagine that you can lose track if you’ve bought premium bonds for years, so I think the app gives you a good mechanism to manage them,’ she says.
Although she didn’t have high expectations of a win, Raelene enjoyed checking the draw results each month: ‘You can go on to the app and see if you’ve won anything, so there’s an element of suspense – it’s a bit like checking your lottery ticket!’
HOW MUCH SHE MADE Raelene didn’t make any money. WHAT SHE LEARNED Rather than withdrawing the money, Raelene has decided to keep her £100 in premium bonds but doesn’t plan to buy any more. ‘I guess the longer you have them, the more chance there is of getting a win. But for me, if I had a significant sum to invest, I’d be looking at a stocks and shares ISA or something with the potential for a better rate of return.’
WHAT THE EXPERT SAYS Ben Rogers, chartered financial planner at Equilibrium, says you’d need to invest much more than £100 in premium bonds over a much longer term than 12 months to be in with a chance of making a significant return. ‘If you had £25,000 in bonds, it would still take eight and a half years to have a 50/50 chance of winning £50,’ he explains.
As money held in premium bonds doesn’t automatically generate interest, there are better options if you have cash to invest over the longer term. ‘In the year since the £100 was deposited into a premium bonds account accruing no interest, it has actually fallen in value as high inflation has eroded its purchasing power, whereas other investment strategies could have neutralised or even beaten inflation.’
He does note, though, that premium bonds are very low risk. ‘NS&I is Government-owned, rather than bank-operated, so there’s no risk to your capital,’ he explains. ‘This protection used to be a selling point for premium bonds, but now all Uk-regulated savings accounts are protected up to £85,000 by the FSCS, so it’s no longer as relevant.’