What experts think of Premium Bonds
AS co-founder of savings advice service Savings Champion, Anna Bowes spends her days pointing people in the direction of the best bank and building society accounts.
But she is also a big fan of Premium Bonds. ‘I love them,’ she says, ‘especially in the low interest rate environment we find ourselves in.’
Although her last win (£25) was nine months ago, she says National Savings’ move to encourage more adults to buy the bonds for under-16s is welcome. ‘It’s great news,’ she says. ‘Anything that spices up the savings culture in this country is welcome.’ Anna now plans to use the more relaxed rules to buy bonds for her godchildren and nieces when their birthdays next come round. Helena Morrissey, head of personal investing at Legal & General, also applauds National Savings’ move although she describes Premium Bonds as ‘more like a small scale lottery than an investment’. She adds: ‘I really do welcome the relaxation in the rules. We need to encourage more intergenerational and family investing to help the younger generation.’ Although the oldest of her nine children were gifted Premium Bonds by grandparents as babies, she says winnings have been sparse. Yet the new rules may tempt her to buy some bonds for her niece and nephew as Christmas presents. She also hopes the Government will now look at extending the same flexibility to Junior Isas. Currently, a Jisa can only be opened on behalf of a child by a parent or legal guardian.
Natalie Ceeney, former boss of the Financial Ombudsman Service, welcomes anything that gets people to save, particularly at an early age. ‘If the change in Premium Bond rules encourage people to save, that’s great by me.’ But she prefers tax-free saving via an Isa.
Baroness Altmann, a former Government Minister, says Premium Bonds will now be ‘an excellent birthday idea’ for her nieces, nephews and friends’ children. ‘Better than money in the bank,’ she says. She currently holds the maximum £50,000 and has been encouraging her 87-year-old mother to buy them too.
Lone wolf is Jason Hollands, a director of wealth manager Tilney. He has never bought Premium Bonds for himself or his two children, aged ten and 11. ‘The bonds are as exciting as watching paint dry,’ he says.
Instead, he prefers to save for his children through investment-based Jisas. He says: ‘I invest on their behalf each month into investment trust F&C. Yes, it’s volatile, but in terms of delivering long-term returns it’s a no contest.’