Premium bonds?

Question

Are they a good idea? Can you take money out if you want as you want?

Answer 1

No investment is a 'good' idea for everyone.

If you are talking about a bond that pays interest (premium) then you generally have to sell them to get your money out.

Answer 2

If you invest the maximum amount, currently £30,00 I believe, then the odds of winning the top prize is about the same as the lottery i.e 14 million to 1. There is also a minimum investment,currently £100 I believe

The difference is that unlike the lottery you don't lose your stake, so you can always cash in your bonds sometime in the future.

However they don't pay any interest so you'll have lost out due to inflation. So your original £100 will be worth something in the region of £95 after one year, about £90 after two years etc.

The amounts that the bonds pay out is calculated on a notional interest rate based on the current bank rate and the total amount invested by all participants.

I believe the rules have changed recently to increase the proportion of the winnings paid to the smaller amounts.

As for them being a good idea only you can answer that.

You need to decide how much you've got to invest.
If it's a lump sum or periodic investments.
What the length of time is that you're investing for.
What level of risk you're prepared to tolerate.
If you're going to need some of the money in a hurry to cover unexpected expenses.

Have a read through the websites listed below and think about what you want to achieve from your savings.

Have a read through the investing and saving sections of the Fool website for some alternatives.

Good luck

Answer 3

By the way, some of the above smells fishy to me. I have a few premium bonds but am no expert, but here is a little tip.

Do not buy premium bonds to make money. They are "fun" and pay no interest. The interesting bit is where you win money. You have to invest in lumps of £50 and can take the small sums (in lumps of £50 ) out at the post office. You can win and a few months ago I won £50.

If you want to make money then you invest depending on your risk and age and how much money you have. The rule of thumb is that you invest first in Isa's and then in, if you are young, shares, if you are older then bonds and fixed interest assets (trackers etc). The difference is due to 1. shares make more in the long run (10 years or more) 2. but can lose in the short-run, so for the older person looking to retire, losing everything, even for a short time could induce a heart attack. (I know you didn't ask this but one guy above said something about investing being not a good idea, it is wrong.

Good luck winning (the jack-pot is mine though)

Answer 4

they're a good idea if you have amounts of £100 to invest (the minimum block you can buy) and you don't need a return on your money. There's no interest as such, just what you may win. To 'take money out', or cash in the bonds you have to give notice but if your numbers come up during that time you are entitled to the winnings. If you want a secure investment with some sort of return try looking at
www.moneysavingexpert.com
for sound advice.

Answer 5

Premium Bonds were introduced almost 50 years ago by Harold Macmillan and are certainly an ideal risk free place to allocate some of you savings.
The capital invested can be withdrawn at any time and will be repaid to you within 2 weeks.

The main advantage of Premium Bonds is that they are completely TAX FREE !

Answer 6

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Answer 7

Good idea if you don't need what you invest. You can win a million tax free. But you get no interest on your money and you can take it out any time you want.

Answer 8

yes u buy them from a pound each and you can cash them. each bond is entered into draws and there are thousands of cash prizes to be won the numbers are drawn be ernie