Premium Bonds Questions (money shrinking draw)?

Question

I currently have £1000 in Premium Bonds that I have had since my Mom and Dad bought them for me 3 years ago, so far I have won nothing.

I was listening to Jeremy Vine on BBC Radio 2 one Friday afternoon and they where talking about Premium Bonds and too things are puzzling me:

Martin Lewis was saying, when you buy Premium Bonds, the bond value starts to shrink and the bonds only stays in the draw for 12 months.

I hope someone here can explain to me how bad this shrinking is for Premium Bond holders?
Also I’m confused about the bonds only been entered into the draw for 12 months, does this mean that I should get my money back and cash them in as soon as possible?

Oh and everyone, Martin Lewis (I think that’s his name) talked about his website called MoneySavingExpert.com which has a Premium Bond calculator somewhere if anyone is interested?

Well thanks everyone and any advice regarding Premium Bonds will be much appreciated.

Answer 1

"Martin Lewis was saying, when you buy Premium Bonds, the bond value starts to shrink and the bonds only stays in the draw for 12 months" ..

Either you misheard or Martin has no idea what he is talking about .. (most likely the latter) ...

(Of course, all money shrinks == it's called Inflation)

Answer 2

Don't worry, your Bonds are entered into every draw, every month - this is stated on their website and it would be illegal to state this if it was untrue!
What he means by your Money shrinking is that if you don't win, your investment doesn't make ANY interest. They are still worth your £1000 - your original stake never goes down - that is why they are an extremely safe option - however, you could win nothing...ever.
I f you put that money into a high interest saving account for example, your £1000 would make £10 (?) a month so, your savings would have increased.
On the other hand, which Savings account offers the chance to make anywhere upto £1 million pounds a month?

Answer 3

Your £1000 in bonds will be entered into the draw as long as you hold them. They are nominally 1000x£1 bonds.

The shrinkage comes from inflation. Your bonds and everyone else's bonds collectively earn interest, but only the select few "prize" winners get a share of that interest. If you fail to win a prize, your holding effectively "shrinks" over time because of the effects of inflation - if you hold them for 20 years without winning a prize your £1000 will be less valuable in the year 2027 than it is in 2007.

Realistically, the chances of winning a prize if you just forget about the money and leave it there for a number of years are quite good. My dad held fewer bonds than yourself for 20 years, and the smaller prizes accumulated. It is the type of investment to just put at the back of your mind.

Answer 4

For years I bought two lottery tickets week (Saturday and Wednesday). When I thought about it I realised that I was throwing away over a hundred pounds a year. The chances of winning the lottery are negligible. I decided instead to buy £100 worth of premium bonds each year, the chance of winning on the premium bonds is also negligible, but the stake money is still mine, and I'm not contributing to the wealth of camelot directors and other worthless causes.

Answer 5

your premium bond numbers will be entered into the draw EVERY month untill you sell them, dont worry!