What are premium bonds?

[Squigglesandgiggles]

Good evening all.
I have heard about them for years. But have no idea what they are, how much they cost, where to purchase etc.
can someone please explain simply what they are?
thank you

You buy them, effectively from the government. Each bond has a number. You can always get your money back so it's very safe. No interest paid. Every month some numbers drawn at random get prizes. Top prize is £1m. Prizes are tax-free. That's it!

Google is your friend

https://www.nsandi.com/products/premium-bonds

Low-risk government backed gambling.

It's not gambling if you don't lose the money you invest.

Basically savings, but instead of getting interest all the interest goes into a lottery and they draw winners every month, you could win nothing or a million.

I've had 5k in premium bonds for 2 years and won a couple of £100 wins, one £200 win and lots of £25s. Probably won something maybe 6 times. The more savings you have the higher your chances.
I have a rule that any winnings have to spent on something frivolous and not re saved which has led to some lovely surprise purchases.

It's more like a savings account with the chance of winning something.

Realistically you need to have tens of thousands of pounds worth to get a decent return. The maximum you can have is £50000 and that should give you a return roughly the same as a top rate savings account. Just buying a hundred quidsworth is highly unlikely to yield much, if anything. The prizes range from £25 up to £million. They draw the numbers every month.

How much do they cost per bond (if that’s the correct term)

I love that rule!! My winnings get reinvested but I might rethink that

I prefer a good old fashioned chat

It's basically as if you are putting your money in an account like a bank. You sign up to NS&I. You can log into your account each month to see whether you've won anything. I had £25k of bonds and used to win £25 most months. Smaller amounts less chance of winning and not a great investment . It's easy to draw your money out again, which is one of its benefits

It's much more fun! My best purchase was a pair of all saints cowboy boots that I bought whilst unemployed, reduced in the sale. It felt so naughty as I wasn't working at the time so counting every penny, but they have barely left my feet this winter and been and endless source of joy!

Each bond is £1 but the minimum you can buy at a time is £25.

All the info is on the link posted by Gasp0deTheW0nderD0g

£25 is the minimum. But it's not a great investment if you're only buying a small quantity- you'd be better off with a savings account. (Otoh if you just want the fun of a bit of a flutter, it's a good way to get that without losing your stake.)

Great! Thank you for all the info I think I’m going to purchase some :)

Thanks for asking this question @Squigglesandgiggles because I’m not from the UK and was always confused about them but didn’t really care enough to look it up. 😂 So basically there’s no interest at all? That doesn’t seem like a good investment?

You get prizes instead of interest.

It's gambling guaranteed interest for the tiny chance you'll win a big prize but a big risk you'll get less return than you would in a standard savings account, but if you have tens of thousands of bonds you'll likely win sufficient prizes that the return is in a similar ball park as standard interest and its tax free so good if you've used up your other allowances.

😭 thanks for this thread! Will open one on payday!

Winnings are tax free so if you’ve used up your isa allowance then they’re worth considering. Otherwise you are far better off using your isa allowance.

The return on investment is unpredictable but tax-free, and the capital is completely secure and there's no notice required for withdrawal. Good for the risk averse. Also for higher rate taxpayers.

Make sure you put your money in by the end of the month or else you'll have to wait 2 months instead of one to gk in the draw.

Best time to invest is late in the month to minimise the time your money is not earning interest or in a draw.

@Gasp0deTheW0nderD0g @user04 okay those reasons make a bit more sense to me. Thank you for explaining.

It's quite fun checking if you've won every month - you either get a little video of a happy person or the disappointing "Sorry you haven't won in February" message. I got £100 this month, was v chuffed

In my opinion they’re a waste of time! You’ll more than likely make less than you can earn in interest at current rates and long term you’d be far better off investing the money in funds. Apologies for the negativity, just my opinion.