Explain premium bonds to me?

[CrazyOldMe]

I'm in a position to start investing a few hundred pounds each month.

Would premium bonds be a good place to put £100 a month?

No not really unless you’re incredibly lucky.

It depends on your timescales really. Without knowing your age, current assets and liabilities no one can give you guidance.

premium bonds are great if you’ve used your ISA allowance and capital gains allowance and want the excitement of the monthly draw. I’d recommend going on the premium bond thread for more info.

For small regular contributions a stocks and shares ISA would be a better option assuming you can leave it alone for a few years. If not a good savings account or cash ISA would be better.

@Madmoomoo is right. Premium bonds have a place, but this is not it. The odds of winning with a small investment are tiny - it's essentially playing the Lottery but with a smaller top prize. Even with full holdings the average return is always below what you can get from a good savings account.

Do you have an emergency fund (cash to cover 3 to 6 months of expenses if you lost your income tomorrow, and to pay for unexpected expenditure like the boiler or car breaking down)? If not, start there - a high interest savings account that allows a limited number of withdrawals, or withdrawals with a penalty, so.toure not tempted to dip in unless you really need to.

If you have that sorted already, look at cash ISA for medium term savings. Money you may need in the next 5 years or so.

Then consider your pension - does that need topping up?

And if all that is in hand, a stocks and shares ISA.

My Dh has full holdings, £50,000 and hasn’t won anything the past two months. Sometimes he’s won between £500-£1000 but there’s no guarantee and if you are putting in £100 a month your chances are slim.

As PO have said, if you’ve maxed out isa and pension contributions and you’ve gone over the savings allowance in relation to tax and you’re a higher rate tax payer then it’s worth looking at. Otherwise it’s just like permanently playing the lottery but you don’t lose your initial stake

No, premium bonds are the most likely of all savings / investments to erode the value of your capital. You could go years without winning a penny. They are fine as a last option once you have reached your allowance for the year with ISAs pension etc but at £100 a month it disent sound like that's a consideration. I would just go for the highest interest savings account. A regular saver might be good to start with.

Just as an example this month I have full holdings £50,000 and won £100, DH has £30k and won £25. That isn’t a great rate of return at all. However we are maxed out on our isa allowance and are higher and top rate tax payers. On Monday we will each move £20k out of premium bonds and into ISAs since it’s the start of the tax year.