Analysis reveals that individuals holding Premium Bonds without winning a prize could have significantly increased their savings elsewhere. The average amount saved in Premium Bonds by non-winners is £128.91, with an average holding period of 8.1 years.
Research by AJ Bell demonstrates that during this period, the £128.91 could have grown to £150.82 in cash savings, a 17% increase. Alternatively, investing in a global tracker fund could have resulted in a 162% growth to £338.30.
If initially investing £5,000, the amount would have grown to £5,850 in cash savings or £13,122 through investments. In the past 8.1 years, prices surged by 47.9%, requiring £191 to maintain the same purchasing power today. Approximately 14.3 million Premium Bond holders have never won a prize, representing 62% of all holders.
Presently, over 22 million individuals hold Premium Bonds, where the odds of winning with a single £1 bond are 22,000 to 1. Premium Bonds, offered by NS&I, function uniquely as participants are entered into a monthly prize draw instead of earning interest on their savings.
The smallest monthly prize is £25, while the largest is £1 million, with two £1 million prizes awarded monthly alongside numerous smaller prizes. The maximum allowable savings in Premium Bonds is £50,000, with each £1 investment generating a distinct bond number.
Sarah Coles, AJ Bell’s head of personal finance, highlighted the lack of interest payments on Premium Bonds, emphasizing that without winning, there is no return on investment. Coles encouraged holders to assess whether their funds could yield better returns through savings or investments.
Individuals can utilize the NS&I online prize checker or the Premium Bonds prize checker app to verify if they have won. An NS&I spokesperson praised Premium Bonds as an entertaining savings avenue that guarantees the full investment return and offers tax-free prize opportunities.
