As the new year unfolds, financial experts are issuing a timely reminder to the millions of Britons holding Premium Bonds to conduct a thorough review of their investments.
The Current Premium Bonds Landscape
The prize fund rate for the popular National Savings and Investments (NS&I) product currently stands at 3.6 percent. The odds of any single £1 Bond winning a prize in the monthly draw are set at 22,000 to one. While individuals can hold up to £50,000 in Bonds, increasing their volume improves the chances of a win, there remains no guarantee of a return. Many holders can go months or even years without receiving a prize.
Aaron Peake, a personal finance specialist at the free credit score service CredAbility, has highlighted that Premium Bonds are often held as a tradition, with people buying them and then largely forgetting about them while enjoying the monthly draw's excitement. "There is nothing wrong with that," he stated, "but it is still worth checking whether they are working hard enough for you."
A Simple Test for Bond Holders
Mr Peake proposes a straightforward self-assessment for savers entering 2026. He advised: "Going into the new year, ask yourself a simple question. If you stripped away the fun of the draw, would you be happy with the outcome so far?"
He emphasised that a negative answer should prompt a review of one's savings strategy, though it doesn't necessarily mean cashing in all Bonds. "For many people, a mix works better," he suggested.
Weighing the Opportunity Cost
The expert introduced the concept of 'opportunity cost' as a crucial consideration. "For savers wondering whether now is the right time to cash in, it often comes down to opportunity cost," Peake explained. "If savings rates elsewhere are competitive, and you have not seen much joy from the draw, moving at least some of your money could make sense."
He recommended a diversified approach to personal finance, suggesting savers could consider:
- Placing some funds into easy-access accounts for immediate liquidity.
- Allocating a portion to fixed-rate accounts or cash ISAs for guaranteed returns.
"Structuring your savings like this spreads risk and gives you a better balance between certainty and chance," Peake told Bond holders. He concluded by noting that the new year is an ideal time to align savings with fresh financial goals, ensuring one's money is positioned as effectively as possible.
