Premium Bond holders who have never won a prize could have more than doubled their money elsewhere, according to analysis by investment platform AJ Bell. The average amount saved in Premium Bonds by someone who has never won is £128.91, and the typical holding period for unsuccessful bonds is 8.1 years.
Comparison of Returns
Over this period, that £128.91 could have grown by 17% in cash savings to £150.82. However, if invested in a global tracker fund, the same amount could have grown by 162% to £338.30. For a starting amount of £5,000, cash savings would yield £5,850, while investment would grow to £13,122.
In the last 8.1 years, prices rose 47.9%, meaning savers would need £191 to maintain the same spending power today. There are 14.3 million holders who have never won a prize – 62% of all Premium Bond holders.
Premium Bonds Basics
More than 22 million people currently hold Premium Bonds, a savings product from NS&I where instead of interest, holders are entered into a monthly prize draw. The odds of a single £1 bond winning are 22,000 to 1. The smallest monthly prize is £25, and the largest is £1 million, with two £1 million prizes awarded each month. The maximum investment is £50,000, and each £1 invested gives a unique bond number.
Expert Insight
Sarah Coles, head of personal finance at AJ Bell, said: “The bonds don’t pay any interest, so if you don’t win, you don’t get a return on your money. It means that over time, you’re losing spending power after inflation, and the impact can be shocking.” She added: “There will always be people who love Premium Bonds, and there will be those who have never won but still cling to the hope that their lucky day might be around the corner. However, if you’ve left money in these bonds for years, it’s worth considering how much you’ve won overall, and asking yourself whether you have kept pace with inflation, or whether your money could be working harder for you in savings or investments.”
Holders can check for prizes using the NS&I online prize checker tool or the Premium Bonds prize checker app. The Mirror has contacted NS&I for comment.
