A recent analysis suggests that individuals holding Premium Bonds who have never received a prize may have missed out on potential earnings elsewhere, potentially doubling their initial investments.
On average, those who have never won a prize hold approximately £128.91 in Premium Bonds, with an average duration of 8.1 years for unsuccessful bond holdings.
However, a recent study by AJ Bell reveals that if this amount had been placed in a cash savings account, it could have grown by 17% to an average of £150.82 over the same period. Alternatively, investing in a global tracker fund could have resulted in a growth of 162%, reaching £338.30.
For those starting with £5,000, cash savings would have yielded £5,850, while investments could have grown to £13,122. Inflation over the past 8.1 years has increased by 47.9%, requiring £191 to maintain the same purchasing power. It is estimated that there are approximately 14.3 million Premium Bond holders who have never won a prize, constituting 62% of all Premium Bond holders.
Currently, over 22 million individuals hold Premium Bonds, with odds of winning a prize with a single £1 bond at 22,000 to 1. Premium Bonds, offered by NS&I, do not accrue interest but rather enter holders into a monthly prize draw where prizes range from £25 to £1 million.
The maximum investment allowed in Premium Bonds is £50,000, with each £1 investment receiving a unique bond number. Sarah Coles, AJ Bell’s head of personal finance, highlights the importance of evaluating whether Premium Bonds are the most effective investment option, considering the impact of inflation and the potential benefits of savings or other investment vehicles.
Individuals can check if they have won a prize using the online tools provided by NS&I. An NS&I spokesperson emphasizes the entertainment and safety aspects of Premium Bonds, contrasting them with the risks associated with other investment options.
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