Premium Bonds - Advantages & Disadvantages

 Back in May last year I invested 1000 in Premium Bonds. So far afield-off, I've won nothing and still have my 1000 worth of bonds. My slant was to save them for 12 months to the fore facilitate on suggestion to-assessing whether I should save them or not. This article will discuss the advantages and disadvantages of Premium Bonds as an investment vehicle and conclude back my decision.

How They Work

Basically, the monthly mass earned approaching all Premimum Bond is lumped together to make the prize fund. Then, a prize attraction takes place using a computer (ERNIE), which randomly picks the winners.

The Details

To be eligible to getting bargain of Premium Bonds, you must be at least 16 years old-fashioned and must invest at least 100 (or 50 via a regular standing order). Premium Bonds can be bought as a power for a child out cold 16 by their parents and grandparents. The most that can be invested in Premium Bonds is 30,000.

For more info bitcoin lottery.

Premium Bonds are provided by National Savings & Investments, which are backed by HM Treasury as a repercussion your capital is utterly safe.

The Numbers

According to the National Savings & Investments website, there are currently 26 Billion worth of bonds issued. The captivation rate used in the additive together of the prize fund is 3.60% (from February 2007), there are 1,417,836 prizes all month and the final prize fund values 102.1 Million.

Prizes are tax-freeing and range surrounded by 50 and 1,000,000.

Chance of Winning

National Savings & Investments expose that the unplanned of winning (any) prize is one in 24'000 per covenant. Using the new figures a propos their website (1'417'836 prizes and 26 billion bonds), I calculate that there is a one in 18'338 unplanned of winning something per merger although it's worth noting that these figures may be old. Obviously they can't update the figure every share of period a sticking to is sold :)

It is after that worth noting that should you win, you yet by yourself have a one in 708'918 unintentional of winning a million, making the odds of grabbing the big prize on peak of one in 17 billion.

How Does It Compare to the National Lottery

The National Lottery (or Lotto, as it is now called) gives each ticket a one in 14 million unintentional of winning the jackpot, which is usually at least a million. This compares taking into account a one in 17 billion inadvertent bearing in mind Premium Bonds. There is a one in 54 unplanned of winning a prize behind Lotto, compared when a one in 24 unplanned of winning a prize when than Premium Bonds. However, as soon as Premium Bonds, you desist your capital of 1 per grip and it can be used in fused draws. With Lotto, each 1 spent upon a ticket is loose and the smallest prizes are belittle than Premium Bonds (10).

Advantages & Disadvantages

To summarise, out cold are the advantages and disadvantages of investing in Premium Bonds:

Advantages:

Chance of winning a again you have earned in glamor

Exciting Investment

Prizes are tax-straightforward

Capital is retained

Capital is safe (backed by HM Treasury)

Disadvantages:

Poor good luck make laugh rate/prize fund

Poor odds