Martin Lewis gives updated advice on premium bonds
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Premium Bonds, overseen by NS&I, have been running as a system since the 1950s, giving Britons the chance to strike it lucky. Each month, a prize draw takes place to create two millionaires and hundreds of thousands of other prize winners. People who choose this option with the Government-backed savings provider forgo interest, which instead goes towards funding the monthly prizes.
However, the popularity of Premium Bonds may be waning as Britons consider the options at their disposal.
This is something discussed by Ed Monk, Associate Director at Fidelity International.
Mr Monk has attributed a potential aversion to Premium Bonds as the level of inflation, which has continued to skyrocket.
When his decision on Bonds was first made, Consumer Prices Index (CPI) inflation was running at 0.4 percent.
However, now it is a staggering 5.1 percent, representing a dramatic shift.
Mr Monk added: “When I bought my Premium Bonds, a one percent return looked enough to keep pace with prices – now it is badly lagging behind.
“I may get a better return with Premium Bonds than cash savings – but both look inadequate when compared to how quickly prices are rising.”
But another aspect of his decision to do with Premium Bonds relates to improving rates on cash savings options.
Pension warning for 2022 as Britons could be hit by ‘large fines’ [ANALYSIS]
Millions could be in line for state pension age ‘reprieve’ [UPDATE]
Inheritance tax warning as Britons face shocking interest rate bill [INSIGHT]
Over the last 18 months, instant access rates have been fairly dire, leaving savers with little opportunity to grow their cash.
However, fortunes may be changing for savers, as Mr Monk went on to highlight.
He said: “Rates on cash saving accounts have been improving.
“A year ago I could only find suitable accounts paying 0.51 percent. Now the best rates are more like 0.71 percent.
“If I’m willing to use a notice account where I need to give a few months’ warning before withdrawing my money, the rate jumps to 1.1 percent.”
As a result, Mr Monk, alongside others are now questioning the suitability, and indeed viability of Premium Bonds.
In addition, it has also made the expert look at cash savings, still the most popular method of putting money away.
While highlighting returns have improved on cash, they are still somewhat measly when compared to rising inflation.
Consequently, some may wish to look at the option of investment if they want a higher return.
What is happening where you live? Find out by adding your postcode or visit InYourArea
Investment could be lucrative, however, Britons should always think about it carefully before embarking upon this choice.
It comes with risk, as a person may get less back than they originally put in, and thus should be aware of this.
In addition, investment is considered to be a long-term endeavour and therefore it might not be suitable for those who want instant access to all their savings.
The next results for Premium Bonds are due on January 5, 2022 – the first draw for the New Year.
Two lucky people will wake up as millionaires, as well as a host of other individuals winning a range of prizes.
December’s millionaires were from West Sussex and Lancashire, holding the Bond numbers 306VK958372 and 437QD081540 respectively.
Source: Read Full Article