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Are Premium Bonds A Good UK InvestmentDiscussion article on buying UK Premium Bonds as an investment with advantages and disadvantages of Premium Bonds with our example of Premium Bond winnings: 
National Savings Premium Bonds are purchased from The Post Office, at the PO website, by telephone or via the mail using premium bond application forms available online or at a local Post Office. Premium bonds can be purchased in multiples of £10 up to a maximum of holding level of £30,000 per person
(at the time of writing 2009). Each purchase of premium bonds must be for a minimum of £100 though, or £50 by monthly direct debit or standing order. Each person gets a unique holder's number when he or she buys premium bonds. This is a 9, 10 or 11 digit and letter number and references any transactions, purchases, winnings, unclaimed premium bond prizes etc and should be kept in a safe place and quoted on any correspondence to the National Savings and Investments.
Once purchased the premium bonds will skip one month's premium bond draw and then be entered into each draw until the owner cashes them in. Our tip when buying premium bonds is to buy them at the end of the month so that your money stays in your bank or building society for an extra few weeks earning interest. If you choose to have any premium bond winnings paid out to you as more premium bonds, ie a re-investment, then they do not skip a month and go straight into the next month's draw. There is more written about this further below this article.
The premium bond numbers are drawn by a computer called ERNIE in Blackpool. ERNIE means Electronic Random Number Indicator Equipment and each premium bond number is drawn completely at random. Parents and grandparents can buy premium bonds as gifts to children and grandchildren. You must be aged over 16 years to buy premium bonds. Is It Worth Investing In UK Premium BondsPremium Bond Prizes The top monthly prize for premium bonds is £1 million and this is tax free. There were two £1 million prizes each month in the premium bond draw though this changed to one £1 million winner from April 2009 as a result perhaps of the recession and credit crunch. Instead this £1 million was given over to over one million £25 prizes for premium bond winners which changes the question Are Premium Bonds A Good UK Investment? All prizes from the National Savings Premium Bonds are tax free. So depending on how often you win depends on whether you think premium bonds are a good UK investment. Each bond has every real chance of winning this top prize. Every £1 bond is entered into each premium bond draw each month until cashed in. Other premium bond prizes are:£100,000, £50,000, £25,000, £10,000, £5000, £1000, £500, £100 and £50. Each premium bond prize value has a set number of prizes. So for example in December 2006 there were 12 winners who each won £100,000, 50 winners who each won £25,000, 247 winners who each won £5000, 7311 winners who each won £500, 265799 winners who each won £100 and 1154794 winners who each won £50. To answer the question is it worth investing in UK premium bonds read this article to make your own mind up. We at findextrawork love premium bonds because we have won many prizes and shall describe examples of our premium bonds winnings and what level of savings we had to achieve them. Advantages of Premium BondsWe will now look at the pros of premium bonds to help you decide if premium bonds are a good UK investment The major advantage of premium bonds is that you could win a large prize and many shrewd investors will invest in premium bonds in the hope of winning the large £1 million prize and along the way they often win the smaller prizes. For example our family invest in premium bonds at different times of the year and cash them in to make purchases, pay bills etc. During the time of owning premium bonds we have won prizes of £25, £50, £100 and £500. Each month one of the family wins at least £50. Premium bonds can be cashed in at any time and the full value of the redemption will be given to you. There are no penalty clauses for cashing in premium bonds and there is no minimum length that you must keep bonds., though newly purchased premium bonds cannot be cashed in for one month to allow the NS&I time to process your order and deliver your certificate of premium bonds. Winnings from premium bonds are free from UK Income Tax and Capital Gains Tax. NS&I will keep the personnel information of all their winners confidential. So no need to worry about getting begging letters as happens to many national lottery winners. NS&I will never reveal your details, not even the identity of the £1 million premium bond winners. They do reveal the County of the winner and the value of the winner's holdings and the value of the winning premium bond. This information cannot identify a premium bond winner. It is fun! We love the excitement of checking the online premium bond checker at the National Savings and Investments website each month. All you have to do is enter your unique holder's number into the search box and they will display any winnings. This normally goes live after the third working day of the month. Even the smaller £50 prizes are celebrated in our house! The checker will also show previous month's winnings. The premium bond review article continues further below. 
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If this page has not answered your questions or you need some more advice then please feel free to e-mail me. I would also welcome any advice to increase the information on this page to make it more useful to others. So feel free to e-mail me your thoughts. I would also appreciate it if you were to send the url of the www.findextrawork.co.uk to your friends, forums and websites. Automatically Add www.findextrawork.co.uk To Your Favourites Folder - Bookmark Us. The site is updated weekly with new earning opportunities. How To Cash In Premium BondsThe easiest way to cash in premium bonds is by obtaining National Savings and Investments form NS&I 303 and a pre paid pink envelope (NS&I 350). It takes only a few minutes to fill out the cash in premium bonds form and you must remember to include the premium bonds that you wish to cash in. It normally takes about ten working days to have the money paid to you as a cheque or paid into a bank account. Premium bond tips are to cash in after the 1st of the month if you can because your bonds are in for one last draw and you could win. Our other premium bonds tip is to include your bank details on the form, rather than request cheque payment. By including your bank details you will get the money paid in much quicker and it is far safer. We have had our repayment paid into our bank account in a record three days and normally have them paid in within 7 working days. The premium bond employees are busier with redemptions at the beginning of the month because that is when most people cash their bonds. We find that when we cash them in after the first week of the month we receive our money much quicker. Premium Bond Winnings
The first time you get your premium bond winnings (after you have finished dancing round the room!) it will be in the form of a cheque. Winnings are sent out in the first three weeks of the month with higher winnings sent out first. Our smaller wins of £50 and £100 have always been received around the 10th of the month.
In the same envelope as the winning premium bond cheque is a small blue form which can be filled out to request that any future premium bond winnings be made by an instant purchase in more premium bonds. This then entitles the premium bonds bought this way to go straight into the next monthly premium bond draw, rather than having to wait a full month before going into the draw. If you are investing in premium bonds as a long term investment then this could be worth considering to save you the temptation of cashing the cheque and spending the cash. Premium bond re-investments can build up to a nice nest egg and raise your premium bond portfolio. If you choose this option then any winnings that take you over your personnel allowance of premium bonds will be paid as a cheque payment. If you win any premium bond prizes over £20,000 then NS&I will contact you to ask if you would like cheque payment or re-investment in more premium bonds or other National Savings and Investments products. So in this instance you have the pleasure of deciding to save for your future or treating you and the family to a holiday, car or other treats! If you do choose re-investment as the option for future premium bond winnings you will receive a premium bond certificate to the value of your prize to keep with your other premium bond certificates in a safe place. £1 million Premium Bond Winner
The £1 million monthly premium bond winners will not get their cheque sent. Instead it is the job of one employee at the National Savings and Investments to
personally visit the £1 million premium bond winner to hand over the winning premium bond cheque, pick them off the floor, calm them down, make a cup of tea and
congratulate him or her. I think there is the option of having free financial advice and general money advice to help the £1 million premium bond winner cope with this
sudden life change win. The dream of having a knock on the door on the 1st of the month makes premium bonds a good UK investment for us! We always stay in on the
1st just in case! The person from National Savings and Investments who delivers the £1 million winning premium bonds cheque is called Agent Million.
The Disadvantages of Premium BondsWe can't think of any disadvantages of premium bonds. Even if interest rates go up so that those who invest their money in banks and building societies benefit, so too do investors in premium bonds because the prize values are always dependent on current interest rates to make investing in premium bonds worthwhile. So for example the January 2007 percentage rate for premium bonds fund prizes is 3.75% tax free. Even if you loose your premium bonds, they get damaged or stolen the NS&I can trace and replace your premium bonds using your unique holder's number, so that isn't even a disadvantage. Premium bonds are a real win win investment and are not a premium bonds scam - we just can't think of any cons of premium bonds. We see premium bonds as a good UK investment because we have had many wins over the years. The Odds Of Winning Premium BondsThe odds of winning a premium bonds prize is about 24,000 to 1. So someone who has invested the maximum premium bond holding of £30,000 could win about 15 prizes a year. In October 2007 the Readers Digest magazine estimated that someone who buys £100 of premium bonds has a 210 to 1 chance of winning a prize. The RD also estimated that with a £100 holding of premium bonds there is a 179 million to 1 chance of winning the £1 million prize. In the same article the Reader's Digest interviewed Mr Justin Modray of Bestinvest points who compared interest rates and considered higher rate taxpayers could get as much as a 6.67% return on premium bonds investments. Example of Premium Bond WinsWe have been investing in premium bonds for over 20 years. The first few years we had only a few hundred pounds in premium bonds and won nothing until we invested a £2000 windfall from another investment. We won three £50 prizes and one £100 prize in two years. When we found ourselves in between houses and were renting we wanted to invest the money we gained from the sale of a house so we invested £20,000 in premium bonds so that we would have instant access to our savings to put a good deposit on a new house when we found the right one. In that eighteen month period we won £50 a month consistently and two £100 prizes and one £500 prize. This gave us a tax free return of £1600 from a £20,000 investment for a year and a half. To get the same return we would have had to have about 5.3% net interest rate and probably have had to tie up our money for at least a year, if not longer. These premium bond wins are given as an example of why we consider premium bonds to be a good UK investment. Some holders of premium bonds may win more, others less. There is a degree of luck involved and some may say that the more of a premium bond holding a person has the more chances they have of winning. Whatever level of investment you can afford to make do give investing in premium bonds some consideration. Real people win the cash prizes which are tax free and it is a fun and safe investment. Premium Bond TriviaYou will probably have realised that we love premium bonds at find extra work. So below we have gathered some premium bond trivia for your enjoyment. Premium Bonds Ernie
We love ERNIE, he sends us money each month! ERNIE was first made in 1957 and since then there has been four ERNIE computers. Together they have produced the numbers for over 110 million tax-free prizes which have been worth over £7 billion.
Each ERNIE premium bond computer has been used for approximately 16 years. The First ERNIE Computer The first ERNIE premium bond computer started work in 1957 using the signal noise created by a bank of neon gas tubes to pick numbers. ERNIE 1 was the size of a van! ERNIE 1 was built by Sidney Broadhurst and his team at the Post Office Research Station. The first ERNIE computer would now take 52 days to finish the premium bond draw. ERNIE number 4 now takes about two and-a-half hours. ERNIE 2 ERNIE 2 started work in 1972 and was a faster computer which was able to produce more Premium numbers to cope with the increased purchases of National Savings premium bonds. ERNIE 3 ERNIE 3 took over in 1988 and was much smaller, about the size of a home computer system. It took about five and a half hours to finish picking the winning premium bond numbers. ERNIE 4 
ERNIE 4 was introduced in 2004 to help cope with the new 11 digit variations of premium bonds and the high number of bonds now being fed into the National Savings computer system and the higher amounts of premium bond prizes. ERNIE 4 can produce variations of all the styles of premium bond numbers such as the 8, 9, 10 or 11 digit variations. When compared to the first ERNIE computer it was found to be 500 times faster. It was developed by LoicaCMG and generates a million premium bond numbers an hour. The first ERNIE could only generate 2000 numbers an hour.
ERNIE receives many birthday cards, letters of thanks and even letters asking him to pick the senders numbers! This was famously depicted in the BBC comedy sitcom Some Mothers Do 'Ave 'Em which starred Michael Crawford as the bumbling Frank Spencer whose mother always sent ERNIE a Christmas card each year. How Many Numbers Does ERNIE Produce Each MonthERNIE produces about 2 million numbers each month but about half have to be rejected because the owners have cashed in their premium bonds or the numbers have not been allocated. How Does Premium Bonds Ensure No Cheating Takes PlaceERNIE generates winners totally at random and gives no preference to location, regions, old or new premium numbers. There are no premium bond scams though there are many misconceptions and urban myths surrounding premium bonds. Government Actuary’s Department Each draw is also independently checked by the Government Actuary’s Department (GAD) using four methods of testing – Frequency, Serial, Poker and Correlation. GAD ensures that there are no set patterns to ensure that the draw has been completely random. A certificate is then issued by the Government Actuary’s Department to verify the randomness of the draw. Do Winners of the £1 Million Premium Bond Prize Own The Maximum HoldingIt is a common misconception that winners of the £1 million premium bond prize own the maximum holding of £30,000. People who own smaller prizes have just as much chance of having their number pulled out by ERNIE, though people who own more premium bonds will narrow the odds some what. As an example the £1 million winner in July 2004 owned just £17 in premium bonds, bought in 1959 when people could buy premium bonds in multiples of £1. The History of Premium Bonds
Premium Bonds were started by the National Savings Bank after the Second World War to encourage British people to save money and the help the Government control inflation. Premium bonds were launched
by then Chancellor of the Exchequer Harold Macmillan in November 1956 at Trafalgar Square,
London. The advertising tagline at the launch of premium bonds was Saving with a thrill.
Unclaimed Premium Bonds
Any unclaimed premium bonds are kept in reserve so that the winner can claim their prizes at any time. There is no time limit to claiming premium bonds and every effort is made to trace the winners of unclaimed premium bonds. There are about 500,000 unclaimed prizes worth a total of £30m held at the National Savings and Investments at Blackpool.
Premium Bonds TV Adverts Sir Alan SugarSir Alan Sugar, a businessman, philanthropist and investor, filmed several premium bond and National Savings and Investments products in 2006. Sir Alan Sugar is best known as the owner of Amstrad and appearing on BBC2 The Apprentice reality television show and is in the Sunday Times Rich List. Sir Alan Sugar donated his fee from the premium bond adverts to Great Ormond Street Hospital. Premium Bonds 50th Anniversary DrawsTo celebrate the 50th anniversary of premium bonds there were two special draws. The first marked the 50th anniversary of the sale of premium bonds. There were extra premium bond winners including 5 £1 million prizes. The second premium bond anniversary draw was held on the 1st June 2007 where there was 5 £1 million winners to celebrate the 50 year anniversary of the first premium bond draw (in those days when you purchased premium bonds they had to wait 6 months before being included in the monthly draw). There was a rush to buy Premium Bonds in April for the 50th birthday anniversary draw, so much so that over £1.3 billion more bonds were bought. Buyers were hoping to win one of the five special £1 million jackpots. In comparison the October draw which had an extra £1 million prize attracted about £2.2 billion in extra sales. This was the largest amount of premium bonds bought in any month. This was because customers wanted to be in the December 2006 and the June 2007 special draws. Over 525,000 people bought their first Premium Bond during the run up to the special 50th Anniversary Draws. This brought the total number of Premium Bonds customers to 23.7 million and over £36 billion invested in Premium Bonds. June 2007 Premium Bond Draw 
There was £1.5 million in prizes as well as the five £1 million prizes for the June 2007 premium bond draw. The odds of winning one of the £1 million
prizes for someone with a holding of £100 was 71 million to 1 and the odds of winning the top prize with the maximum premium bonds holding of £30,000 was
236,000 to 1.
Five £1 Million Winners of the June 2007 50th Anniversary Premium Bonds DrawsAll five £1 million winners of the June 2007 50th anniversary premium bonds draws lived in England. One of the lucky £1 million winners had only just bought their first premium bonds in November 2006. The winners of the June 2007 50th anniversary premium bonds draw were from Nottingham with a total investment of £21910 (the value of the winning draw was £5000), East Sussex with a total investment of £26850 (the value of the winning draw was £300), London Borough of Hammersmith and Fulham with a total investment of £30000 (the value of the winning draw was £5000), Tyne and Wear with a total investment of £30000 (the value of the winning draw was £5000) and Kent with a total investment of £25000 (the value of the winning draw was £5000), Four of the £1 Million Winners of the June 2007 50th Anniversary Premium Bonds Draws had bought their winning premium bonds within the last four years whilst the other premium bond winner purchased the bonds in August 1998. Their ages were between 25 and over 65 years of age. Four Agent Millions were trained to deliver the good news on the 1st June 2007. To date there have been 188 £1million winners, 166 in England, 6 in Wales, 9 in Scotland, 6 in Northern Ireland and 1 who lived overseas. How Many People Own Premium BondsThere are over 23 million premium bond holders in the United Kingdom. Between them they hold £26 billion worth of Premium Bonds. Many are long term serious investors, others have the occasion purchase in the hope of winning a prize from ERNIE - each have a very real chance of winning a tax free prize from National Savings and Investments which makes premium bonds a good UK investment. Can I leave my premium bonds in my will to my children? Our understanding is that the value of premium bonds will form part of your estate which will be handled by your solicitor. These would normally be cashed in by the executor and solicitor and distributed to the terms of your will. However National Savings will allow your estate to keep the Premium Bonds for one year and any prizes will be paid to your estate. This one year is probably in place to allow time for your will instructions to be acted upon and your estate distributed. Something to consider when asking are premium bonds a good UK investment. Premium Bonds CalculatorMartin Lewis, the Money Saving Expert has created a premium bonds calculator at his website moneysavingexpert where each premium bond holder can add his or her amount or premium bonds and how long they project to keep them for in terms of years. The premium bond calculator will then automatically predict how likely it is that the holder will win premium bonds and the values. The premium bonds calculator gives percentages of likelihoods for each type of prize value. This free tool will also compare your likeliness of winning the premium bonds with other savings such as cash ISAs and savings accounts for tax and non tax payers as well as the virtual certainty of winning at Premium Bonds. To use the premium bonds calculator visit moneysavingexpert.com For more information or to buy premium bonds and other National Savings and Investments products visit the official website at www.nsandi.com |
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