What Makes Premium Bonds So Successful

After looking at some statistics of Premium bond holdings, I was thinking what is it that makes them so successful and popular, in spite of the odds of winning. About 40% of the population of the country owns these bonds, which makes around 23 million people. People are investing around £14,500 in these bonds every minute. Among the 23 million people who are the holders of the bonds, there are 50% who have been investing in bonds for more than ten years. This means that the bonds do have some characteristics that overcome the odds of winning. With these statistics, one can easily see that the popularity of premium savings bonds have increased considerably in the fifty years since these bonds were first introduced. The bonds’ returns are not always fixed, and they depend on the bank rates and regulations, and the prizes are not guaranteed. However, the reason they are so popular and successful is that the winnings are tax-free. This makes them a good investment option for people who are in a high tax bracket and want tax savings. Hence, these people invest heavily in the bonds and they have greater bond holdings, which increases their chance of winning immensely. Another advantage of the Premium savings that contributes to their success, is that they can be cashed in at anytime and the investor would lose only the return.

Why Should You Invest In Premium Bonds?

I’ve heard many people say that if there are such low odds of winning in Premium Bonds, then why invest in them. Well, as some people say, that it’s not always about winning. The premium bonds have many other advantages for the investors, besides winning prizes. First of all they are a riskless investment and are protected by the treasury. There are no particular age restrictions. For investors their greatest advantage is that the prizes, which are the return, are tax free - and this saves the investors from a lot of tax, leaving all the profits to them. In times of need, the investors can cash the bonds and get their money back. The only difference would be that then they won’t be getting the return. The bonds don’t need to be bought again and again, and the same bond can win several times because there is no expiry date for Premium savings bonds. There are, however, also one or two problems. Winning is not guaranteed and inflation lowers the value of the bonds. Despite these problems, which are considered important by some people, there are many people who still invest heavily in bonds - and sometimes they do it just for the thrill.

Is It Worth Buying Premium Bonds

Usually I hear many people say that premium bonds are not a very good investment option, and there are several other options that are much better and have greater returns. It is true that the returns, in the case of winning, are not very good as the rate is around 3.4% annually (which is not a good return even if there is any return). However, the investors who are in a high tax bracket and invest large amounts in these bonds have relatively higher returns because the amount that is invested is large. This also increases their chance of winning by a little. On the other hand, a person who has invested a small amount in bonds won’t have a good chance for either winning or getting a return. For example, if there is a person who invests £100 in bonds, then their chance of winning the return would be only 3.4% of 100, which would be only £3.4. So there are many people who prefer other savings accounts and cash ISAs to premium bonds because of their relatively higher returns. But in spite of all these things, every individual has a different view of the worth of the bond because there are some people who like investing in the bonds for to many reasons, while some people don’t. This is why about 40% of UK’s population is investing in bonds and 50% of these people have been doing so for more than 10 years.