Analysis suggests that individuals holding Premium Bonds without winning any prizes could have more than doubled their savings elsewhere.
On average, those who have never won a prize in Premium Bonds have £128.91 saved, with an average holding period of 8.1 years for unsuccessful bonds.
However, a recent AJ Bell study reveals that if this £128.91 had been placed in cash savings, it could have grown by 17% to reach an average of £150.82 over the same period.
Alternatively, investing the same amount in a global tracker fund could have resulted in a growth of 162% to £338.30.
For those starting with £5,000, the amount would have grown to £5,850 in cash savings or £13,122 if invested. In the past 8.1 years, prices increased by 47.9%, requiring £191 to maintain the same purchasing power today. The report indicates that 14.3 million holders, constituting 62% of Premium Bond holders, have never won a prize.
Currently, more than 22 million individuals hold Premium Bonds, with odds of winning a single £1 bond estimated at 22,000 to 1.
Premium Bonds, a savings product by NS&I, offer participants the chance to win tax-free prizes monthly instead of earning interest on their savings.
The smallest prize is £25, while the largest is £1 million, with two £1 million prizes typically awarded each month alongside numerous smaller prizes. The maximum investment allowed in Premium Bonds is £50,000, with each £1 invested corresponding to a unique bond number.
Sarah Coles, AJ Bell’s head of personal finance, emphasized the lack of interest payments for non-winning bond holders, potentially leading to a decrease in spending power over time due to inflation.
She advised individuals to assess whether their money could be better utilized in savings or investments if they have not seen significant returns from Premium Bonds.
To check if they have won, individuals can use the NS&I online prize checker tool or the Premium Bonds prize checker app.
<p class="Paragraph_paragraph-text__PVK