30 entries in Premium Bond draws (was it worth it?)

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Premium Bonds are the UK’s largest savings product, with more than 21 million people saving over £118 BILLION in them.

But with other savings rates on the rise, and now beating Premium Bonds, should you still be buying them?

I started buying Premium Bonds at the end of December 2019 which meant my first round draw didn’t qualify until February 2020.

After exactly 30 months with ‘skin in the game’, I wanted to take a look back and reflect on how it’s gone…

What are Premium Bonds?

Premium Bonds are quite a unique savings product.

Offered by National Savings and Investments – a government backed savings vehicle created to raise money for government and public services – people put their savings into ‘bonds’ which are then entered into a prize draw to be in with a chance of winning a cash prize.

Some of the facts:

  • Each bond costs £25
  • You can put in a maximum of £50,000
  • The prize draw is done once a month
  • All winnings are tax free
  • Prizes range from £25 – £1mil (there are 2 winners of the top prize each month)
  • If you win, you can either opt to receive the cash winning as income or reinvest it back into more bonds
  • You’ll never lose your original capital, but there is no guarantee of getting a return on your money

What are the chances of winning?

It can get a little complicated if you went to get into the nitty-gritty, so I’ll let this video fo Martin Lewis from Money Saving Expert tell you:

This was recorded in Dec. 2020.

How much have I put in?

I’ve staggered my deposits in varying amounts just based on how much spare money I have had left over over this time-frame.

I use Premium Bonds as an ‘overflow’ savings account after I’ve maxed out my Lifetime ISA; effectively as a secondary house deposit pot.

2020

My first round of bonds was valued at £150 and over 2020 deposited a total of £10,875 with individual deposits ranging from £150 – £4,875.

A further £50 was deposited over two £25 instalments from two separate prize winnings.

So, if we take my deposits as a whole and compare them to my winnings, that’s a 0.45% return.

HOWEVER, both these two prize winnings came from a single £3,000 deposit. So, in effect, we could say I actually received 1.66% return on the £3,000, but 0% on the remaining £7,875.

2021

Deposits for 2021 didn’t start until April, and this year was a lot quieter than the previous one.

I deposited a total of £2,025 with individual deposits ranging from £250 – £1,775.

A further £100 was deposited over four £25 instalments from four separate prize winnings.

Again, taking my overall deposits with the addition 2021’s contributions, I received £100 from £12,900. Taking these deposits as a whole, that’s a 0.75% return.

HOWEVER, one of these £25 prizes came from the previously mentioned £3,000 deposit from 2020.

A further two £25 prizes (£50) came from a single deposit of £4,875, made in 2020 also.

And the final £25 prize came from a single deposit of £1,000, made in 2020 also.

None of my winnings for this year came from a deposit made in 2021.

2022 (so far)

Deposits so far in 2022 have ranged from £100 – £1,525 totalling £1,925.

A further £50 has been deposited over two £25 instalments from two separate prize winnings.

And taking my final overall deposits with the addition of 2022’s contributions, I received £50 from £14,825, making that a 0.33% return.

One of the £25 prizes came from a single deposit of £4,875, made in 2020.

The other £25 prize came from a single deposit of £3,000, also made in 2020.

Again, none of my winnings have come from a deposit made in 2021 or 2022.

Examining the results

So overall, every prize I have received has come from just 3 of my deposits (£1,000, £3,000, and £4,875).

None of my prizes amounted to more than the minimum £25 win. Although on one occasion I won £50 in one prize draw, but from two separate wins from the same strip of bonds.

The total is as follows:

  • £1,000 x1 win
  • £3,000 x3 wins
  • £4,875 x3 wins

In total I have deposited £14,825 and returned an overall prize fund of £175, making that a 1.18% return over the 2.5 years.

Taking the prize winning bonds in isolation, they’ve made me the following returns:

  • £25 from £1,000 – 2.5%
  • £75 from £3,000 – 2.5%
  • £75 from £4,875 – 1.53%

However, with prizes only coming from 3 out of 12 of my deposits, a sizeable £5,950 has won me nothing (over 40%!).

Of the 9 deposits that haven’t won me anything, the amounts range between £100 – £1,775.

Conclusion

Has it been worth it? For me, yeah probably.

As I mentioned, this has only ever been a secondary house deposit account. I will have surely received better returns on the WHOLE amount if I had just stuck it in an S&S ISA – and not just returns on the 3 out of 12 deposits – but it’s a safer mid-term place to put some cash.

Returns were especially reasonable in 2020/21 when cash savings rates were at an all time low, but as rates start to go up, cash savings may be better placed elsewhere.

I don’t expect to win the big prizes, but enjoy the lottery-style draw and receiving smaller semi-regular wins from my deposits is more than I’m happy with considering I want this money in ~3 years.

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2 thoughts on “30 entries in Premium Bond draws (was it worth it?)

  1. I continue to have some of my emergency cash in premium bonds, which I liken to having cash hidden under my mattress, except that there’s the chance to win something! There’s always someone banging on about them being rubbish investments and yes they are, if that’s all that you’re doing with your cash. You’ve got it right, it would be daft to risk putting house deposit money in a S&S ISA when you can’t predict what the markets are going to do when you actually need the cash. I cashed in most of my bonds for my house purchase so only just slowly building it back up – only 2 x £25 wins so far this year. Good luck with yours!

    Liked by 1 person

    1. Yeah they’re good fun to take a pint once a month! That’s exactly what I’m hoping to use mine for, makes me feel like I’m doing the right thing. I hope you can build yours up again and get some nice wins too 😀

      Liked by 1 person

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