The UKs largest saving product remains as popular as ever after 60 years. Originally introduced by Harold McMillan in 1956 with numbers randomly picked out by ERNIE – the Electronic Random Number Indicator Equipment, it now uses thermal noises in transistors as its source of randomness and can generate over one million winners per hour.
Although a mainstay of many people’s investment portfolio they have recently been subject to a significant decrease in prize money. In June 2016 National Savings & Investments (NS&I) lengthened the odds of winning a prize from 26,000/1 to 30,000/1 – or put another way, you now have a 1 in 31,653,072,200 of winning the £1million prize per £1 bond.
The introduction of Personal Savings Allowance has also eroded what was once a key benefit of premium bonds, the tax-free nature of prizes. This now mean that majority of people will no longer pay tax on their savings anyway.
We appreciate that clients enjoy holding Premium Bonds. Providing they are held as part of a well-balanced and diversified portfolio then they can be a good way of keeping you engaged with your wider financial position. However, it is worth bearing in mind that there are alternatives out there in the investment market.
So now may be the time to consider if “a bit of fun” is preventing you from achieving a real return on your investment. If you feel your investment portfolio is in need of review, or, you would like to discuss potential investment options then please contact the team at Foresight to arrange a meeting.