Are Premium Bonds A Good Investment?

Premium bonds are the most popular 'investment' in the UK, but should they hold that title? Are they even a good investment?

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Timestamps
00:00 - Secure
01:00 - Lottery
02:10 - Attractive
03:04 - Maths
04:30 - Ghosts
05:22 - superstition
06:52 - Calculate
08:00 - Investing
11:04 - Tax
13:10 - Spice

[DamienTalksMoney]

This video is the first in a new series where each month we will examine whether popular ways to save and invest actually live up to their promises. Please drop your suggestions below for what else you want me to cover.

[markmahood]

I've my emergency fund in premium bonds. I find it handy as I'm not tempted to spend it as its out of my current account. Also i do it instead of the lottery for a small bit of excitement in an otherwise rather dull existence 😂

[AliBapcyk]

The production quality on your videos is really getting next level. Watching the journey is such a joy. Love to see it.

[VegasMilgauss]

As a high rate tax payer the fact they are tax free, safe as can be and can be accessed whenever make it a no brainier for emergency fund.

[drfurbz]

The production value on these videos is really starting to show, love the content keep up the good work.

[IssieAndLife]

This is a solid video! I've been keeping most of my emergency fund and house deposit in Premium Bonds for the last 2-3 years for the exact reasons you describe at the end. I've found the golden amount to hold is between £20k and £25k for "luck" and payout reasons. Using the MSE calculator, I worked out that keeping less than £10-15k or greatly increased how much luck factors into the winnings.

In my personal situation I've found I've been better off with PBs compared to best interest savings I had access to by about £100 in the last year. It definitely needs to be compared to savings account as opposed to an investment. Obviously in my case I should've invested 2-3 years ago, but I may need quick access to the money, and I'm not eligible to use a LISA for house purchase.

[repentmaster]

It's highly liquid (withdraw when needed), risk-free (guarantee capital preservation) and tax-free, with high potential upside (albeit low chance). Certainly has its unique place and value amongst the heavily-taxed British. As you said, it's a tax-free shelter for the people (especially those who can't afford to hire accountants to setup companies/FICs to dodge tax), so it's doing good for the public

[adamp]

Additional rate payer here, yes PB are where I stick my emergency fund. It's liquid, safe, and if I'm lucky enough to win (usually between £25-£100 a month) I don't pay any tax.

[seanwalsh]

I stopped my DD to lotto around mid 2021. I basically just took my £25 DD for Lotto and instead used it to get premium bonds.
I was lucky to win £100 last October which now has my pot at £1125. That’s more than I have seen in return from lotto in a 5 year period. I’d go as far as to say with lotto I was massively out of pocket. This swap was and still is a no brainer for me. When pairing up against lotto.

[alexisval-ex]

One aspect you didn't highlighted is the security of premium bonds. It's important to note that NS&I is government-backed, ensuring the safety of funds in the event of bank failures or similar circumstances. This makes premium bonds a secure alternative option for holding money also.

[dm]

Your videos are just getting better and better. Going on location, and interspersing these historical videos is awesome!

[Nates]

What a video Damian! Loved the new format, loved the structure of the video and the fact that it contained everything that it needed and still wasn’t boring or too long. Bit of history, a few puns and jokes, maths and taxes of it all and then the personal reference and your personal take.
Great video overall, keep up the good work!

[progresssuccess]

8:17 Damian this is one of the most important things I have ever heard you say that I don’t think a lot people understand it! Could you cut this into a short to expand its reach!! This I feel aligns with your purpose/goals 😉

[lyracian]

I have heard it all before but did enjoy the way you presented it.

For me Premium Bonds are my emergency cash fund due, as you said, to the tax free return. Once I have 20k in my ISA each year then spare cash goes into bonds.

[scoobydooism]

Finally, someone from a younger generation than myself giving good quality investing advice. Keep it up mate…loving the “out and about” style of video too, it’s a good concept, makes everything feel like a mini documentary rather than someone sat in a boutique studio rattling off shite…that’s when the viewers attention span falls off, keep up the good work pal💯👍🏻

[MoneyGist]

I think the original problem was referring to this "investment" as "bonds."

[DeeJayFahrenheit]

I had Premium Bonds since I was a kid in the 90's. Not once did I win any amount. I had forgotten I had my bonds until last year, then I hit up NS&I and sold them. I walked away with £1800. That's £1800 that had sat there NOT accruing interest for almost 3 decades.

[ademcguinness]

Essentially, if you struggle with good financial habits (such as paying yourself first and leaving your savings alone) then premium bonds can be a helpful tool to help you save. They are not investments in my view, but a lottery ticket where you loan the government money and you might get a prize over your entire life, with the benefit of not affecting your Capital Gains Tax :) People on the internet stating it has a "yield " claiming the chance to win is an effective interest rate is at best misrepresentation and at worse a terrible lie.

[paulm]

Superb explanation, I have a tiny £500 in premium bonds I've had for a while but I've wasted untold amounts on the lottery. Will follow your suggestion and pay into my bonds instead.

[TomARowly]

Not for the individual - but great for the government