How Viable Are Premium Bonds

Do you think you should win at a least a prize ifvery safe investment because you won't lose
you have invested 30,000 pounds in premiumyour money. Unlike any other bonds, you can
bonds? There is no guarantee that you will win awithdraw your money at any time.
prize even in your lifetime. But the report saidThe negating factor is that you don't earn any
that there are 168 millionaires from the winninginterest from these bonds. But you have an
the grand prize since 1994. So, you may stand aopportunity to become a millionaire. In addition,
chance to win.you can use the same bonds for every draw. If
Anyone can buy premium bonds. The onlyyou compare to lottery, then you understand that
requirement is the person must be at least 16why so many British people invest in these notes.
years old. You can invest as little as 100 poundsIn the lottery, you have to buy all the time but
or as high as 30,000 pounds.for premium bonds, you can buy one time and
Although the bonds don't give you any interest,you are entitled for a lifetime opportunity to win
but the money which is pooled together from all1,000,000 dollars of cash provided that you don't
the investors provides a sufficient fund for theredeem them for cash.
cash prizes. You can calculate the interest byAnother factor that many people don't consider is
taking the total cash money and divide it by thethe inflation rate. Although you don't lose your
total investment. It will come to about 4% forinvestment, but the inflation will depreciate the
every pound invested.value of your investment. What you have
How do the National Savings and Investmentinvested 10 years ago is not going be the same
agency determine who is the winner of the cashworth should you decide to redeem the bonds
prizes? Every month, they will draw randomtoday. You would not be able to buy many things
numbers using a number generator which istoday if you could buy them 10 years ago with
known as ERNIE. It will prevent any kind ofthe same amount of money.
pattern. This will ensure that no one can cheat thePremium bonds are safe investments. Today, the
machine. Every bond will have a unique number.National Savings and Investment firm offer an
However, you need to remember one uniqueeasier way to buy the bonds. You only need to
code. This unique code is issued to you as acall them by phone. Apart from this, you can buy
bondholder when you buy your first premiumthem from post offices, ATMS or directly from
bonds. With this unique code, it can trace to allthe agency. You only need to remember one
your bonds that you have bought.thing. It is risk-free and offers no interest.
The good thing about this investment is that theNevertheless, it is not inflation-proof. The value of
government guarantee it. You can say that it is ayour investment will depreciate over the time.