Investing In Premium Bonds Is It Worth It?

So here’s the back story to this, 2 years ago we decided to move house to be closer to the kids. I suppose too we were thinking of something a bit smaller and if possible a place by the sea. As it turned out we sold the house very quickly, without a month but because the locations were wanted to move to were a 3 hour journey it meant house hunting was difficult. A few camping trips and we were already staring into the face of completion on our sale but nowhere near having anything to move in to. We didn’t want to mess our buyer about so we also started looking for a short term rental. This also was difficult s we have a dog but we did find a place to take us. In fact by this time we had decided with would work on a 2 years plan.

The plan was simple, we had money form the house sale to cover rent so we would both leave off work and do whatever we wanted. We estimate the cost of this over 2 years and thought with Brexit effecting house prices it might cost us a bit less but we would aim to find a property to buy & move in within a year then have another years to do any work or just decide what we wanted. Our options included buying a business or starting a business or even buying and selling property.

So by now we’ve sold the house, moved into the rental and have a lump sum in the bank. Our next concern was the interest rate on this lump sum. Spreading over accounts we could get 3% interest, which to me amount to very little. So in the end we looked at premium bonds. We are allowed to invest £50,000 each so £100,000. No interest but also no risk and two chances to gain via the monthly prize draw. If we hit the big prize we could win £1 million tax free. But our hope was we would just match the 3% we could get at the bank. This really wasn’t full 3% because it has a number of restriction on the total invested in the account and the length of time you get the higher rate. The standard rate is even not worth mentioning.

We kept a spreadsheet on our progress. So this might help other thinking of doing the same thing. We think it was worth it, the little exciting at the beginning of each month was funny if mostly disappointing and we  had some banter between each other as one week my bonds with win the most and the other her bonds would. Anyway for good or bad, suppose we all have opinions, here’s the results;

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Author: Delicate Dave