If you play the National Lottery each week you have probably spent a small fortune over the years compared to your winnings, so now is the time to consider Premium Bonds.
Now you probably know the maths but don’t like thinking about it. If you spend £2 per draw per week on the National Lottery, that’s £208 per year. You could probably double that as well, as a lot of people will do more than one line per draw. To make matters worse, in recent times the National Lottery has increased the cost of playing and lowered the chances of winning by including more numbers.
So why do you still do it? The main reason is probably fear of missing out. The thought of no longer playing the lottery and thinking but “if only I had played this week I could have won the jackpot”.
Well there is another way to play a form of lottery that could give you the chance of winning £1 million every month without technically costing you a penny!
Let me introduce you to Premium Bonds.
How Premium Bonds work
How Premium Bonds workWhat are they?
- A form of savings account.
- Instead of paying you interest, each £1 you save buys you a Premium Bond number.
- Each month your Premium Bond numbers are entered into a prize draw.
What can I win?
- Various monetary amounts from £25 up to £1 million, tax free.
- There are around 3 million prizes drawn each month including 2 chances to win the £1 million.
What can I do with my winnings?
- You can choose to have the money paid straight into your bank account, receive a cheque or buy more Premium Bonds with it.
How much does it cost?
- The minimum amount you can ‘save’ into Premium Bonds is £100.
- You can do this as a one off and leave it there, you don’t need to top up every month.
How safe is it?
- Premium Bonds are protected by government and considered one of the safest ways of ‘saving’.
Can I get my money out?
- Yes anytime.
- There are no penalties to withdraw your cash including the original amount you put in from your Premium Bonds account.
Premium Bonds vs the Lottery
Now before you get carried away, like any lottery, the odds of winning are going to be very high.
Technically you have better odds of winning the jackpot on the lottery. But that is not the point. The point here is that you are not spending money to play the lottery with Premium Bonds. If you put £100 in your Premium Bond account you can take it out at any time. With the National Lottery, once you’ve spent your £2, it’s gone.
Yes you could say that some of your £2 is going to good causes and if that means a lot to you then fair enough, perhaps stick with the National Lottery or save into Premium Bonds as well.
As for whether you should ‘save’ more into Premium Bonds, this is a tricky one. Unlike the National Lottery, the more Premium Bonds you hold the more your chances of winning improve. However the odds are still really high and you may find you receive no winnings for a long time. Had you saved your money into a higher paying interest account you would have received a better return.
If you are thinking of Premium Bonds purely for saving then there are probably better options out there. But if you just can’t help playing the lottery and want to save money, I would suggest Premium Bonds are a better way to play.
If you would like help managing your cash better please give us a call and sign up to the Financial Freedom email below. You will receive tips and insights to help you on your way to finding your financial freedom.
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