Premium Bonds Reviews

Premium Bonds Or Savings Accounts The Choice Is Yours

Premium Bonds Or Savings Accounts The Choice is Yours

There is controversy about premium bonds and if they are really worth the investments. If you calculate the odds of winning per bond and the interest rates for regular savings accounts, the argument could go both ways. On the positive side a premium bond gives the saver a chance to win over a million pounds if they are the two lucky numbers picked during the monthly lottery. The flip side of the coin is that there are thirty six billion losers each month. There money stays the same, it does not loose its value, but there is no interest to generate profit. So the government, in all actuality, is using thirty six billion pounds worth of British property for free.

People who are skeptical about premium bonds contend that the reason the odds are so against the majority of the investors is that the distribution is skew by the way it awards the prizes. This would allow for the majority of the investors to have stunted to no chance of winning a cash prize. Their earning potential of their money would actually decline because they would not be earning the interest rate in a regular savings account or the rise of the accretion if the money was invested in stocks.

If you get past the hope of winning a million pounds so you can look at premium bonds for what they are. A fun way to detain money and at the same time you can have the excitement of winning the lottery. To look at winning backwards suppose that one million people put in one pound apiece for the draw. One part would win the million pounds, but there would nine hundred and ninety nine thousand and nine hundred and ninety nine people who would be losers. Those people would have at least made a small percentage on their savings. It's a choice between a chance for something big or a wee interest to give you the satisfaction of profit.

Another way of looking at it is to look at the interest rate of a premium bound. The bag rat of four percent is the estimated payout for your one pound bond. The government uses the interest to create the prize bank and to allocate the prizes. So you would envision to win four pounds on a hundred shock investment. This is impossible because the smallest prize is fifty pounds. It would take around seven investors to loose their regard for that month if you won those fifty pounds. Even more people would avoid their money to finance the two million pound give away to two winners.

Competent is simply a choice in the behaviour you should invest your money and that choice is yours. Lotteries always provide hope for a better life even though you know in your heart that winning is a very long shot. Savings accounts provide security both financially and emotionally now you know that you will get a return on your money. It is just a practice of tastes and were you feel more comfortable.