In 1965, Harold Macmillan introduced Premium Bonds. The premium bonds are government bonds which have prices more than their parity value. According to the statistics released by the National Savings and Investments, up to 23 million people are currently holding these bonds. Premium bonds are one of the safest and easiest means of saving money. There are generally two types of premium bonds – callable bonds and non-callable bonds. You can also choose from corporate bonds, municipal bonds, surety bonds, mortgage-backed bonds, etc.
Bonds are one of the easiest ways to invest and grow wealth for any financial plan. Premium bonds can be said to be debt security. As an investor, you are lending money to an issuer like a corporation, federal agency government, municipality, or other entity when you purchase a bond. Bonds investment is the best because you will get an expectable stream of payments with the repayment of principal and with interest.
How to Buy Premium Bonds
The premium bonds bought by Millions of Brits every year are offered by National Savings and Investments (NS&I) which are backed by the government. These bonds will not pay you interest but will have to enter a monthly prize draw where you will be eligible to win tax-free prizes that worth up to £1 million each. The winning odds for any Premium Bond prize is 30,000 to one and it improves to 24,500 to one on December 2017.
If you want to be earning a regular income, this account is not for you because most people will earn only a small percentage of their money over time. People of aged 16 and above can open such account and a parent or guardian will manage the account if the child is below that age.
Who Can Go for Premium Bonds?
You can go for Premium Bonds if you have £100 or more to invest, and if you are a guardian, parent, or grandparent wanting to buy bonds for a child who is under the age of 16 years. In contrast, Premium bonds may not work for you if you are expecting a regular income, guaranteed returns, or if you are concerned about the influence of inflation on your savings.
How to Apply for Premium Bonds
The purchase of premium bonds is a very easy task to complete. All you have to do is to visit the website of the National Savings & Investments to register. You can also apply on the phone by calling +44 1253 832007. For grandparents who will like to buy premium bonds for a child under 16, they will have to apply by post. You will be given a unique bond number for each and every £1 you invest and they will be included in the draw every month. You will need £100 to get started and this will fall to £25 in March 2019 and you can invest up to £50,000.