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Last Updated: Friday, 9 May, 2003, 23:06 GMT 00:06 UK
Premium Bond limits raised
Premium Bond ticket
Tickets can be bought at Post Offices

People will be able to invest up to 30,000 in Premium Bonds thanks to a change in the rules that comes into force on Monday.

National Savings said it was raising the limit by 10,000 in response to growing demand for the bonds.

Any increase in the total amount money invested should help to increase the number of tax free prizes for Premium Bond holders.

But there are also likely to be more individuals vying for those prizes.

And some independent financial advisers (IFAs) warn that Premium Bonds should not be viewed as a serious investment for people saving for retirement or school fees.

Safe home

Investors buy bonds worth 1 from the Post Office or by post from National Savings & Investments (NS&I). The minimum stake is 100 and, until now, the maximum has been 20,000.

They are simply a bit of fun, the return on the investment - through wining prizes - is on average much lower than a standard High Street savings account
Julian Crooks IFA

Over the past few years sales have rocketed, as people have tried to find a safe home for their investments in the face of turbulent stock markets and paltry interest rates.

As a result, 23 million people in the UK own at least one Premium Bond and the number of investors who hold 20,000 worth of bonds has increased from 75,000 five years ago to over 350,000 today.

According to official figures, the odds of winning are the worst in at least 10 years.

A premium bond owner currently has a 28,500 to one chance of winning.

Back in 1993 the odds were just 11,000 to one.

"They are simply a bit of fun, the return on the investment - through wining prizes - is on average much lower than a standard High Street savings account," Julian Crooks, director of the Financial Planning Service told BBC News Online.




SEE ALSO:
Bonds bring luck to Dumfries
27 Feb 03  |  Scotland
Q&A: Are Premium Bonds worth it?
19 Feb 03  |  Business


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