Martin Lewis gives some financial advice to viewers….(read more)

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Martin Lewis: Are Premium Bonds Safe? | This Morning

Martin Lewis, a renowned financial expert, recently appeared on the popular TV show “This Morning” to discuss a topic that concerns many savers: Are Premium Bonds safe? Premium Bonds have long been a favorite savings option for Britons, offering a chance to win a tax-free cash prize every month. However, their safety is a topic that remains highly debated.

During the show, Lewis provided some valuable insights into Premium Bonds, shedding light on the safety concerns surrounding them. He stated that, unlike a regular savings account, which offers a guaranteed interest rate, Premium Bonds do not provide any form of interest. Instead, the interest earned is given back to bondholders in the form of prizes, creating a lottery-like experience.

Lewis reminds viewers that Premium Bonds are issued by the UK government’s savings institution, National Savings and Investments (NS&I). This means that they are backed by the UK government, which is considered one of the safest entities to invest in. The government ensures that NS&I remains financially secure, making it highly unlikely for bondholders to lose their money.

However, Lewis emphasizes that while the principle invested in Premium Bonds is safe, the returns are not guaranteed. It’s essential for investors to understand that they may not win anything at all. The chances of winning a prize are determined by an interest rate that NS&I sets, which currently stands at 1%. This means that for every £100 invested, the average return would be £1 per year. While some may win significant amounts, others may not win anything.

Lewis emphasizes that Premium Bonds can be an exciting way to save money, particularly for those who enjoy participating in the monthly prize draw. However, he advises against treating them as a reliable investment option, stating that “They’re not savings, they’re gambling.”

To further address the safety concerns, Lewis also points out that NS&I is entirely backed by the UK government’s Treasury, which means that there’s no cap on the amount of money protected. This provides savers with a sense of security, even if they have a substantial amount invested in Premium Bonds.

In summary, Martin Lewis’s appearance on “This Morning” shed light on the safety of Premium Bonds. While the bonds themselves are considered safe as they are backed by the UK government, the returns are not guaranteed. Premium Bonds should, therefore, be seen as a fun and potentially rewarding saving option rather than a reliable investment strategy.