The return on investment is not a certain percentage, interest or dividend; What you need to know about Premium Bond, where the money accumulated in the pool is distributed through a draw.
One of the most widely used (and in my opinion, the most exciting) investment methods in the UK is premium bonds. The return on investment is not a certain percentage, interest or dividend; It is obtained by distributing the money accumulated in the pool through a draw.
The working logic is as follows. Let’s say you have 100 pounds, if you deposit it in a bank, at best, at the end of one year, you will have 105 pounds with 5% interest (fixed). If you want to access your money (easy access) during this period, the interest rate will be around 3.5%. If you do not use ISA, you must also pay tax on this income. (Let’s ignore non-principal protected methods such as coins/funds/stock markets for now. If you enter leveraged coins, you can also have millions of pounds.)
If 10 people came together and pooled our money and tied it to the bank for 1 year, our total interest income would be 50 pounds. If we shared this income equally to everyone, everyone’s income would be 5 pounds and there would be no advantage to use this system. But let’s say that at the end of each year, 25 pounds will be given to 2 people instead of 5 pounds to 10 people, and if we say that these two people will be chosen as 2 numbers from 1 to 1000 and correspond to those money, while the income of 8 people is 0%, o 2 people’s income would be 25%, and there is no instrument that gives such a high return without the risk of losing the money you invest. (If you do not have a house before (in England or Turkey) and you are going to buy a house worth up to 450 thousand, there is a 25% state contribution in the lisa.)
Now, if we turn 10 people into 22 million people, the 1000 pounds collected into 120 billion pounds, and the state as the place where the money is collected, we get a premium bond. 1 drawing right is given for every 1 pound deposited into the system. For every 1 pound you get 1 draw. At the beginning of the month, the monthly return on the money in the system is calculated, a draw is made and distributed to the lucky winners. Prizes start from £25 and can go up to £1 million. Total rewards each month (numbers change each month depending on the money in the fund):
124 …………units…50 thousand
pounds are given and you can deposit a maximum of 50 thousand pounds into the system. Which number of pounds is rewarded, how much money that person has in the system, when he deposited it, his region, etc. are announced on this site every month for high returns. for example; In February 2020, someone in Wandsworth deposited 1000 pounds into the system and that person won 100 thousand pounds in April 2023. More interestingly, in 1976, someone who invested 4 pounds won 25 thousand pounds. The best part is that there is no tax on the money earned.
Even though I normally consider myself lucky, nothing happened to the money I kept in the system in 2 years. If I invested it in interest, I would only be able to eat 1-2 nice meals out with the return, but the excitement of wondering if I made money from ns&i’s application at the beginning of each month is much more than the return I lost.
It is definitely not a long-term investment tool (historically, stock market investments have yielded much better returns), but a method of investing money that you can access quickly when you need it, with a little fun in it. You may not be able to access your money in the stock market immediately, or if you are going to use your money within 2-3 years, the stock market may not be a safe investment tool. (While it is highly likely that there will be returns in the long term, there may be fluctuations in the short term.)
Who is premium bond for?
– Those who like the possibility of making a lot of money but do not want to lose their principal
– Those who want to access the money they keep aside within 1-2 days
– Those who will not touch their money for at least 1 calendar month
– those who trust their luck
Not for whom?
– Those who expect a sure return
– those who want a chance to earn more (usually the principal is at risk in this case)
– those who want to make long-term investments
– Those who did not have a home before and saved money to buy a house worth up to 450 thousand
– Those who do not want to leave their job to chance