Are Premium Bonds a Worthwhile Investment?

Premium bonds are a way of saving money that many people get excited by. They are more like a lottery in some ways because there are prizes won each month, but you will never lose your money. This means that many people will buy them because they see it as a safe way to gamble. Is it worth doing though?

How Premium Bonds work

Premium bonds are not actually an investment they are really a type of savings account but they are unique. You have to buy bonds with the money that you give them and the minimum amount of bonds you can buy are 25 and the maximum you can hold are 50,000. Each bond is worth £1 and will be entered into a draw each month. The bonds are drawn by a computer using a random number generator system and each bond has an equal chance of winning. You will increase your chances of winning by buying more bonds, as the more you have the more will be entered in the draw.

There are various prizes and these will change depending on the amount of people that hold bonds. Normally there are two main winners who get a million pounds each. Then there are smaller prizes of £100,000, £50,000, £25,000, £10,000 and £5,000 which are shared between about 90 people.  Then there are the really small prizes of £1,000. £500, £100, £50 and £25 and there are many of these over three and a half million prizes. The most prizes are the £25 ones and there are over three million of these compared with the next biggest category which is the £50 where there are only 25,000. Occasionally they have a reshuffle of prizes, the most recent one being adding the second million pound prize and introducing the £25 prize when previously the smallest was £50. This was in response to customers requests for more prizes and more big prizes.

There will be people that never win anything on the premium bonds, which is due to the nature of the fact that it is a prize draw. The more bonds you hold; the more likely you are to win a prize and due to the odds those with the maximum holding should win at least one prize each month whereas those with the minimum are likely to never win anything.

Alternatives to Premium Bonds

If you like the idea of winning prizes, then gambling is really the only alternative to premium bonds. There are places where you can do this for free, but the prizes are normally non-existent is extremely low. If you want a chance of winning a million pounds then you will have to pay out some money. If you buy a lottery ticket or use a gambling site then the odds will be against you and you will not get back the money that you have used as a stake, which you do with a premium bond and you will have a low chance of winning a prize. If you want to gamble, then premium bonds are a better alternative because you will be able to get your money back.

Another alternative is to put your money into a savings account, use it to repay a loan or to invest it. Savings accounts can pay higher interest than you will get the equivalent of with premium bonds. If you have a bigger holding then you are more likely to get a prize and so it is more worthwhile having them compared to if you have only a small amount of money. If you are prepared to tie your money up for a year or more or give notice on withdrawals, it is likely that you will get a lot more back than with premium bonds.

If you use the money to repay a loan via the likes of Emu.co.uk then it likely that you will be better off than putting it in premium bonds. Loan interest tends to be much higher than what you are likely to make back form premium bonds. Obviously, if you are lucky and win the big prizes then this will not be the case, but if you look at the average interest rates that most people get then it will be lower than what you are paying on the loan. You will need to check the loan though to make sure that there are not any fees for repaying it early, that might mean that it is actually more expensive to do this than to put the money in premium bonds.

Investments tend to have a better return than savings or premium bonds. However, you take a risk when you take out an investment. It is possible for you to lose the money that you have put in. This is because you buy something with the money such as a shares and then hope that the value goes up when you want to sell them. If the value goes down then you will lose out. There are different risk levels with investments and it is best to talk to a financial advisor about which investments would suit you the best.

Continue Reading →

Should I Monetise my Hobby?

Many of us have hobbies that we could make money from. You might think that this would only apply to hobbies where you make things such as crafts, but actually you might be able to make money form all hobbies.  This is because you do not have to just produce things to sell, but you can teach people about something, write about it or review it. You can start a social media group, website or blog all about what you do, put up videos or photos and earn money from advertising. There is a lot to think about but it could be a way to earn some extra money, which could help with bills, loans, buying treats or increasing savings and some people even make enough money to live off from doing this.

Do I have a unique hobby?

You need to think about your hobby and whether it is something that is unique and different. There are many different hobbies out there and you need to think about what might make yours a bit different. It might be that you have a much more in-depth knowledge about it or a certain aspect of it than other people. It might be that you have a different way of doing it. It could be that you feel that you have a unique way of explaining it or something like that. It does not have to be that you are doing something new but that you are approaching it in an interesting or unique way.

Can I figure out a way to monetise it?

If you make things then you can sell them. This sounds straight forward but you will need to find a place to sell them. You may be able to sell online through existing channels or you may need to set up a website so that you can sell through it. It is worth doing a lot of research first to see how other people sell similar work so that you can decide whether you should sell in a similar way. Do remember though, that just because people have work listed for sale, it does not mean that they have actually managed to sell it using that means. It can be very hard to tell what might work. If you already have some things that you are happy to sell then you can experiment selling in a few places that are free to sell on and you will be able to see if you are successful.

If you do not make things or do not want to sell the things that you make, there are still ways that you can make money. You can make instructional videos telling people about how to do your hobby. You can show them photos of your collection, work or whatever. You could write about it, perhaps reviewing things or describing things. These sorts of things can be put online, perhaps on your own website or a social media page so that other people can look at them. If they are popular then you may attract advertisers and be able to make money this way. It is important to realise that a lot of people do this sort of thing and so it is worth looking to see what others are doing so that you can decide if there is a space in the market and so you can make what you do a bit different so it stands out.

Do I want to?

It is also worth thinking about whether you really want to do this sort of thing. By making money out of something that you normally find relaxing and fun it could change your perspective on it. It could make it better as you will see some purpose to what you are doing and you could enjoy the money that you make form it and the appreciation that you get from other people from selling or teaching them things. However, you may also find that it makes the hobby less relaxing. You may be thinking about how to make money from it rather than enjoying it. You might be worrying about how you are going to do it well, make it interesting or make extra money from it. This could mean that it is not so much fun or you may feel that you do not want to do it because you feel stressed when doing it.

Think about how you might feel about it. If you are not sure then try it for a short period of time. Just do a little work and see if it makes money and after a few months or so then review it and decide whether you want to continue. You might want to try harder as a few months is not long to try it out, but make sure that you review every few months so you give yourself the opportunity to step back and return to it being a hobby. Although the extra money could be useful, if it means that your life is not so relaxing as a result then you may decide that it is not worth it.

Continue Reading →