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Extra £1m premium bond prize announced


A second monthly premium bond prize of £1m will be launched by National Savings and Investments (NS&I) this August.

The announcement means that two people will win a tax-free lump sum prize of £1m each month, instead of the current single winner.

Additionally, as of the 1st of June 2014, premium bond holders will be permitted to own a maximum of £40,000, an increase of £10,000 from current levels. This will then be increased by yet another £10,000 next year when premium bond holders will be able to own a maximum of £50,000.

Julian Hynd, Retail Director at NS&I said being able to invest more into premium bonds is good news for investors as “the more they invest, the greater their chance of winning a tax-free prize”.

21 million investors

There are currently over 21 million people who own at least one premium bond, 600,000 of which own the maximum of £30,000.

Bondholders are entered into a monthly draw to win a tax-free prize, the jackpot being £1m, whilst other prizes range from £25 to £100,000.

Premium bonds pay out on average just 1.3% of the money invested, which is currently lower than inflation as measured by CPI at 1.8%. This means that the true value of an investment is likely to erode over time; however, there is also the possibility of winning a large cash prize.

For those who are looking for a more stable investment, it might be worth investing in an Individual Savings Account (ISA). This is especially the case as from the 1st of July 2014 as savers will be able to increase the amount they put into their ISAs to £15,000 a year from the current levels of £11,880.

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