Premium Bonds investment limit increases to £40,000

National Savings and Investments has upped limits for its popular investment vehicle

Premium Bonds investment limit increases to £40,000

National Savings and Investments (NS&I) has increased the investment limit on Premium Bonds from £30,000 to £40,000. It also announced that the number of £1 million prizes offer will double in August 2014.

NS&I is one of the largest savings organisations in the UK, best known for its Premium Bonds. It has over 25 million customers and more than £100 billion invested. Premium bonds are backed by HM Treasury so become an attractive alternative to immediate access deposit accounts.

Premiums bonds work best for higher rate taxpayers who already use their maximum ISA allowance and want a secure home for a proportion of their cash. Even though there are no prize guarantees, when compared with the rates of interest on offer from taxed savings, the chance of winning a better return in prizes will appeal to many.

National Savings and Investments (NS&I) have a net financing target of £13.0 billion in 2014-15 +/- £2 billion of which the new Pensioners Bonds, launching in Jan 2015, are expected to take around £10 billion (no details of the terms for these yet) so that would leave around £3 billion to be raised through Premium Bonds.

There are currently 600,000 investors who hold the current maximum of £30,000 in Premium Bonds. This might mean therefore an average additional investment of £5,000 amongst those who already hold the maximum.

“The increased investment limit is likely to appeal to wealthier pensioner investors, as will doubling the £1 million pay-out,” says Danny Cox, Hargreaves Lansdown. “Pensioner Bond launching at the beginning of 2015 will have broader appeal and be relevant to more of the millions of retired investors with only modest sums to invest.”

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Categories: News
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About Author

Shelly Ford

Shelly Ford, assistant editor at Every Investor, has worked as a writer within the banking and insurance sectors for ten years. She has a particular interest in personal finance and retail banking.