Barclays savings expert issues warning to anyone | European Markets

A Barclays financial savings skilled has issued a warning about Premium Bonds and your possibilities of profitable a prize within the month-to-month draw.

Premium Bonds go into a month-to-month prize draw somewhat than your holdings growing in keeping with an rate of interest, as with a standard financial savings account.

Profitable Bonds are chosen at random and paired with a prize, with every £1 Bond having an equal probability of profitable, presently at 22,000 to 1, whereas the prize fund charge is 4%, though that is falling to three.8% from the April draw.

Clare Francis, director of Financial savings and Investments at Barclays Good Investor, pointed to the truth that with Premium Bonds you get “no guaranteed return”.

She mentioned: “You could get something back but you may get nothing, so in many ways you’re taking a gamble.”

Premium Bonds savers ought to word that though yours odds of profitable are 22,000 to 1, the overwhelming majority of the prizes within the month-to-month draw are for the bottom quantity, at simply £25, with far fewer massive money prizes for quantities resembling £100,000 and £50,000.

There are two £1million jackpot prizes in every draw, so your possibilities of profitable the highest prize are miniscule.

Suggesting different options, Ms Francis mentioned: “If you’ve got a medium to long term time horizon – five years or longer – investing offers the potential to make your money work harder than it would in a savings account, and probably Premium Bonds.”

She defined that stock markets have a tendency to supply greater returns than money over the long time period, and that with rates of interest falling, the returns out of your money financial savings will drop as effectively.

Ms Francis advised one method to get into investing: “Investing in funds, rather than buying shares directly, can be a good option because funds provide greater diversification, which helps reduce the overall risk.

“A single fund will usually invest in between 50-100 completely different firms. Funds are additionally seemingly to offer a cheaper manner of building a diversified investment portfolio as a result of there will likely be fewer trading charges – there could also be no charge in any respect to buy and promote.”

Another way to start investing is with a stocks and shares ISA, with ISAs having the advantage that all your investment growth will be tax-free.

You can invest up to £20,000 each financial year into ISAs, and you can split this allowance between different types of ISAs, including cash ISAs and stocks and shares ISAs.

Despite the advantages of investing, Ms Francis said it’s still a good idea to keep some of your money in savings. She said: “Financial savings are nonetheless important for surprising expenditures and likewise short-term financial objectives, we advise something you may wish to spend on within the subsequent 5 years.

“This is because stock markets can fall as well as rise, so there is a risk that you could lose money. The longer you’re invested for though, the risk of loss lessens.

“Due to this fact when you’ve received your financial savings cushion in place, it’s price contemplating investing money you’ll be able to afford to put away for the long run.”