Before there was a National Lottery the biggest hope most people had of a life-changing windfall were Premium Bonds.
Many families gifted a Premium Bond to a youngster – originally costing just £1 – at a Christening or birthday.
But while the investment – or gamble – holds out the prospect of a tax-free windfall of as much as £1 million, many have been left empty handed.
Ed Monk, of broker Fidelity International, said: “The way the maths works is that if you have a small number of them your chances can be remote.
“Three-quarters of people who have ever held them have never won, which speaks to the fact that if you hold them in low amounts you’re not very likely to win at all.”
Mr Monk said: “If anything, Premium Bonds are best used by people willing to invest at least £15,000. At that level you have a better chance of getting close to the advertised fund rate, assuming you have the average level of luck.
“They offer a particular advantage if you’re a higher-rate taxpayer because it’s hard to get that equivalent return from a savings account or a cash Isa.”
Derek Kilkenny-Blake has kept his Premium Bond in a filing cabinet at his home in Gloucestershire for more than half a century.
Originally bought for him as a christening present by his grandfather in 1961, sadly it has yet to return any sort of prize.
Mr Kilkenny-Blake said: “I have always kept my name up to date on the register, but I haven’t won anything. It’s a lottery I suppose, and I have friends who win regularly, but I suppose I am just unlucky.”
Premium bonds function differently to standard savings accounts or cash Isas. Rather than earning interest, every month National Savings & Investments (NS&I) uses its Electronic Random Number Indicator Equipment (ERNIE), to award prizes of between £25 and £1 million.
A typical £25 investment, which is the minimum buy-in today, has a one in 840 chance of winning the minimum prize every month.
The chances of winning one of the two £1m prizes with a £25 investment are roughly one in 2.5 billion.
Figures released under the Freedom of Information request showed that more than 460,000 savers invested in government-backed accounts 20 years ago. Of the accounts still open, 44,900 have yet to win even £25.
Carole Murphy, from Bedford, was also gifted Premium Bonds for her christening when she was 13. But in 50 years she has yet to collect a prize.
Ms Murphy, aged 63, told the Telegraph: “My friends win regularly and they reinvest their winnings. I have bought another £200 just to see, but I’m not holding out much hope.”
Premium Bonds remain Britain’s most popular savings product. However, Laura Suter, of stockbroker AJ Bell, says the custom of buying them for children is dying out with the rise of digital banking.
“Back when money was much more of a physical thing and when online banking hadn’t become commonplace, giving Premium Bonds was a great way of gifting money without having to put cold hard cash in the post,” she said.
“Premium Bonds were a big part of people’s savings and a great way to gift children money.
“You couldn’t just get parents to open a bank account online and then transfer cash to that savings account and lots of people didn’t want to put cash in the post – so Premium Bonds were an ideal option. It also came with the added excitement of potentially making the child a millionaire.”
Paul Davis, from Edinburgh, was gifted £8 worth of Premium Bonds by his father in 1963. He contacted NS&I, hoping that he might have won a prize in the 60 years his name had been in the draw, but it was not to be.
He said: “I would never dream of buying my kids a Premium Bond.
“It’s really old fashioned – but in those days there wasn’t much you could buy someone that would be a wee investment for them. I’ve taught my kids to save the proper way to save.”
The rise of the Junior Isa and child trust funds, spurred by an awareness that today’s children will inevitably face difficulty buying a house in the future without a sizeable cash deposit, has also dampened the appeal of Premium Bonds as a form of long-term investment.
An NS&I spokesman said: “Each £1 Premium Bond, no matter when it was bought, has an equal chance of winning, meaning the more bonds you have the more chances you have of winning a prize.
“Last month saw over 5.8 million prizes, and since the first draw in 1957, ERNIE has drawn over 648 million prizes worth over £30.5 billion.”
