AJ Bell has suggested investing for children could be a safer bet than using popular premium bonds.
A Freedom of Information by the company showed the average account value of the 14.4mn premium bond holders who have never won a prize was £106.79.
Laura Suter, director of personal finance at AJ Bell, said tiny accounts stand only a slender chance of winning and will account for a huge proportion of the accounts that have never won.
Suter added: “To put things in context, those 13.7mn people with a balance under £100 represent over 60 per cent of all holders, but only 0.1 per cent of all the money held in premium bonds.
“In contrast, just 5 per cent of holders have the maximum £50,000 balance, but they account for 50 per cent of the total value of all premium bonds in circulation.
“Put simply, if you’re one of the millions of people with a small amount of money in premium bonds, the odds are stacked against you.”
Suter said premium bonds are often given to children as a gift by parents or grandparents but there could be better ways to invest money for children.
She said Junior Isas were a good option for those wanting to put money aside for children.
“That’s not to say that everyone should ditch cash and bonds, as safe havens have a key role to play in people’s finances,” said Suter.
“Although given that savings and investments for children will normally be held for them until they reach adulthood, there’s less reason for them to hold cash savings.
“You can also buy so-called ‘all in one’ funds that spread your money between different countries’ stock markets and across various asset classes, with an option of having more or less in stock markets versus bonds, gold and cash, depending on your risk appetite.”
tara.o’connor@ft.com
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