The answer to whether you should invest in isa or premium bonds really depends on your personal situation and risk tolerance. If you are a cautious investor who values stability and consistency then premium bonds might be the better choice as you don’t lose any of your initial investment and there’s a chance to win a prize. However, the return on Premium Bonds is much lower than a Cash ISA and over time your money could potentially be worth less as a result of inflation.

Both isa and premium bonds are tax-free investments, but they have different benefits. Isas give you a guaranteed rate of interest while premium bonds have the potential to grow your lump sum through the chance of winning a prize, if selected by Ernie, the computer that selects winners.

Investment Showdown: ISA vs. Premium Bonds – Finding the Right Fit for You

However, while you can’t lose your money with premium bonds, the chances of winning a prize are low – in fact, across the year you might not win anything at all. The more premium bonds you hold, the higher your odds of winning.

You can open a JISA and a premium bond in the same name and both are great options for saving for your children’s futures, but only they will be able to access their savings and prizes once they reach 18. You can also gift JISAs and premium bonds to children who don’t have a parent or legal guardian with one themselves. However, based on past performance, a stocks and shares Junior ISA is likely to offer your child a stronger lump sum than JISAs or premium bonds alone.