The current inflation rate is around 2.5%, and few if any ordinary savings accounts offer anything close to that. But yes, in the longer term if you don’t win a prize the value of your bond will be slowly eroded by inflation. In my personal view nobody should put all their money into Windfall Bonds, therefore (or Premium Bonds, for that matter). It’s really a personal decision everyone must make for themselves. If you are lucky enough to have a ‘spare’ £10,000 to invest, with Windfall Bonds you will at least receive some interest guaranteed and have a small chance of winning a prize of up to £50,000 as well. In the long term, however, equity-based investments are likely to produce better overall returns, though with a few ups and downs along the way!

Thanks, Caz. Yes, I kept getting emails from a personal finance newsletter about these Windfall Bonds as well, so decided to find out more. I have just one £1 premium bond these days, as I lost faith in them after a long barren spell. I wouldn’t personally go for a Windfall Bond either, but I can see that they might appeal to some people. You do get the guaranteed interest of 0.75% plus the outside chance of a “Windfall”.