Tracking National Savings (NS&I) Premium Bonds

Premium Bonds are a UK government backed product from National Savings and Investments (NS&I). They allow people to buy a quantity of £1 bonds (up to £50,000 per person) for the chance of winning monthly prizes of between £25 and £1m. Investments are 100% backed by the UK Government. Winnings are paid tax free, and there are well over one and a half million prizes per month. The way that returns are structured, it means that an individual holding would average out at around 1.8% 'interest' for someone with average luck (from December 1st 2008).

Tracking Premium Bonds in Microsoft Money is not totally straightforward as there is no hard and fast mechanism in the Money program to do it. There are a couple of ways that people do use to track the bonds, and either is suitable:

1. Some people use an ordinary bank account, into which you use a "transfer" transaction. The transaction is from the account you make the cheque or debit from, each time you purchase bonds. As 1 bond costs £1, the value of the account is therefore equal to the number of bonds you have.
   
   If you receive a payout (prize) on your premium bonds, then you can record this as a deposit to the same account (if you reinvest winnings) or into another account if you do not.
    
2. Other people use an investment account - creating an investment account and then create a bond investment. Each bond has a value of £1. Using 'Buy Investment' transactions to purchase bonds, you can add any purchases into this account. You would thus need to use a Sell transaction to sell them. Note that bond values should be £100 each in Money (see Article 43) for the Maths to work. It won't affect the value reported

With either mechanism of tracking, there is a built in category/subcategory for UK users (see UK Categories in Money 2005). You can use this category "Other Income: Lottery/Premium Bond Prizes" to record your 'winnings'.

If I were using the standard bank account option, then the simplest way of using it is to just set up an Asset account named 'Premium Bonds'. There is nothing else required.

However, I record my premium bonds using the second option above, in the investment/portfolio area. This is mainly so I can get some investment performance figures back out (as these are not available for standard bank accounts). I use an investment account called 'National Savings' to track all activity with National Savings and Investments (NS&I), and then purchase the bonds in a bond investment named "Premium Bonds" into that investment account.



An example of the investments area approach can be seen above. This also shows some sample performance figures.

Either way mentioned above is fine for using with the program.