Who wouldn’t want their children or grandchildren to be in with a chance of becoming a millionaire?

Premium Bonds are a popular gift for younger relatives because they offer the thrill of the draw and a Government-backed, tax-free way of keeping their money safe for when they are older.

There are 864,656 child Premium Bond holders, with an average £3,261 in their accounts. That means around one in 14 kids are in the monthly draw, versus roughly one in three adults in Britain, or 23 million.

On the face of it, they seem like a sensible way of saving, but what are the odds they will actually win anything in the monthly draws, from £25 to the £1million top prize?

National Savings & Investments (NS&I) has analysed the ages of everyone who has won a prize in the past decade to see how successful our junior savers really are.

It found that a record number of children are on track to win prizes this year, with 203,683 having won already.

In 2025 there were 283,762 child winners while a decade ago there were just 156,343. A record number of under-16s won the £100,000 prize last year, with 21 taking NS&I’s second-largest prize. So far this year, six have won this amount.

In 2025, an all-time high of 1.3 million prizes went to under-16s. So far this year, they’ve won 672,279. But in the past decade just five under-16s have scooped the £1million jackpot.

So are they the right investment option for your children, grandchildren, niece or nephew – or should you look elsewhere?

How much do you need to invest to win?

There are 190,959 Premium Bond holders under the age of four, the analysis for This is Money and the Mail shows. Meanwhile, 272,502 are between five and nine, and 401,194 between ten and 15.

The average amount that has been invested for under ones is £1,643, while those six and above hold more than £3,000.

One in seven children with Premium Bonds have less than £100 worth, while the vast majority (87 per cent) have less than £1,000.

Some parents and grandparents have poured larger amounts of money into these accounts. There are 22,314 accounts with between £40,000 and the maximum permitted holding of £50,000.

But you don’t need to have this much to be in with a good shot of winning – children who won a prize had £26,638 on average in their account. That’s far less than the typical holding for an adult winner, who had £40,363.

How do you buy Premium Bonds for children?

You need a minimum of £25 to open a Premium Bonds account and can pay in up to £50,000.

The easiest way to buy Premium Bonds for children is for a parent or guardian to set up an account. This requires filling in a form with basic details about the child and ID checks for both parents and child, which can take a few weeks to process.

Any future tax-free cash prizes are sent directly to the nominated parent/guardian’s account or can be automatically reinvested in Premium Bonds.

Only the child’s parent or guardian can cash in the bonds before the child turns 16 – but prizes and money legally belong to the child.

This is, in part, to stop parents and grandparents who have already filled the £50,000 limit on their own accounts from cheating the system by opening accounts in the children’s names with the intention of keeping the money for themselves.

A NS&I spokesman says: ‘We’ll send any documents, any prizes won and payment for cashed-in Premium Bonds to the parent or guardian. Any payments made to the nominated person do not change the legal ownership of the money.’

Once an account is set up for a child, then Premium Bonds can be purchased via NS&I on their behalf. You’ll need to know the full name, date of birth and address of both child and parent.

Are Premium Bonds the best way to save?

Much like saving and investing as an adult, it’s crucial to build a balanced portfolio for children.

Premium Bonds are a good option but you shouldn’t put all your eggs into one basket. 

The chances of winning a life-changing amount are incredibly slim, but the odds of winning are especially poor for those holding small amounts. 

With nearly nine in ten child Premium Bond accounts holding less than £1,000, someone with average luck would get no returns on their money over a year and typically win just £125 worth of prizes over five years.

Over the past year, 15 of the 24 jackpot winners held the maximum £50,000 in their account. The winner with the lowest holding had £7,000, in August 2025.

So if you want your child to bank guaranteed interest on their savings, the first port of call is to open a Junior Isa (Jisa). You can pay in up to £9,000 a year and, like adults, this can go into a cash Isa or a stocks and shares version.

Top rates for cash Isas come from building societies – Bath BS pays 4.15 per cent and Skipton BS 3.8 per cent. NS&I itself has a competitive 3.7 per cent rate on its Junior Isa. Or you can find low-cost stocks and shares Junior Isas with Hargreaves Lansdown, Fidelity and Vanguard, which all offer a number of ready-made funds to invest in.

If you start investing when they’re young, the money has a long time to grow into a tidy nest egg for when they turn 18 and get access to the funds.

Someone who saves the maximum £9,000 a year, or £750 per month, into a Jisa with a 5 per cent return from birth could have a pot worth £261,000 by the time the child reaches adulthood.

Should you invest in a pension or Isa instead

A pension for a child may sound like an unusual choice but it comes with huge tax perks and opportunity for decades of compound growth. 

Money paid into a self-invested personal pension (Sipp) gets basic rate tax relief automatically added, bumping up contributions by 25 per cent. 

Rules limit the amount that can be saved into a pension to £60,000 per year, or your total annual income. However, there is an exemption for low earners and non-earners that allows up to £3,600 to be paid in, including basic rate tax relief.

Parents or grandparents can pay into a Sipp for a child and could pay in a maximum of £2,880, which would have £720 of tax relief added to take it up to £3,600.

Paying in £2,880 a year would work out as £240 per month, which is a larger sum than many could afford. However, even paying in £50 per month would prove hugely beneficial over the long term. 

The £50 contribution from parents or grandparents would be turned into £62.50 by tax relief.  With an average annual investment return of 7 per cent, over 20 years this would grow to  £32,600, over 30 years it would grow to £76,250 and over 40 years it would become £164,000.

That said, you should only consider doing so if your own retirement funds are in good shape. 

Also, unlike Premium Bonds where children can access the money at 16 and Jisas at 18, pensions cannot be accessed until a set age – this is currently 55, due to rise to 57 in April 2028 and may rise further.

So while Premium Bonds make for a longer-lasting present than toys or clothes, you may be better off opting for a Jisa.

My wife Danielle and I have invested £150 monthly between us for our seven-year-old daughter Brooke through Vanguard since birth, with an opening balance of £1,000. 

Currently that pot stands at £26,000, with a 151.55 per cent return since the account was opened – or, in other words, nearly £11,000 of that pot is interest.

If the fund continues growing at the same pace, the account could contain £245,000 by the time she’s 17 – and £201,000 of that would be interest.

Returns are historically high at the moment, but even if her pot grew at a more manageable 6 per cent, it would still be worth £72,000 by the time she turns 17.