Premium Bonds Article Discussion Area

BeeUK wrote: »

Interesting Premium Bonds question to ponder...

What would people prefer...

1. Current system of large-ish prizes from £50 upwards...or
2. Series of smaller prizes and more chance of winning something say from £25 upwards?

What do you think?

Um - I think you'll find that option 2 will be happening soon: http://www.myfinances.co.uk/companies/savings-investments/national-savings-and-investments-ns-i-/ns-i-new-premium-bond-prize-isa-rates-cut-$1262311.htm

BeeUK wrote: »

Interesting Premium Bonds question to ponder...

What would people prefer...

1. Current system of large-ish prizes from £50 upwards...or
2. Series of smaller prizes and more chance of winning something say from £25 upwards?

I would be quite happy for any of say my 6 x £400 (£2400) blocks purchased in January to win a £25 prize in the next 12 months, as it would beat the 1% currently being offered in my Nationwide ISA.

Just popped in my local Post Office and they have run out of Premium Bond application forms, they said they have had a run on them. Luckily I have 3 spare at home but its the first time I have ever known them run out!

Anyway, topped up with another £400 worth today.

I've recently been considering whether to keep the Premium Bonds I hold, so I've made a little spreadsheet to work out not just the precentage odds, but the likely frequency of payout. Also, some posters have said that the nominal 1.8% payout (current) is watered down by the fact that some of it goes to the big prizewinners. Anyway, I thought I'd post my findings just so any people considering buying PBs can weigh up the numbers for themselves.

First thing I noticed is that, in practical terms, nearly all of the (95%) payout goes towards the small prizes (£50 & £100) with (relatively) good odds. I wanted to find out the average time between payouts, rather than the odds of winning. For somebody with a maximum £30k holding, the average would be 10 £50 wins a year, and one £100 every 45 months. So, the likelihood of winning small prizes is good. For the big prizes (£500-£1m) the odds are not so good, ranging from an average win once every 154 years at the £500 level, up to once every 53000 years at the £1m level!

Dividing the prizes into 'realistic' and 'optimistic' categories is quite sensible in fact. The 'realistic' prize pot, comprising £50 & £100 prizes, should pay out on average 1.71% pa (at present rates), equivalent to savings account interest of 2.1375% gross (normal tax payers) and 2.394% (higher rate tax payers). In the past, that would have sounded dismal but with current interest rates, maybe not. The 'optimistic' (£500+) prize pot, on the other hand, will only pay out to a handful of people, but obviously by buying the Premium Bond you are at least joining that group!

The next thing I thought about was, what is the premium for being in the draw, ie, the difference between interest in a savings account and the average PB win over time. If £30k was saved at 3% gross, the cost (in lost interest) of being in the draw is £17.25 per month (normal tax payer) or £2.25 (hi rate tax payer).

Caveat: Premium Bonds payouts are not a certainty, and the wins above are averages. Many people win more or less than the average.

Roger_Bennion wrote: »

Premium Bond Odds are obviously becoming greater but can anyone tell me if they have experience for themselves or anyone they know having won twice with the same numbered Premiun Bond ?

Feedback todate indicates that indivdual numbers are probally not checked,If the draw is indeed random then the odds should remain the same each month. but I still have no firm acceptance from anyone that the same numbered bond has ever won twice.

Can anyone out there confirm to me that they have won twice with the same numbered bond.

I've never won twice with the exact same Bond but have had quite a few times where the same block has won (3 times in consecutive months & 3 times where the same block has won more than 1 prize in the same month, all of these in the last 3 years.

I have run a syndicate with holdings of more than £60,000 since 1986 and would like to offer a few 'thoughts' in reply to some other questions I've read on here.

I've found from experience that if a £1K block has not won within the first 24 months it is unlikely to do much and I would therefore cash it in and buy a new block. I keep a spreadsheet of the bonds & what they've won and those which do not win regularly are changed. I admit that this leads to 'lost months' waiting for the new Bond to be eligible but it has proved to be a worthwhile tactic. All of my blocks of Bonds now win regularly. If they don't, they're outed.

We all know that the odds of each bond winning a prize are equal... or are they? The theory is not really in dispute until you compare a block of £4000 which is split into 2 x £2000. These were obviously purchased at the same time yet one has won 2 prizes and the other has won 7. Over the years I have seen this trend repeat many times so, without doubt, there are 'lucky' bonds and '"not so lucky' bonds. If you've got 'unlucky' ones don't be afraid to change them.