Lottery or Premium Bonds- Advice Please?

gilly41

Hi
I am quite new on these boards so not sure if I am posting on the right forum but here goes!!
We put £4 a week on the lottery- the same 2 lines on a Wed and Saturday. After reading these boards for several months I have realised how little we are actually getting back from it- maybe 5 £10 wins a year- which is a massive loss!!
I am now thinking about getting some premium bonds but havent a clue where to start. I know if we stop the lottery I am always going to be wondering if we could have won with those lines but on working it out we have spent approx £1500 in the past 9 years- and with nothing to show for it.
Thanks for any advice
xx

grumpyoldgit_2

Try searching the boards for premium bonds - there are at least two active threads on that subject at the moment and loads of older ones.
GoG

jobbingmusician

Well done you for realising what a con the Lottery is. :rudolf:

Why is it a con?? (for anyone who hasn't realised) - because only 50p of every £1 spent goes towards prizes - the rest is swallowed up by Camelot! :mad:

I think there are some disadvantages to you putting the money into PB, however - the main one being that your first purchase has to be £100 worth! After that you can 'top up' with £10 worth at a time.

Another disadvantage (and, as grumpyoldgit has said, you will get a much better idea of ALL the advantages and disad - that we have thought of - if you search for other threads) is that your money has to sit around for a month before it starts being put into the draw. That means it's actually a good time to invest NOW (end of the month) if you have £100 around the place :rudolf:

A suggestion - why not put a bit every month into the sort of monthly savings account that matures after 6 years or so - can't think of the name but I'm sure there are some that pay you a bonus if you just keep paying a little bit in each month for a set period - almost like winning the Lottery...

the_gasman_2

hi gilly,
Just sent you a personal message. Hope it helps you.

Greycrow

Dont look at either as an investment,they're not, they're strictly a gamble.
If you like a flutter, and I do, then for £4/wk you have a bit of fun and a dream albeit a very remote one. But don't forget that little Irish girl down Limerick way, she had a dream too.
If you want to invest then follow the route suggested by jobbingmusican.

Patr100

jobbingmusician wrote:

Why is it a con?? (for anyone who hasn't realised) - because only 50p of every £1 spent goes towards prizes - the rest is swallowed up by Camelot! :mad:

I don't do the lottery , neither do I work for Camelot but let's get some facts right.

Over the seven year period, out of every pound spent, 50p goes to prizes. 28p to "good causes", 12p to the Govt on lottery duty, 5p to retailers, 4.5p to Camelot operating costs and half a penny to Camelot Shareholders


http://www.camelotgroup.co.uk/presspack/AboutTheNationalLottery.pdf

jobbingmusician

A genuine thank you to Patr for pointing this out. The figures had got slightly distorted in my head, and I guess I shouldn't complain totally, as I am part of the voluntary sector that the 28p in the £1 used to fund before the Government got their hands on it and started spending it on their own 'charities' :mad:

However, my basic point is still valid - of every £1 you spend on the Lottery, only 50p is returned in prizes. And 17p goes directly in retailer's commission and taxes.

For interest, I assume taxes on PB are about the same - am I right? And what about retailer's commission? At least we can find out fairly easily what the (notional) return on PB is - although this isn't quite accurate for year 1 as it discounts the month's waiting time before bonds go into the draw. :rudolf:

bunking_off

They're both about gambling.

With the lottery, your stake is the money you hand over, and as has been said, the average payout is 50%.

With premium bonds, you're effectively staking the interest that you would otherwise have got on money you invested in the bonds (you get your money back if you cash the premium bonds in, but not the interest you lost while you held them). If (and only if) that interest rate is the same as the one that National Savings & Investments sets the payout at (currently 3%), then the average payout is 100%....ie you'd forgo the 3% interest you could get elsewhere, but on average get 3% in prizes hence on average be level. The fun element is in the gamble of whether you get nothing or substantially more than that 3% average.

If, however, your savings would otherwise be getting a better return elsewhere than 3%, then like the lottery the average payout falls. Example, if you could get 4% interest on your savings, then you're gambling 4% interest and on average the payout is 3% prizes, hence 75% net payout. (In reality things are a little more complicated as there's a month delay between buying a bond and it being entered into the draw).

If you want to gamble and have the odds better in your favour, then you'll get better odds at the bookies (believe payout is 80-90%?) or to a casino (e.g. roulette, depending upon style of table, has either a 97% or 95% payout).

jobbingmusician

bunking_off wrote:

They're both about gambling.

With the lottery, your stake is the money you hand over, and as has been said, the average payout is 50%. With premium bonds, you're effectively staking the interest that you would otherwise have got on money you invested in the bonds (you get your money back if you cash the premium bonds in, but not the interest you lost while you held them).

I thought that was what originally appealed to the OP - gambling, but just the interest rather than the capital :rudolf: