Premium Bond Calculator Discussion

ModeMMau3

I have had originally £16 worth of Premium Bonds since 1968,one of which "won" £50 in 1984.
Having looked at Martin's calculator,in 2005 I decided to add some luck into my life,so built up to maximum of £30,000 by Oct 2010.Up until then I "won" about £900,but since maxing to £30k,in 13 draws I have "won" £150.My luck is such,as stated by Martin's calculator,that 99.4% of people with max £30k win more than me,the average amount of winnings being £400 against the £150 in 12 months which I "won".
I am not moaning about such a derisory "return",nor worried about the interest I could get in a good savings account because I know I'm gambling,and my "stake" is only part of my available dosh.
I have a good pension too.
If,as Martin's calculator I assume is correct,then I consider my bonds to have hit a bad patch and that over a certain period something could come about to rectify my poor performing bonds.
My input here should show the downside to anyone thinking of putting their life savings into Premium Bonds and expecting to win.
They are for fun and perhaps.......just perhaps,ok?
I'm 67,a widower,so don't have any commitments,and have saved for years,so what I do,I can afford.
BTW I am not looking for a partner by revealing these things because I don't want to jeopardise my loot ok ? :-)

ModeMMau3

Without losing it ?

MsConstipatedPiggyBank

I've done pretty well on the premium bonds this year, having invested £15,000 - £25,000 over the entire period, and I've won approx. £900. This is comparable with what I could have earned in a high interest account. I've already maxed out my ISA so eggs aren't all in one basket.

I'm saving very hard and putting away money quickly, so anticipate needing to set up an ISA and premium bond account for my partner too.

Would it be possible to update the premium bond calculator to work out the odds for winning different amounts when owning above £30,000 of premium bonds? Whilst I realise it's not possible for an individual to do this, it is possible for a couple to do so, or for a family to manage over £30,000, and it would make it easier to see whether our money is in the right place, given current low interest rates.

atush

I bought 500 (100 for each of the 5 of us) 5 years ago. WE have won 150 altogether.

Although we have done well, i consider them to be gambling w/o losing a stake so we won't be buying more. They are just fun money. And everyine gets to keep the money they win up to 500, and if winning over that must split witht he other 4.

I really have better things to do with 30K while earning so little myself.

Reynard_2

is this very odd or what, not sure who to ask, so trying my luck here.

the thing is this, every month without fail i get 2 cheques for £25, every month without fail.

i asked a mathematition customer of mine the odds, he said impossible, he put a wager on, and guess what today, (fri) i won a tenner as again 2 cheques for £25 arrived in the post.

whats going on?

thelawnet

Reynard wrote: »

is this very odd or what, not sure who to ask, so trying my luck here.

the thing is this, every month without fail i get 2 cheques for £25, every month without fail.

i asked a mathematition customer of mine the odds, he said impossible, he put a wager on, and guess what today, (fri) i won a tenner as again 2 cheques for £25 arrived in the post.

whats going on?

How many have you got?

thelawnet

bind00 wrote: »

I'm not sure I trust this calculator. For example, under What Will I Win, selecting 10 years, if I put in any number of bonds from £18,500 up to £30,000 it always says I'd expect to win just £2,500. Now I'm no post doctoral cosmology statistician but I'm pretty sure your payback would increase with your investment.

Premium Bonds really don't have anything to do with cosmology. This just blinding with science.

Statistics yes, but it really is not rocket science (albeit that the statistics are above GCSE standard).

Basically what happens is the more time/money you have invested, the more closely your actual payout will approach the theoretical.

The odds of a particular bond in a particular draw winning a particular prize are:
£25 - 1 in 24,900
£50 - 1 in 1.36million
£100 - 1 in 1.36 million
£500 - 1 in 13.4 million
£1000 - 1 in 40.1 million
£5000 - 1 in 483 million
£10000 - 1 in 1.00 billion
£25,000 - 1 in 2.34 billion
£50,000 - 1 in 4.67 billion
£100,000 - 1 in 10.5 billion
£1,000,000 1 in 42 billion

With £30,000 bonds over 10 years, that's 10 * 12 * 30,000 = 3.6 million chances. You can expect to win the £25 prize on average 3.6million/24,900 = 144 times, the £50 and £100 prizes 2.64 times, and then the chance of winning ANY prize of £500 or more is only 31%.

The expected payout of the game is 1.5%, and what NS&I have done is skew this VERY heavily towards the £25 prizes. 80.2% of the payout comes from £25, 2.94% from £50, 5.88% from £100, 3% from £500, 2% from £1000, and the top six prizes only payout 6%.

This actually addresses a previous criticism by Martin of the Bonds, namely that the modal (most common) return is much less than the mean (expected value). In fact, 1.2% is paid out just through £25, if you add in the £50 and £100 prizes, it's 1.35%. So you are really only 'gambling' with a fraction of a percent of your money.

Of course the 1.5% payout itself is still a problem, but the distribution skew no longer is (although many would prefer to sacrifice more of their interest in return for a bigger chance of a jackpot....).

monstersnowman

I have used my ISA allowance and am in receipt of WTC but I am almost at my maximum earnings for WTC. If I earn anything more I will lose it a rate of 41% of any taxable income to the point where I wont be entitled to WTC and will also lose my free dental treatment then I will be taxed another 20% on the taxable income, adding up to 61% of my taxable interest going down the plughole and teeth to pay for etc. I will have to either go private or travel miles to another dentist who accepts paying NHS. Also other little benefits you receive by being a WTC receiver will go. Therefore I want a return from a large lump sum that is not tied up & will not be taxable so it doesnt affect my WTC. Savings accounts provide very low returns and/or are fixed term and/or taxable so whilst Premium Bonds are a poor rate as well they stand up in my personal circumstances mainly because they fulfill my needs AND they are like playing the lottery for free. I have just watched a bloke buy £10 of midweek lottery with a terrible negative return. It may not be a good investment for everyone but a small number of people in my circumstance see it as an attractive and sensible gamble without damaging my WTC status and my teeth ) I will also get quite excited once a month - you never know.

cestlavie

over the last year i won the equivalent of 1% on my holding.

worldtraveller

I've had a £1 premium bond since 1957 (AB5*****) and it's not won anything!