Premium Bonds shock

Former_MSE_Guy

This thread is to discuss the following news story:

Premium Bonds: 1 in 100 chance of beating inflation

Morrisha

Today, I received a letter from NS&I informing me that I had not collected my winnings from 7 months ago. It was only £25, but I thought 'about time, I haven't won a dickie bird for ages'. While I was filling in the form to claim my prize I realized that winning something.. anything....a scrap perhaps; was long over due.

Indeed, it then dawned on me that despite having the full £30000 invested, I have not won even a paltry £25 in all that time. And in fact may have only earned about £125 in the whole time I have owned the bonds. (About 28months)
I thought the odds on winning something were about 25,000 to 1, but I was wrong. Now I am incredulous -How can you have 30000 bonds where in 6 separate draws, you win absolutely nothing!!!!

Stunned, I rang NS&I and they informed me that it was "unlucky" that I had not won a single penny for 6 months. I said there must be a mistake, and they confirmed there was no mistake. Despite my maximum holding.

The reason why there is no mistake is because Ernie (the random bond number generator) generates millions of numbers, including millions of phantom numbers and numbers for dead people. These phantom numbers sometimes "win", reducing the chances for real bond number holders. In other words, bond holders like me, thought I was competing against other bond holders for the prizes, where as I am actually competing against a load of phantom bond holders including deceased ones. No prizes for guessing who get's the phantoms winnings!

My wife also has a similar holding and she has won practically nothing as well. I am now having that queasy feeling you get when your investments turn out to be a wretched disappointment. I feel duped.

diable

Morrisha wrote: »

Today, I received a letter from NS&I informing me that I had not collected my winnings from 7 months ago. It was only £25, but I thought 'about time, I haven't won a dickie bird for ages'. While I was filling in the form to claim my prize I realized that winning something.. anything....a scrap perhaps; was long over due.

Indeed, it then dawned on me that despite having the full £30000 invested, I have not won even a paltry £25 in all that time. And in fact may have only earned about £125 in the whole time I have owned the bonds. (About 28months)
I thought the odds on winning something were about 25,000 to 1, but I was wrong. Now I am incredulous -How can you have 30000 bonds where in 6 separate draws, you win absolutely nothing!!!!

Stunned, I rang NS&I and they informed me that it was "unlucky" that I had not won a single penny for 6 months. I said there must be a mistake, and they confirmed there was no mistake. Despite my maximum holding.

The reason why there is no mistake is because Ernie (the random bond number generator) generates millions of numbers, including millions of phantom numbers and numbers for dead people. These phantom numbers sometimes "win", reducing the chances for real bond number holders. In other words, bond holders like me, thought I was competing against other bond holders for the prizes, where as I am actually competing against a load of phantom bond holders including deceased ones. No prizes for guessing who get's the phantoms winnings!

My wife also has a similar holding and she has won practically nothing as well. I am now having that queasy feeling you get when your investments turn out to be a wretched disappointment. I feel duped.

If you have £60k tied up jointly in Premium Bonds then you must be mad. you gave you that bit of financial advice?

wriggly

Morrisha wrote: »

The reason why there is no mistake is because Ernie (the random bond number generator) generates millions of numbers, including millions of phantom numbers and numbers for dead people. These phantom numbers sometimes "win", reducing the chances for real bond number holders.

I'm pretty sure that ERNIE generates a list of random numbers longer than required. These numbers are matched against valid bond numbers, with the "phantom" numbers being discarded, and later numbers moving up the list. Do you have any evidence that this is not the case?

I'm not sure what would happen if ERNIE's list was not long enough to ensure all the prizes are awarded, but I presume they could turn it on again if necessary.

bendix

Another classic case of hyperbolic reporting from MSE Guy.

Why, exactly, is it a 'shock'? Anyone with any financial savvy knows they're a complete waste of time, and a throwback to the financial immaturity of the 50s and 60s.

dunstonh

If you have £60k tied up jointly in Premium Bonds then you must be mad. you gave you that bit of financial advice?

Cruel to be kind

I am now having that queasy feeling you get when your investments turn out to be a wretched disappointment.

its not an investment. Its a national tombola. You are giving up any return to be put in a draw. Its similar to having the money in the building society, earning interest and then popping down the local shop to by lottery tickets and scratch cards with all the interest. If you would never dream of doing that with your interest, then you have to ask why you are doing it with Premium Bonds.

***xyz***

diable wrote: »

If you have £60k tied up jointly in Premium Bonds then you must be mad. you gave you that bit of financial advice?

Maybe they took their own advise. I've done exactly the same and have 60K in PB's with my OH. Have done so for a number of years and we are happy with the returns. Nothing mad about it if you are happy to do it and have your financial house in order. Just my opinion.

Sceptic001

bendix wrote: »

Another classic case of hyperbolic reporting from MSE Guy.

Why, exactly, is it a 'shock'? Anyone with any financial savvy knows they're a complete waste of time, and a throwback to the financial immaturity of the 50s and 60s.

bendix, check the date of the original post - I think you have been April fooled, two years in arrears...

Jake'sGran

I have £15,000 in bonds and £5000 of that is in winnings but I have never won more than £100 (I have had them a long time). Last year there was a £25/£50 win in every month but one.

There was an article in the Sunday Times some time ago saying that if you sold your bonds and bought new ones there was a much better chance of winning. Seems irrational but who knows, it might work.

Reaper

Morrisha wrote: »

The reason why there is no mistake is because Ernie (the random bond number generator) generates millions of numbers, including millions of phantom numbers and numbers for dead people. These phantom numbers sometimes "win", reducing the chances for real bond number holders. In other words, bond holders like me, thought I was competing against other bond holders for the prizes, where as I am actually competing against a load of phantom bond holders including deceased ones.

I think you may be getting confused. On the death claim form (PDF) the beneficiaries have the option of leaving the premium bonds running for a maximum of 12 months if they wish.

No prizes for guessing who get's the phantoms winnings!

Not who you think. It's the beneficiaries of the dead person's estate.

Reaper

Jake'sGran wrote: »

There was an article in the Sunday Times some time ago saying that if you sold your bonds and bought new ones there was a much better chance of winning. Seems irrational but who knows, it might work.

I doubt you remember that right. More likely the article was discussing common myths as this is one of the classics. As the NS&I says:

Myth 3: Only new Bonds win prizes
Each £1 Bond has an equal chance of winning, regardless of when or where it was bought. Bonds bought more recently may seem to win more often because there are more new Bonds than old – more Bonds have been sold in the last six years than in the previous 48 put together.