Premium Bonds

adminannie

This is just a passing thought at the minute, but what is everyones idea of buying £2000 of premium bonds.

I wouldnt get much interest on that amount but what are the odds of having a few wins

Any thoughts on this Annie

afro_2

1 in 24,000 chance of winning
ie for £2000, a 1 in 12 chance of winning each month.

Prizes start at £50, go up to £1 million. Avg return under 3% though:(

amosworks

How was this average calculated?

grebbo

I think premium bonds are worth a punt - £2k in an ISA isn't going to make much.

Gorgeous_George

amosworks wrote:

How was this average calculated?

It doesn't need to be calculated. It's all here.

2.95% tax free average return. I look on it as gambling the interest you can be guaranteed in the bank etc. for the hope of winning big. The £50 prizes are almost worthless.

Personally, 2% of my savings are in PB.



GG

weekendwarrior

Ok, the returns can be poor but at least there is the chance of winning the big prize!

I have a substancial amount in a high interest account and the monthly returns after tax are poor, I am now buying premium bonds in varying amounts until I reach the limit.

Because inflation is so low I am not bothered if I don't get a little interest!

At least any winnings are tax free.

Gorgeous_George

My mortgage is 5.25%.

PBs 'pay' 2.95%.

It's not rocking horse science

As well as the paltry rate of return, nearly £407M of investor's money is needed to pay the £1M first prize each month - and there's two of them so £814M of investor's money is needed to fund the 2 first prizes.

Just like the lottery, you need manyl losers to fund a few winners.



GG

coolagarry

I have £30,000 and my wife has £10,000. We tend to win £150 and £50 per month respectively. We both have our maximum isa's and the PB's are our version of doing the lottery.

As an aside, my winnings always come a week before hers (I assume it's something to do with the bonbd numbers or something) and it's quite amusing to see her waiting for the postman to see if she has beaten me (and the odds) this month!!

Gorgeous_George

coolagarry wrote:

I have £30,000 and my wife has £10,000. We tend to win £150 and £50 per month respectively. We both have our maximum isa's and the PB's are our version of doing the lottery.

You seem to be beating the odds by more than double. Either lucky or, more likely, forgetful of ther lean months.

£40K at 5% is £2K so you're gambling over £150 per month. On average, everybody loses on PBs.

So long as people are fully aware of what they are doing, it's not a problem.

Paying 2.95% and claiming it as TAX FREE is a great advertising gimmick.

And no, I haven't won yet!



GG

amosworks

A lottery?
Unlike the lottery, with bonds you can get your investment back even if you don't win

Have you TRIED returning a losing lottery ticket??

Lea37

I'd say do it. My fella's initial £1000 block of bonds bought just over 2 years ago had a substantial win last month.

Like you say 2k is not a massive amount to invest and the premium bonds give you a chance to win big without risking your cash. They also serve as a deterrant from spending the cash in my experience.