MSE News: The seven deadly sins of premium bonds

Gorgeous_George

littlemrtinkle wrote: »

i for one am fed up of martin always picking on premium bonds and not saying anything about the lottery. At least with premium bonds you get your original stake back

Arrgghhhh! You DO NOT GET YOUR STAKE BACK. If you did, it wouldn't be a stake. This is the most important point to understand.

The lottery does not feature on the Savings and Investments board. All PB's related topics should be on a Gambling thread.

GG

Batchy

The fact is this... if you had £100 and you could get say 2% gross... ie £1.50 net for the year, that will buy £1 lottery ticket. PER YEAR

I have had invested £100 in premium bonds for a while it won £50 a few years ago.

What are the chances that my 1 lucky dip a year would have won £50?

Since each £1 has as much chance as another £1, that means technically I have had (over the last 10 years)

£100 x 12 x 10 = 12,000 goes on the premium bond draw as opposed to 10 goes on the lottery. Firstly 10 goes... how boring... secondly... im a winner, and what would the likelyhood have been on the lottery?

I used to play the lottery and played £5 a week, and saw it as a waste! So I stopped.

Gorgeous_George

The lottery is a waste of money. That's why it is not investment in the same way that betting on the horses is not an investment.

I am pleased that your gamble on PBs has paid off - well done, you have been lucky. But PBs are NOT an investment - it is just a raffle and there will be a few winners and many, many losers.

All gamblers go through the denial phase. 12,000 attempts and one 'win' of £50. You couldn't make it up.

GG

Batchy

Gorgeous_George wrote: »

The lottery is a waste of money. That's why it is not investment in the same way that betting on the horses is not an investment.

I am pleased that your gamble on PBs has paid off - well done, you have been lucky. But PBs are NOT an investment - it is just a raffle and there will be a few winners and many, man losers.

All gamblers go through the denial phase. 12,000 attempts and one 'win' of £50. You couldn't make it up.

GG

you gotta be in it to win it! :-) lol

mikey72

MSE_Martin wrote: »

Source: www.premiumbondcalculator.com
Of course, though, with premium bonds you don't lose your capital. So for a fair comparison, put £2,900 in premium bonds and your jackpot odds are 1 in 14 million. Instead, put the same in a top savings account and you'd earn £5 interest after a month - enough "

I just put £2900 in for 1 year

At least £1,000,000 1 in 1,168,249
At least £50 43.8%
At least £25 76.5%
plus all the other prizes

In fact it's only a 23.5% you'll actually win nothing, so it doesn't seem that great a risk of the £60 interest you would be giving up.

edda

Sorry mse Guy, but why not do a search before starting a new thread? Same discussion exists here:

https://forums.moneysavingexpert.com/discussion/2421911

Gorgeous_George

mikey72 wrote: »

I just put £2900 in for 1 year

At least £1,000,000 1 in 1,168,249
At least £50 43.8%
At least £25 76.5%
plus all the other prizes

In fact it's only a 23.5% you'll actually win nothing, so it doesn't seem that great a risk of the £60 interest you would be giving up.

So, the odds are that you will win £25. And that's better than £60 because...

In the end, the only problem is people referring to PBs as investments rather than gambling. It is gambler's denial.

GG

mick_sturbs

Stupidly last year after reading the article on what a poor invesment premium bonds where i halved my holding even though i had recieved quite a few payments from "ernie" Since then my returns on my remaining bonds has far exceeded any returns i could have got in any bank account .Quite frankly i do not believe the so called premium bond calculator and i will think most carefully before believing everything i read from so called experts.

Gorgeous_George

mick_sturbs wrote: »

Stupidly last year after reading the article on what a poor invesment premium bonds where i halved my holding even though i had recieved quite a few payments from "ernie" Since then my returns on my remaining bonds has far exceeded any returns i could have got in any bank account .Quite frankly i do not believe the so called premium bond calculator and i will think most carefully before believing everything i read from so called experts.

... and that is your choice. So long as you make your choice having considered the pros and cons AND understand that PBs are gambling, not investing...

GG

dougz_2

mick_sturbs wrote: »

Stupidly last year after reading the article on what a poor invesment premium bonds where i halved my holding even though i had recieved quite a few payments from "ernie" Since then my returns on my remaining bonds has far exceeded any returns i could have got in any bank account .

You should be releaved to learn, the fact is probability does not work like that. Just because you randomly happened to have a little winning streak on the bets you made, that has absolutely no bearing on what would have been the return had you made more bets in the same period. Each £1 PB is an entirely independent bet, so those additional ones would have been just as likely to lose as anyone elses.