Premium Bond Shenanigans

luggagewarrior

I don't know if something dodgy is going on, or wether I'm just unlucky when it comes to keeping my money.
It started with my notion that you only seem to get payments from the Bond meisters within the first 3-4 months and then very sporadic after that.
So that was the plan, heartened by the 3.1% average payout, put down 25k(from a previous house sale, presently residing in our offset mortgage), hold the PBs for 6 months and cash in having had a chance of the big prize, lots of small ones and my original stake back.
As it turned out, that was what happened, month 2 brought in 3x£50, month 4 bought 2x£50 cheques and nothing on any on any other months that would make up for the lost £125/month from a now 25k lighter offset mortgage.
We hung on untill month 7 but still got nothing so cashed in, but the problems that I encountered was during the entry/exit phases.

The bonds that were issued had shortened surnames, which I assumed was an administrative shorthand and wouldn't affect the cheques.; Wrong, everything was returned to them for recorrections to be made, delaying my first winnings by a month. At about month 7, decided that enough was enough, so cashed in 10 days before month 8 draw, ticking the 'wait untill next draw before cashing' box, and expecting the payment into my nominated account by week 2 on month 8 at the latest. By week 1 month 9 I was purterbed, so contacted the PB CustSvcs who said that they were about to make the payment.

They aparrently only received the bonds 2 weeks after the month 8 draw so had to wait untill month 9, I on the other hand sent the bonds 10 days before the month 8 draw. An extra month lost due to this transit delay.
I lost on the way in and lost on the way out. Who gained?, The government. Could it be accidental and just affecting only me? Perhaps, but if all large sums attract this incompetence / delivery delay, then the sums involved may be humungous. Call me an old cynic, but if the Govt is involved, then it's probably the latter.

8 month venture, Offset mortgage loss=£125x8=£1000. Projected gain@3.1%=£516. Actual winnings=£250.
Alan Sugar, stick your recommendations where the sun don't shine.
Has any one else had any similar issues?

tom188

No but it increases my suspicion that PBs are rubbish, and only the only winner is the treasury who use them as a great source of cheap debt.

nrsql

There's another thread heer about valuing bonds.
I would expect you to get 456 rather than 516 for 25k over 8 draws so you have probably been a bit unlucky.
As to buying the bonds - you can buy via a debit card and that is considered the purchase date so you can do it the last day of the month.

Never tried to cash in bonds so can't comment on that.

Think what you have done is pretty high risk - might have given a big profit but I'm not surprisde it shows a small loss over that period.

tom188

Think what you have done is pretty high risk - might have given a big profit but I'm not surprisde it shows a small loss over that period.

I dont really want to get into the are premium bonds good debate but you certainly cannot say that moving your money to your offset mortgage from the PBs is high risk. It is probably the lowest risk thing you could have done with it, short of paying off that section of the mortgage.

It is a random draw so you are just as likely to have a run of bad luck at the beginning as twenty years in, however there will obviously be a smoothing effect on your returns, the longer you hold the bonds. (good periods counteract bad periods).

YorkshireBoy

tom188 wrote:

I dont really want to get into the are premium bonds good debate but you certainly cannot say that moving your money to your offset mortgage from the PBs is high risk.

I think nrsql was referring to borrowing at 5%+ (from the offset) to invest in something that gave an average but not guaranteed 3.15% - and be entered for only 6 out of 7 possible draws.

nrsql

Yep - was using the mortgage money for PBs that I thought high risk.
Wouldn't say it was a bad thing to try though.
Investing that money in the stock market would probably have been considered higher risk but you probably would have shown a profit over that time if you had (a lot of people here would have thought you crazy though, which is odd for a strategy that made money).

luggagewarrior

The replies seem a bit complicated, there are 2 issues that I was pushing, the first was that I think that the odds are adjusted to favour fresh entrants and complainers, as has been borne out by friends and family, you get most wins within three months then the tap is turned off. My parents in law have about 40k invested with any winnings going back into the pot, they periodically get a £50 cheque, sometimes 2, sometimes non. They're not even getting 1.5%, even averaged over the 5 years that they've held them. Hence my instinct to hold them for 4 months and cash in. Nrsql estimated £456 return, we got £250, rubbish, but I was prepared for that.
The second and main point was that is the delays on entry / exit which cost me cash and worked in favour of the exchequer. That was the point that I was trying to make, the extra month that I had to wait because they 'received' the bonds after the draw when I had sent them in 10 days before hand cost me £125 in lost offset mortgage money.
To end my final point, if that practice is systemic, then they're making shedloads, just like banks that transfer your funds in 3-5 working days.
I know it's a moan, but thats what these pages are for.
LW

nrsql

The delays are certainly a concern.
I would have expected the purchase date to be the day they received the request.
You don't say how you did this but sounds like you may have sent a cheque - the purchase date to be the day they received this - max 2 days after you sent it (unless this was your first purchase in which case you shoud have read the t's and c's).
Can't see any method by which it would have taken any longer.

exel1966

There are no delays on entry as you call it if you purchase by phone with a debit card on the last working day of the month.
In fact it works in the purchasers favour as the money may not necessarily be debited from your account til up to 4 days later.

EDIT : TEL. FOR PURCHASES :- 01253 840005

sheraz2

^you still have to wait one full working month after you have invested, hence your losing

exel1966

I never said you didn't !! Yes it does take 1 month and it clearly explains that in the T&C's. If you don't think that's worth it, then don't purchase them in the first place !