Premium bonds reduced payout

nrsql

Well - actually the total is increasing in July but the amount in £50 and £100 is decreasing by a lot. A small increase in the number of £50 and a big reduction in number of £100. They are giving more big prizes.

I value these on the £50 and £100 prizes (assume I won't get anything else)so my expected return will reduce. Have to consider whether to carry on holding them.

Kazza242

Oops. I was composing a thread on the increase to the Premium Bond prize fund when you posted. I didn't see this post beforehand. The thread details which prizes will be increasing:

http://forums.moneysavingexpert.com/showthread.html?t=460903

nrsql

Just read that the chances of winning will remain the same at 1 in 24000. So although my expected yield will go down due to less £100+£50 I should get more larger prizes. Half of the £100 prizes should be larger.

I wish.

dealsearcher

I could never understand why they added a second 1 million win. I would have thought it a lot better to keep the single 1 million win and to introduce 4 x £250,000 or 10 x £100,000 wins.

Paul_Herring

dealsearcher wrote: »

I could never understand why they added a second 1 million win. I would have thought it a lot better to keep the single 1 million win and to introduce 4 x £250,000 or 10 x £100,000 wins.

So they can advertise "WE'VE DOUBLED THE NUMBER OF MILLION POUND PRIZES!!!" or similar - sounds 'better' than "we've increased the number of £100K prized by 10"

nrsql

I would rather it went into the £50's.
Might change my mind if I win the extra £1M prize though.

dollpiggy

It's still better than the National Lottery - at least you can get your £1 back!

Paul_Herring

dollpiggy wrote:

It's still better than the National Lottery - at least you can get your £1 back!

Bad comparison.

A more realistic comparison would be to put £30,000 (or whatever) into a savings account, and spend the interest on the lottery.

You can still get your £30,000 back.

dollpiggy

£100 invested in a year means you are gambling with £3 of likely interest after tax. That's less that 6 pence a week for a chance to win a prize. Pro rata that's 6 p per week per £100 invested per year - I think it is worth a punt.

Show me a lottery retailer that sells tickets for 6 pence (or 12 pence if it is ISA interest)?

Paul_Herring

Pro rata that's 6 p per week per £100 invested per year - I think it is worth a punt.

For £100 yes. For £30,000 with no other 'investments' or savings, IMHO, no.

Show me a lottery retailer that sells tickets for 6 pence (or 12 pence if it is ISA interest)?

You're taking the comparison too literally, but I'll bite. Just save £16,667 instead. And get your bank to pay your interest weekly.

Or just buy all your lottery tickets at month/year end when you get your interest. Buying 1 ticket 52 times a year gives you the same chances of winning as buying 52 tickets once a year.

Aegis

Paul_Herring wrote: »

For £100 yes. For £30,000 with no other 'investments' or savings, IMHO, no.

You're taking the comparison too literally, but I'll bite. Just save £16,667 instead. And get your bank to pay your interest weekly.

Or just buy all your lottery tickets at month/year end when you get your interest. Buying 1 ticket 52 times a year gives you the same chances of winning as buying 52 tickets once a year.

I agree with the gist of the post, but I think the last paragraph might be incorrect.

If you assume that you have different number combinations on each ticket, the probability of winning big on the lottery with N tickets entered into the same event is N/14,000,000 or thereabouts, while entering 52 times with 1 ticket is 1 - [(14,000,000 - 1)/14,000,000]^N. Admittedly, for low values of N the results are insignificant, but at higher levels they become quite important mathematically.

You actually have a slightly HIGHER chance of winning by playing all in one go rather than on a week by week basis, but in a N = 52 situation, the increase is pretty damn negligible, I must admit

Interestingly enough, the same point can be proved by considering the result of either buying 14,000,000 unique tickets for one draw or one ticket for each of 14,000,000 draws. In the first instance you're guaranteed a win. In the second you're not.

Moral of the story: if you're going to play the lottery, play once with volume. You have a slightly higher chance of winning that way.*

Sorry to be pedantic, but I like number games.





















* Please do NOT go and blow all your money on the lottery after reading this... Even with the increased probability, you stand so little chance of winning big that playing and aiming for that big win is really not a good idea from a mathematical perspective!