Premium Bonds

leeroy2009

anyone got them, anyone won anything? thinking about getting 100 quids worth

bowlhead99

With 100 entries into the monthly draw at the current payout rates you should win a prize every 20 years. On average, over 96% of the time, that prize will be 25 quid, but the rest of the time it would be higher. If you can wait 37 million years, you 'should' win the jackpot, of course you might not, because it's a game of chance.

Generally premium bonds are more useful for high rate taxpayers, as the prizes are tax free, and if you have say 25-30k in them, the prizes come regularly enough to get enough prizes to create an effective interest rate of over a percent. It's not a market beating interest rate, but all the interest is gambled for prizes anyway. So in your case, every 20+ years you'll win a prize, but you'll never get the 1-1.5% that the big investors get, you can only get 0%(nearly all the time), or 25%(once a generation), or more (a 50% or 100% return would happen every 500 years ish, higher prizes much less frequently than that...)

The alternative is to have your hundred quid in an account earning 2-4% net and then buy a couple of lotto tickets a year with your interest. At 2 tickets a year you'd only win a prize every 27 years, which is a bit worse than the PB route. But the chance of a jackpot is higher, you should win once every 7 million years instead of once every 37 million with the bonds. And the jackpot is higher, and you can boost it higher still by only playing rollover weeks. And the prizes are still tax-free.

Basically, on 100 quid invested you won't see prizes very often if at all. If you conceived a child this weekend, they'd be just about to graduate uni before you won your first £25 at the standard odds.

But this is an average and you might win next month. Also, when playing over 20 years plus, the interest rates (prize payout rates) are bound to go up at some point because rates are generally at an all time low at the moment and at other points in the economic cycle it will be higher.

Personally (though I do have a fiver of bonds I've had since a child, which will likely never win in my lifetime, but I can't be bothered to sell), I'd have my cash in a regular bank account earning interest and then just buy the occasional rollover lotto or Euromillions ticket. You don't really want a 25 or 50 quid prize once a lifetime - only the jackpot is really lifechanging, and the jackpots come bigger and more often with a couple of lotto entries a year than with £100 of bonds "invested".

[Deleted User]

Hi,

you could use this wee calculator, it's quite friendly, so with £100 over 1 year, average luck, you could expect to win, 'roughly 0'.

I like the 'roughly', so could be more or less, though not much less. :rotfl:

jedsonack2

bowlhead99 wrote: »

With 100 entries into the monthly draw at the current payout rates you should win a prize every 20 years. On average, over 96% of the time, that prize will be 25 quid, but the rest of the time it would be higher. If you can wait 37 million years, you 'should' win the jackpot, of course you might not, because it's a game of chance.

Generally premium bonds are more useful for high rate taxpayers, as the prizes are tax free, and if you have say 25-30k in them, the prizes come regularly enough to get enough prizes to create an effective interest rate of over a percent. It's not a market beating interest rate, but all the interest is gambled for prizes anyway. So in your case, every 20+ years you'll win a prize, but you'll never get the 1-1.5% that the big investors get, you can only get 0%(nearly all the time), or 25%(once a generation), or more (a 50% or 100% return would happen every 500 years ish, higher prizes much less frequently than that...)

The alternative is to have your hundred quid in an account earning 2-4% net and then buy a couple of lotto tickets a year with your interest. At 2 tickets a year you'd only win a prize every 27 years, which is a bit worse than the PB route. But the chance of a jackpot is higher, you should win once every 7 million years instead of once every 37 million with the bonds. And the jackpot is higher, and you can boost it higher still by only playing rollover weeks. And the prizes are still tax-free.

Basically, on 100 quid invested you won't see prizes very often if at all. If you conceived a child this weekend, they'd be just about to graduate uni before you won your first £25 at the standard odds.

But this is an average and you might win next month. Also, when playing over 20 years plus, the interest rates (prize payout rates) are bound to go up at some point because rates are generally at an all time low at the moment and at other points in the economic cycle it will be higher.

Personally (though I do have a fiver of bonds I've had since a child, which will likely never win in my lifetime, but I can't be bothered to sell), I'd have my cash in a regular bank account earning interest and then just buy the occasional rollover lotto or Euromillions ticket. You don't really want a 25 or 50 quid prize once a lifetime - only the jackpot is really lifechanging, and the jackpots come bigger and more often with a couple of lotto entries a year than with £100 of bonds "invested".

Much descriptive, and calculative.

brendon

Premium bonds pay 1.5% interest currently (average), with a fair bit of variance around that. If you're happy with 1.5% (after tax) with some chance to get a lot more or a lot less, go for premium bonds. Otherwise, stick with standard savings products.