Premium Bonds - Odds of winning

humfer

Sorry if this has been posted before, but I currently buy £100 a month in premium bonds and was thinking of upping this to £250 a month when I can afford too. Just wondering if anyone has ever worked out the odds of winning say £50 or £100k etc based on different sized holdings. For example if you had £10k in premium bonds the odds of winning £50 would be.... and so on

itsnotfair_2

The maximum holding allowed per person is only 30k. Martin has previously done a thread on this somwwhere.

masonic

The odds can be found here http://www.nsandi.com/products/pb/rates.jsp

At 24000 to 1 per bond of winning a prize, the chances of winning each prize, say, for a £10k holding per draw are:-

£1,000,000 0.000056%
£100,000 0.000846%
£50,000 0.00166%
£25,000 0.00333%
£10,000 0.00838%
£5,000 0.0167%
£1,000 0.190%
£500 0.570%
£100 3.46%
£50 37.4%

So that makes your expected winnings per month £31.70, which equates to an interest rate of 3.8%, just as stated.

hur575

i had permium bonds before but the odds are better when you have close to maximum. the limit before was 20k i think and i had 15k my study loan which i left and i was wining 50 almost every month. a frined has put 30k and he told me he at least make 2k of win each year

masonic

hur575 wrote: »

a frined has put 30k and he told me he at least make 2k of win each year

Then your friend has been quite lucky.

Jonbvn

MSE Article

The odds are provided in the article.

Milarky

humfer wrote: »

Sorry if this has been posted before, but I currently buy £100 a month in premium bonds and was thinking of upping this to £250 a month when I can afford too. Just wondering if anyone has ever worked out the odds of winning say £50 or £100k etc based on different sized holdings. For example if you had £10k in premium bonds the odds of winning £50 would be.... and so on

This exposes the misguided belief in Premium bonds - that the more you hold, the more your chance of winning, and the more your chance of winning big (all technically correct) ergo large holdings are a better 'bet' than small ones.

No! Have £100 and and leave it at that. The chances of winning ANY prize is small enough (24000:1 each time) but should your prize come up you then have an instant 50% profit at least. That's the £50 prize. Now look at the table posted by masonic: £100 about 1/10th as likely - (chances of 100% profit about 1:250,000 each time)... £500 about 1/6th as much again (chances of 500% profit 1:1.5million) £1000 prize about 1:4.5million... and so on.

It really isn't worth saving up your pennies (in the form of monthly deposits into Premium bonds that, by the way, can't be entered in the draw for at least a month - so that's a full month's interest straight off - about the price of a lottery ticket) to get slightly 'closer' to that highly unlikely outcome each month and to be cumulatively losing 4-5% pa in interest as you so nearly get there. People just don't see this - it appalls me. Still no one will lose their shirts because of years of lost interest (including those who win prizes repeatedly that yield maybe 2-3% per year) But it is actually irresponsible to be putting your money into an almost guaranteed to lose 'investment' (in the case of a true 'investment' all investors would win or lose at the same time that invested on the same day etc) without appreciating the 'odds' - and that they really are so small as to justify NO stake larger than the minimum permitted.

Yes, I understand the 'money under the bed' analogy that is often the real reason behind people having 'faith' in government backed premium bonds - they simply don't know where to put their money - but they are a poor 'investment' almost universally (as only a small number/percentage of premium bond holders show a 'real' return of any kind - see what I said about true 'investing' above)

Stompa

Milarky wrote: »

No! Have £100 and and leave it at that. The chances of winning ANY prize is small enough (24000:1 each time) but should your prize come up you then have an instant 50% profit at least. That's the £50 prize. Now look at the table posted by masonic: £100 about 1/10th as likely - (chances of 100% profit about 1:250,000 each time)... £500 about 1/6th as much again (chances of 500% profit 1:1.5million) £1000 prize about 1:4.5million... and so on.

Absolutely right. As someone once said, the chances of winning a big prize are roughly the same if you buy a premium bond as if you didn't bother - so why bother?

Jonbvn

Stompa wrote: »

Absolutely right. As someone once said, the chances of winning a big prize are roughly the same if you buy a premium bond as if you didn't bother - so why bother?

Agree entirely, but what you say is contrary to human nature.

Stompa

Jonbvn wrote: »

Agree entirely, but what you say is contrary to human nature.

Sadly you're right.

McSaver

I hold £1,000 i worked out that i should win a prize on average every 2 years but i still havent won and i have nearly had my bonds 2 years.