Premium Bonds Calculator Discussion Area

MILLWALLFC

By the way the interest rates are going up fromt he 1st August to 4%

http://www.nsandi.com/products/pb/rates.jsp

That means the odds are now 21000 to 1.

Does this now mean you ahve to design a new calculator.

isofa

I've had PBs purchased for me since I was a child. I'd be more interested in how real life chances fair between holding many spread out sets of bonds, e.g. £100 in one block, £500 in one block, £1000 in another, etc, against having a entire block of £30K. I have tiny blocks from the smallest amounts available to purchase in the 1970s up to larger blocks, purchased over a period of at least 25 years. So am I statistically going to win the same amount of prizes in these spread out amounts, than if I cash the lot in and buy a contiguous block? (I've heard many a conversation of people who sell all theirs, buy a "new" block and win lots of prizes in the first year).

I win somewhere between 2.5% and 4% of my holding a year in prizes. Sure it's not beating top end savings accounts, but it's a calculated gamble, you might one day win a few thousand, and you aren't risking that much. (The most incidentally I've won is £100, and 99% of all my prizes have be £50).

[Deleted User]

isofa

It makes no difference to your odds of winning.

The_Bleurk

ISO - you will have heard folks talk about buying a big block or selling and rebuying their bonds and telling you how wonderful it has been that they have been winning.

Folks will also be doing the same and 'losing' in equal numbers but funnily enough you never hear about that.

Strange eh? Or, like me, have you ever observed first hand how folks behave at the horse races...............

isofa

Sure, good point!

I understand the statistical chances are the same, looking at my wins, the majority come from my largest block, adding up my smaller blocks (which easily total the same holding as the large ones), shows they don't perform as well.

And we all know computers can't truly create random numbers too!

The_Bleurk

ISO your comparison of two different 'blocs' of holdings is exactly like comparing two different people - someone somewhere is experiencing the opposite.

Some will win more others will win less - as I said before this is not an investment and it is misleading to treat it as such.

Its a punt, a bet, a gamble on having the outside chance of hitting the big time......

YAM_3

Hi Martin,

thank you for developing this calculator.

MSE_Martin wrote: »

A. Over 40% of people in the UK hold premium bonds
B. It is by many times the biggest single savings product
C. Most people don't understand how it works.
D. To provide information as to the realistic odds is crucial to help people make a rational decision which is exactly what this site is about.

I've done a lot of testing on this. And the results are shocking.

They are your pet hate - aren't they? Anyway, as others have pointed out, the advantage of premium bond is that there is a (small but existing) chance to get al life-changing amount of money. Of course this chance isn't free, there is a risk and a price to pay. I am perfectly happy with that.

So for me the interesting comparison is not premium bonds versus savings account but between premium bonds and other high risk/high gain 'investments'.

Is there any chance that you could extend the calculator with e.g. the lottery, roulette, high risk stocks/derivatives, ...? Or an article about gambling/high risk investment, the chances and costs of the several options?

Thanks

Another Martin

Paul_Herring

Yant1 wrote: »

isofa

It makes no difference to your odds of winning.

In fact it does make a difference - there's less chance of winning if they cash in and repurchase as a block - they're losing out on 1-2 draws.

The_Bleurk

A very good point indeed Paul.

[Deleted User]

YAM wrote: »

Is there any chance that you could extend the calculator with e.g. the lottery, roulette, high risk stocks/derivatives, ...? Or an article about gambling/high risk investment, the chances and costs of the several options?

Thanks

Another Martin

Well on a roulette table or blackjack you lose 0.5% of your money every throw. Lottery its somewhat higher in terms of how much you lose per game at a guess 75% of your money everytime you play.

Stocks all things being equal with no assessment it would be 50:50. Youd have to draw up your own metrics as to how you assess companies.