Premium Bonds Article Discussion Area

mdj1

Interesting.

I invested £10k in a block last november and they went into the January Draw. Winnings so far.

Jan 1 x £50
Feb 2 x £50
Mar 1 x £50

I'm happy with that, the 10k is there for me should i need it. Anything i win i see as a bonus, a night out lets say. If i don't win then i wont be that bothered, will just think, oh well better luck next time!

I don't see it as an investment, I see it as a way to put some funds asside and maybe win a few bob in the process.

If it was sitting in a bank account, i wouldn't get a cheque for my interest and think. oooo, i'll treat myself to night out.

It's a bit of fun and at the end of the day, my 10k is there if i need it.

Reestit_Mutton

Aegis wrote: »

Don't feel like a fool. NS&I and society in general has been referring to premium Bonds as an amazing investment for so many years that it's difficult to break that perception of them.

Equally, don't be fooled by the detractors into thinking that they are a complete waste of time either. For some people they can be a very useful tax-efficient tool in their armoury.

For my mum, for instance, it means the difference between having to fill a self-assessment tax return in EVERY year as a 40% taxpayer and not.

Not only does the long-term return that she has enjoyed from them look good when you consider that her interest on that money could be taxed at 40% but it additionally saves ME time and money by avoiding the burden of the annual tax return - what's more, it gives her a little something to look forward to each month as, with the full 30K invested, she is statistically expected to receive at least one prize each month.

Reestit Mutton

arealhighlander

I bought a £22,000 block in Sept 2005.

To date I have won £1600 total, biggest win was one £500. The rest were five £100's and the rest in £50's.

Interestingly, I have just noticed that every win was on a bond that was in my original £22k block (the winning cert tells you the Bond no. that won the prize). so it seems pointless "re-investing" your winning each time as it wins you nothing. I know people have always said you should always buy one coninuous block to increase your chances. People should maybe consider selling them all off and then repurchasing one block every few years (or dont bother re-investing your £50 wins)

I'm cashing in all the bonds I've won plus £10k of the original block to put into some of the newer 1 year fixed rate accounts as I feel the return is better than what I am getting on the PBs at present.

Reestit_Mutton

arealhighlander wrote: »

Interestingly, I have just noticed that every win was on a bond that was in my original £22k block (the winning cert tells you the Bond no. that won the prize). so it seems pointless "re-investing" your winning each time as it wins you nothing. I know people have always said you should always buy one coninuous block to increase your chances. People should maybe consider selling them all off and then repurchasing one block every few years (or dont bother re-investing your £50 wins)

The maths says that it makes no difference how contiguous your numbers are, whether they have won before or how long you've held your bonds for. Anyone saying differently is simply superstitious.

The terms of PB also weight your chances of winning in favour of maintaining your holding as you always lose at least one draw whenever you "change" your bonds.

Reestit Mutton

jamesd

arealhighlander, if you'd received all of the prize money on the first day and put it into Premium Bonds you'd have 14 times the chance of winning on your original block in each draw as on all of the winnings combined. If you got your winnings evenly spread over time after the first month you had 400 times the chance of winning on the original block as the winnings. By 15 months ago that had risen to 28 times the chance of winning on the original block as on the winnings. Even today you have a 40% chance of winning nothing at all on the prize money if you left it in Premium Bonds for a year. What you're seeing is expected, just because you have far more bonds in the original block.

You're still right to be switching your money to savings accounts.

Since you're willing to take risk you might also consider whether holding some of the Blackrock UK Absolute Alpha fund is interesting to you. Do note that there is the chance of loss of capital, though it does have a good record of avoiding that so far.

dougz_2

Reestit_Mutton wrote: »

it gives her a little something to look forward to each month as, with the full 30K invested, she is statistically expected to receive at least one prize each month.

No, the maths actually say she cannot "expect" that. She SHOULD expect, and budget for, the reasonably probable worst case, i.e the depressing outcome of getting no prizes at all for more than a month in a run, and to end up with a big dent, up to £1000, in her income over the year.

The gambling element means you might win, but never forget this is always counter balanced by what you might lose. This unnecessary uncertainty is a curse not a blessing. Investing with risk should be for significantly higher long term returns, not less as with PB, which is why they are even poorer value than the 3.8% return suggests.

Paul_Herring

dougz wrote: »

which is why they are even poorer value than the 3.6% return suggests.

There - fixed that for you

Jonbvn

Reestit_Mutton wrote: »

Equally, don't be fooled by the detractors into thinking that they are a complete waste of time either. For some people they can be a very useful tax-efficient tool in their armoury.

For my mum, for instance, it means the difference between having to fill a self-assessment tax return in EVERY year as a 40% taxpayer and not.

Not only does the long-term return that she has enjoyed from them look good when you consider that her interest on that money could be taxed at 40% but it additionally saves ME time and money by avoiding the burden of the annual tax return - what's more, it gives her a little something to look forward to each month as, with the full 30K invested, she is statistically expected to receive at least one prize each month.

Reestit Mutton

I would assume you have considered other tax-free options, such as ISA's & index-linked saving certificates?

Berkshire_Beancounter

If anyone needed proof that people's experiences vary dramatically:

My husband and I both hold the maximum in premium bonds and have done so for a while.

In the last seven months I have won 5 x £50 prizes - in three of those seven months I've won nothing.

In the last seven months he has won a total of 15 prizes - 1 x £500, 4 x £100 and 10 x £50. There was only one month where he didn't win anything.

I haven't kept records going back beyond this but from memory the previous year has been roughly the same - he invariably wins, sometimes two, three or even four prizes, and I am lucky if I get one £50 prize.

But then again I saw on a website today that my name, Helen, is not regarded by people as 'lucky' and so I guess my experience confirms that!

miaxmia

Berkshire_Beancounter wrote: »

If anyone needed proof that people's experiences vary dramatically:

My husband and I both hold the maximum in premium bonds and have done so for a while.

In the last seven months I have won 5 x £50 prizes - in three of those seven months I've won nothing.

In the last seven months he has won a total of 15 prizes - 1 x £500, 4 x £100 and 10 x £50. There was only one month where he didn't win anything.

I haven't kept records going back beyond this but from memory the previous year has been roughly the same - he invariably wins, sometimes two, three or even four prizes, and I am lucky if I get one £50 prize.

But then again I saw on a website today that my name, Helen, is not regarded by people as 'lucky' and so I guess my experience confirms that!

Although I know the odds are no different, out of interest do you both have them as single blocks or not?