Premium Bonds Article Discussion Area

The_Bleurk

BTW I also have a £1 bond from birth which has yet to win a penny - I'm 60

Chris_in_Ashtead

eskbanker said:

The odds of a single bond winning a prize are about 1 in 24,500 in any given month (but about to get worse), so on average you'd expect to win something roughly every 2,000 years, i.e. don't hold your breath!

I assumed those statistics are based on current average holdings. Of course 60 years ago £1 was worth considerably more than it is today, and there would have been far fewer bond holders. I suppose if I was ever going to lucky it would have happened in the first few years of my life.

polymaff

You need to be on Gamblers Anonymous to discuss a £1 investment on, not MSE...

The new rate from May will offer a return of about 1.17% on significant holdings. That's 1.46% and 1.95% equivalent/effective return if you pay tax - basic and higher rate, respectively - on savings.

edda

Why does the first posting in this thread point to a discussion thread about the premium bond calculator when the thread was closed years ago?

eskbanker

The_Bleurk said:

Slightly pessimistic: £1 would be a prize every 0.25 million years. £25 every 10000 years. But.... contrary to many beliefs it is statistically well behaved - hold £50k max and you will see 

Those figures aren't slightly pessimistic, they're just wrong!

The numbers in the post before yours are sourced from the NS&I website (prior to the forthcoming changes), where did yours come from?

eskbanker

Chris_in_Ashtead said:

eskbanker said:

The odds of a single bond winning a prize are about 1 in 24,500 in any given month (but about to get worse), so on average you'd expect to win something roughly every 2,000 years, i.e. don't hold your breath!

I assumed those statistics are based on current average holdings. Of course 60 years ago £1 was worth considerably more than it is today, and there would have been far fewer bond holders. I suppose if I was ever going to lucky it would have happened in the first few years of my life.

It's undoubtedly true that there are far more bonds active now than 60 years ago, but the prize fund is based on a percentage, so should keep the chances relatively consistent.  That percentage has inevitably varied over time (typically in line with savings market movements, etc) and is about to do so again, but it's not necessarily the case that chances decrease as volumes increase....

imcat

imcat

I have just received a prize cheque for the Oct 2003 draw (yep ...17 years ago!!).

I haven't held any bonds for well over a decade and so was shocked to receive it. Apparently, someone else was not eligible for the prize from that  draw and so they have reallocated it to me.... after all this time!

I am very surprised that they keep records going back that far or even do this. Anyone else have this happen to them?

minimalising

I just thought I'd share my experience.   I bought some of these and then so did my wife, but confusingly she gave me the money and we did it all on my NS&I account.  Today I worked out exactly how it has all performed.
I bought 5500 in 2016.  
She added 10000 the same year.
However, we both took out 4000 each in 2017.
In that whole time we won £25 twenty times.  The prize was always reinvested automatically.
Her 6k block won 18 times (£450) and my 1500 has won twice.  
Not one block of 25 reinvested has ever won.
I worked all this out today and will be putting my 1500 into my stocks and shares ISA where it should have been the whole time.

eskbanker

minimalising said:

I just thought I'd share my experience.   I bought some of these and then so did my wife, but confusingly she gave me the money and we did it all on my NS&I account.  Today I worked out exactly how it has all performed.
I bought 5500 in 2016.  
She added 10000 the same year.
However, we both took out 4000 each in 2017.
In that whole time we won £25 twenty times.  The prize was always reinvested automatically.
Her 6k block won 18 times (£450) and my 1500 has won twice.  
Not one block of 25 reinvested has ever won.
I worked all this out today and will be putting my 1500 into my stocks and shares ISA where it should have been the whole time.

You haven't really made it clear what linkage, if any, there is between your findings and your decision, but personally I can't see that those results are in any way unusual.

A holding of £15,500 would be expected to return £200 over a year with average luck, and £7,500 should return £100, so over those four years, your collective return should average out to be close to the £500 that you did achieve.

Of course, looking at smaller subsets of the overall total holding will distort the results, but that's the inherent nature of randomness and averaging.  If you're perhaps suggesting that the lack of winnings from reinvested prizes is significant then no, it isn't - since an individual bond has a 1 in 24,500 chance of winning a prize in any given month, that means that any block of 25 would be expected to win something roughly every thousand months (83 years).

Likewise, if you're believing that 'your' £1,500 is 'unlucky' compared with your wife's 'lucky' £6,000, and that this is a reason to move that money elsewhere, then that would suggest a lack of understanding of how randomness works, especially when considering smaller holdings.

On the other hand, if you're saying that your £1,500 was money that should always have been invested in S&S anyway, regardless of the outcome of PBs, then yes, it's never too late to put your money in the right place, but that isn't in itself due to any inadequacies of PBs!