Premium Bonds

SenatorDave

I have been buying £200 worth of premium bonds per month and now have over £5,000.
Will I stand a better chance of winning if I cash in the batches of £200 and buy a batch of £5,000?

Stompa

It should make no difference.

_CC_

No, it will make no difference.

Your chance of winning anything significant is extremely low (1 in 10,000 chance of winning £10k if you kept the £5,000 in there for a year and 1 in 500,000 for winning £1m).

Due to the lowest prize being £25 you're also likely to be getting a pretty lousy return (odds are 0.5-1%) even by premium bond standards.

It would make far more financial sense to withdraw the money and put it into a high interest account.

bowlhead99

How many bonds do you have with 25 batches of £200? 5000.

How many bonds does your neighbour have with one batch of £5000? 5000.

What is the chance of any one of those bonds being a winner in a particular month? One in 26,000.

So every five or six months hopefully one of your bonds will produce a win. It may be a lot more often or much less often than that, because it's all random.

The same is true for your neighbour who has the same number of bonds as you.

ERNIE picks the winning bond numbers and doesn't care what batches they are in or who owns them or whether they already won last month. He is a random number generator.

HappyMJ

Remember the odds....1 in 26,000. The most common prize by far is £25. If you held £26,000 of bonds you would expect to win 12 times per year and win back £300. That's a return of 1.1%.

You can earn up to 6% putting your monthly £200 into a regular saver account. The interest is free of tax so putting £200 every month into one you will have about £75 of interest each year. The £5,000 you have now can then be transferred to another account earning 5% interest and will get you £250 guaranteed every year.

alanq

As others have said 25x£200 of bonds stand the same chance of winning as 1x£5000. However, if you cash in your current bonds and buy new ones you will have no bonds eligible for a prize for 1-2 months. (e.g if you buy bonds in June they will not enter the draw until August)

https://www.nsandi.com/files/published_files/asset/pdf/premium-bonds-brochure.pdf

Dan83

I think premium bonds are great, if I had the money, I'd have £50k worth. You may only win £25 a month, but you may also win £10,000! No one can tell the future so no one really knows.

bowlhead99

Dan83 wrote: »

I think premium bonds are great, if I had the money, I'd have £50k worth. You may only win £25 a month, but you may also win £10,000! No one can tell the future so no one really knows.

You are right, no one can tell the future, they can only make educated guesses.

For example with 50,000 invested, each of those bonds will have been entered in a prize draw 1200 times over the next hundred years - 60 million entries altogether, which sounds a lot. With the odds currently available, you would probably win about 2300 prizes over the century. Unfortunately, the chance of a prize being£10k or more is only about one in 24600 so with only 2300 prizes per century, you would expect to wait over ten centuries, if your luck is only 'average'.

Putting money on premium bonds is unlikely to beat inflation so your £50k now plus winnings is worth no more than £50k in real terms in a century's time.

By contrast, investing £50k in a stock market investment fund might typically (based on the last century)return 4-5% per year compounded, on top of inflation. Which in a century's time will be £2.5 to 6.5 million quid, in real terms.

So, choosing to 'invest' your money in premium bonds to maybe win £10,000 once every ten centuries (unless you're unlucky and it takes 50 centuries), instead of taking the two to six million quid, is !!!!!!. Maybe if you already had the two million quid, a £50k flutter isn't so bad.

Of course, if you aren't doing it for the long term and don't want stock market risks, you can just put the money in a decent paying bank account and buy lotto tickets on rollover weeks with all the spare interest you generate over and above what PBs usually pay. Then you get a decent interest rate *and* the very unlikely chance of a big win.

daveyjp

My daughter has about £500 worth bought as gifts by grandparents.

She generally wins 2-3 time a year. Last year she had 4 wins, she has already had one this year.

_CC_

daveyjp wrote: »

My daughter has about £500 worth bought as gifts by grandparents.

She generally wins 2-3 time a year. Last year she had 4 wins, she has already had one this year.

Really?

With average luck she should expect to win nothing over a year.

There is only a % chance you'd win 2 x £25 prizes over a year with £500 worth of bonds, so maybe she should begin doing the lottery too as she's appears to have magical powers

Mr_K

The term 'win' makes me laugh. Its nothing more than interest. If you get a single £25 'win' on a 50k investment every month, you are in fact losing compared to a 1% savings account.