Premium bonds - are they worth it?

Hannah_M

All these statistics are about winning the big prize. I'm happy to win £25 even once in 3 years - then I'll have made it worth it. I read that the chance of winning anything is 1 in 30k per pound invested, so with £500 that's a 1.7% chance of winning. Not too low - or did I miss something?

Frogletina

I invested £100 ages ago, then another £200. My return from that was two lots of £50 very soon after that - from the bonds in the first ones bought - probably 40 years ago.

I've since topped up my premium bonds to almost £1000 and not had a win since.

However, I rarely think of the money tied up, so if I ever get a new win it will be a pleasant surprise. I don't think of them in investment terms.

I also put £2 a week on the lottery, have the occasional win (two lots of £25 recently) but nowhere near as much as I put in. But I consider the money spent each week, and don't look at the results - just wait for an email to say I've won.

A good win would be nice, but I don't expect it to happen.

frogletina

eskbanker

Hannah_M wrote: »

All these statistics are about winning the big prize. I'm happy to win £25 even once in 3 years - then I'll have made it worth it. I read that the chance of winning anything is 1 in 30k per pound invested, so with £500 that's a 1.7% chance of winning. Not too low - or did I miss something?

Unfortunately statistics don't quite work that way, as that would imply that a £30K holding would have a 100% chance of winning, which is not the case! However, your main point is right, i.e. that there is no need to be swayed by those who perceive PBs only in terms of a tiny chance of winning a massive sum. Try experimenting with the calculator site linked at post #4 to gauge likely returns on different sums over different periods....

Hannah_M

eskbanker wrote: »

Try experimenting with the calculator site linked at post #4 to gauge likely returns on different sums over different periods....

I keep trying the calculator, it's not working for me Probably one of my filters, they tend to stop some random stuff from happening.

About the statistics - if you have £30k, then I agree a 100% chance of winning something isn't realistic but over a longer period, it should work out (as with all statistics). ie, over 2 years, you'd probably win an average of 24 prizes.

eskbanker

Hannah_M wrote: »

I keep trying the calculator, it's not working for me Probably one of my filters, they tend to stop some random stuff from happening.

About the statistics - if you have £30k, then I agree a 100% chance of winning something isn't realistic but over a longer period, it should work out (as with all statistics). ie, over 2 years, you'd probably win an average of 24 prizes.

Plugging £30K over two years into the calculator, you'd have 90.2% chance of winning at least £500 and 36.5% chance of winning at least £750, and not forgetting the 1 in 44,415 chance of winning at least £1m

But yes, the larger the holding and the longer the time period then the closer your return should be to the average of 1.25% (1.15% from May).

weenie15

Last year, I won £100 (4 x £25) - my holding was around £2500 at the time. Yet I had won zero in the previous years.

Premium bonds are terrible if you see them as 'investments' but once you've exhausted all the high interest bank accounts and want somewhere safe to put your cash, then I guess it's got to be better than sticking it under the mattress!

Plus, in it to win it and all that, and unlike the lottery, you get your money back (less inflation).