Is "average luck" a good concept in Premium Bonds

mark1959

I expect to win a million [next month], so they can divide the other million up for everyone else. Winning both million pound prizes in one month is just being greedy.

teddysmum

When I rang, last week, to make my complaint about messing my account up, they promised that I would win a million this time, but I didn't win anything, so had better complain again (worth £75).

Pincher

I think there was some study that found that small Premium Bond holdings tend to do worse than if you had £50k. Somehow the larger holding has a smoothing effect on getting prizes.



When you buy a Lottery ticket, keep the receipt.
If it doesn't win, ask for a refund.

At least with Premium Bonds, you get your money back, plus a little interest.

Xenon

teddysmum wrote: »

I wish they would cut the million wins and give more people a chance of smaller prizes. Few actually expect to have a big win, so more would be satisfied by extra chances of winning something.


I would imagine very few buy just because they may win a million.More likely as they don't lose their stake and the payouts from savings accounts are so poor, so little to lose.

I agree - cut the second 1 Million prize and split that between £5000 - £100,000 prizes (especially as they were cut back in number)

Malthusian

teddysmum wrote: »

I wish they would cut the million wins and give more people a chance of smaller prizes. Few actually expect to have a big win, so more would be satisfied by extra chances of winning something.

Why not follow this logic to its natural conclusion, cut all the big prizes and award everyone a prize of £1.15 every year for every £100 invested?

I would imagine very few buy just because they may win a million.More likely as they don't lose their stake and the payouts from savings accounts are so poor, so little to lose.

I think you are mistaken. That may be the logic applied by MoneySavingExpert fans but not by the population as a whole. If someone just wanted more interest from a risk-free investment they'd be filling up on loss-leader regular savings accounts.

People buy Premium Bonds in order to buy the fantasy of becoming a millionaire. The fantasy of winning £100,000 is nowhere near as much of a draw.

brewerdave

teddysmum wrote: »

I wish they would cut the million wins and give more people a chance of smaller prizes. Few actually expect to have a big win, so more would be satisfied by extra chances of winning something.


I would imagine very few buy just because they may win a million.More likely as they don't lose their stake and the payouts from savings accounts are so poor, so little to lose.

...I respectfully disagree - I "invested" a chunk of my redundancy money into PBs some 18 years ago - its earned~ 2.25% compound nett over the years BUT I originally bought them as a gamble to win the Big One - its now our only gamble as the Lottery has got too expensive and the pools don't pay the way they used to

sharkstar

It's a weird expression, and it seems to be used only in this context. I think what it is getting at is this. If I flip a coin ten times, calling heads each time, with average luck I will win half the time, ie five heads and five tails. The probability of a given person having average luck on ten throws is less than 0.25. For a hundred throws it goes down to 0.08, i.e. it's overwhelmingly likely that they will be more or less lucky than average, though having average luck is still more likely than the other kinds of good or bad luck they might have.

In the context of Premium Bonds, in order to say something meaningful about your chances of winning a prize over 12 draws for a given holding, you need to anchor the answer with reference to average luck.

eskbanker

Not convinced it was really worth resuscitating a two-year-dormant thread for that, but to be fair, the MSE PB calculator accepts that its loose concept of 'average luck' just refers to the mathematically-sound median average: "We use an estimate of the 'median average'. This means if everyone with £x in bonds stood in ascending order of amount won, the person in the middle of the line has 'average luck'."

Many other valid averages are available (mean and mode being two obvious examples), while the coin-tossing scenario outlined above is essentially digressing into other statistical concepts, such as skewness and standard deviation.

AnotherJoe

hhshipley wrote: »

Everyone seems to use the concept of "average luck" when quoting premium savings chances of winning. But try this little experiment-

Log on to the prizes calculator, and use £1700 for a year - result is "£0 with average luck". Go to the graphical display and hover over the £25 vertical bar and read off 49.3 percent.

Repeat for £1800 for a year and the results are "£25 with average luck" and 51.3%.

With only a swing of 2 percentage points we go from no chance to a win. This surely is not how the real world chances of winning change - no difference as we put in £1700 but at that point an extra £100 flips the expectation to £25. Is "average luck" a useful concept?

No, you don't. You are misreading/ misunderstanding.
You aren't going from no chance to a win,you are going from the app reporting no win to the app reportinga a wIn, and in reality your chances have merely improved by 2%

Zanderman

AnotherJoe wrote: »

No, you don't. You are misreading/ misunderstanding.
You aren't going from no chance to a win,you are going from the app reporting no win to the app reportinga a wIn, and in reality your chances have merely improved by 2%

The OP hasn't logged in for a year, and has only posted one post (this thread) 2 years ago, so it's probably pointless correcting him/her now.