Is NS&I really worth investing with?

RhondaD

eskbanker said:

RhondaD said:

I've had £4,000 in premium bonds for a while but I'm starting to think I would get better returns elsewhere. In the last 15 months I've won absolutely nothing. Zilch. Every single month, nothing. I feel I've wasted 15 whole months which even in a savings account would have earned me more. It just seems pointless investing in premium bonds. They don't seem to win anything. I've even asked them if it's usual to not even win a fiver in 15 months and they just gave the usual guff about how every bond has the same chance of winning blah blah blah, but It seems like the 5,000 bonds I bought don't have any chance of winning.

https://www.moneysavingexpert.com/savings/premium-bonds-calculator/ gives an illustration of expected returns with average luck, and, based on the odds applying as at December 2022 draw (i.e. before the rise to a nominal 3%), your expected return would have been £75 over a year, but there's also a far from insignificant 13.5% chance of winning nothing during that time.  There's a 0% chance of winning a fiver as such

They're certainly not for everyone, but anyone buying into premium bonds should acquaint themselves with the basics about likely outcomes before committing....

So effectively I've not even made the expected return if I have made absolutely nothing in 15 months? I think I'm probably better with a guaranteed return from a savings account with the amount I'm investing. 

RhondaD

annabanana82 said:

RhondaD said:

I've had £4,000 in premium bonds for a while but I'm starting to think I would get better returns elsewhere. In the last 15 months I've won absolutely nothing. Zilch. Every single month, nothing. I feel I've wasted 15 whole months which even in a savings account would have earned me more. It just seems pointless investing in premium bonds. They don't seem to win anything. I've even asked them if it's usual to not even win a fiver in 15 months and they just gave the usual guff about how every bond has the same chance of winning blah blah blah, but It seems like the 5,000 bonds I bought don't have any chance of winning.

It would be highly unusual to have won a fiver in the last 15 months given the minimum prize is £25. 

That's not really the point to be fair. 

RhondaD

davidr1964 said:

I bought £4.5k's worth of PB's in late 2021 and won £5k earlier this year, so you just never know!

That's what I needed to hear.

Albermarle

RhondaD said:

davidr1964 said:

I bought £4.5k's worth of PB's in late 2021 and won £5k earlier this year, so you just never know!

That's what I needed to hear.

So davidr1964 has been VERY lucky and you have been a bit unlucky. That's the long and short of it.

grumiofoundation

RhondaD said:

davidr1964 said:

I bought £4.5k's worth of PB's in late 2021 and won £5k earlier this year, so you just never know!

That's what I needed to hear.

As above that’s not how you should be looking at premium bonds (or really how you should look at probability in general).

You are almost guaranteed not to win 5k

davidr1964

I was very lucky indeed with my win. I was holding that money for buying some 22/23 CS added pension. It was PB's or the very low interest rates of a year ago and was always going to be a short term investment.

RobM99

Premium bonds are like the lottery - except you get your money back when you lose!

RhondaD

I see where you are all coming from. I'm almost conflicted in thinking if I just hang on my luck might even out. It's just hard to comprehend a system supposedly random seems never to pick certain bonds.

twadds123

been thinking about this and really as someone else said, do you prefer the certainty of returns in a savings account, or prefer an outside chance of winning some money?

Your money is safe in premium bonds also winnings are tax free, the cost to play is essentially the amount that money could have earned you elsewhere.  remembering savings interest can be taxed if you go over certain thresholds depending on your taxation levels.

so assuming no tax on savings.

your £4000 in the highest current easy access account (Zopa 2.86%) would earn you £114.4 in interest in a year.

happy to lock it away for a year?  then highest 1 yr fix is (Atom 4.25%) this would earn you £170 in interest in a year.

got access to first direct regular saver?  drip feeding from zopa to FD at 7% @£300 per month totals £194 in interest in a year

depending on your circumstances those are your costs to have the money in premium bonds for a chance to win.

coyrls

RhondaD said:

I see where you are all coming from. I'm almost conflicted in thinking if I just hang on my luck might even out. It's just hard to comprehend a system supposedly random seems never to pick certain bonds.

An equal probability of each bond winning is not the same as every bond being picked an equal number of times.