Bad run on Premium Bonds

Stubod

Must admit our "returns" seem to have plummeted since the rates went up this year, currently averaging 1.5% on max holding for this year to date.

Even though I am fully aware it is all "statistics", I am now considering moving our bonds to the best fixed rate monthly income account I can find. I wasn't too bothered when interest rates were below 1%, but now they have improved I may well move and return to PB's when savings rates drop again?

eskbanker

Stubod said:

Even though I am fully aware it is all "statistics", I am now considering moving our bonds to the best fixed rate monthly income account I can find. I wasn't too bothered when interest rates were below 1%, but now they have improved I may well move and return to PB's when savings rates drop again?

I don't think PBs have ever competed with fixed rate savings, even though they've sometimes matched, or even beaten, easy access ones?

SpeedSouth

On  the flip side I deposited £30k in March, bringing it up to £38k total.  I won £375  in April and £200 (25+25+50+100) this month.

So I'm close to 2% for the tax year already on the new deposit.

Arl71

First draw with max holding and I won £325-delighted with that.

trailingspouse

I have £595 in Premium Bonds, and won £25 x 2 last year. Go me!!!

GrubbyGirl_2

I am doing quite well so far this year (touch wood!).  In 2022 I won £600 on a full holding but I've already won £800 this year.  Hopefully I'm building up to the big one

moneysaver2019

I'm thinking of pulling out, max holding, won £25 in March, £0 April, £25 in May, so £50 in 3 months, think I'll be looking elsewhere.

elsien

Brie said:

Stupid question being inserted here:  Do you have to check your account to see if you have won? 

OH & I have a tiddly £1k each and have done so since November.  I'd love to discover I'd won a fat prize.

I get emails telling me I’ve won, but I need to log into the account to check the amount.

Millyonare

Premium Bonds, which are tax-free, can make sense for 45% taxpayers... maybe sometimes make some sense for 40% taxpayers... but rarely make sense for the vast majority of 20% taxpayers (who can usually find better net rates elsewhere).

Remove the word "premium" from the headline, and it changes the game dramatically.

They should be called "Average" Bonds... or "Most People Won't Make a Penny" Bonds.

MSE itself states that £1 of "Premium" Bonds have a "virtual certainty" of making zero returns. Nothing. Zilch. Not a penny.

JohnWinder

eskbanker said:

The odds of a blank month on a maximum holding are 12.5%, so the odds of three are 12.5% ^ 3 = 0.2%

If the odds of a blank month is 12.5%, then the probability is .111. Prob = odds/(1+odds).

The probability of 3 blank months is .111 cubed, ie .137%. Converting that to odds gives .137% (or close enough).

How did you get 0.2% for the blank 3 month odds?

I can see that 0.2% is 12.5% cubed, but is it ok to multiply odds in this case?