Bad run on Premium Bonds

eskbanker

Point taken, probability of 1 in 24,000 equates to odds of 23,999 to 1, so the above technically related to probability rather than odds, but in this sort of scenario that difference isn't material.

Albermarle

SVts said:

I've just invested 25k but after reading this thread I am regretting it already. My first eligible draw is June so I'll wait until then and see what happens. Think I'd be better off accepting the guaranteed £75 from Chip each month.

Not yet mentioned in this thread, but it is clear that any 100% rational 20% taxpayer  would not buy PB's .

However very few people are 100% rational, and some are hardly rational at all. PB's are popular because they appeal more to the emotional side. They are more fun than a savings account ( for some people). They wait expectantly for the draw each month; they share their winning news with friends and family; they hope for a big win , they even post on forums about them 

JohnWinder

Yes, NSandI say it’s odds, and have expressed it as odds would be expressed. But odds are hard to understand for a lot of people, although they have some useful mathematical properties that probabilities don’t have, but you don’t need them in the case of premium bonds, so I wonder why they use odds. Hide something or confuse people perhaps.

The only way I know to find the chance of 3 blank years is to use probabilities. And as you say, at low probabilities, odds and probabilities don’t vary very much. They ‘drift’ the furthest apart at odds of 1 (probability 0.5). But when you start raising small differences to a few powers, the differences mount up. In our example for 3 years, it was 0.2% vs 0.137%. 

strawb_shortcake

I disagree to an extent @Albermarle, I put the max into PB's as a BR tax payer. When we were came into a substantial (to us) sum, I was claiming CTC. Not going over £300 interest was a factor for me to consider when deciding where to place the money. 

We did have money in other interest bearing homes, so it wasn't our entire savings in one place. 

Appreciate I'm an outlier in where and why people should put their money for tax reasons.

Millyonare

Albermarle said:

SVts said:

I've just invested 25k but after reading this thread I am regretting it already. My first eligible draw is June so I'll wait until then and see what happens. Think I'd be better off accepting the guaranteed £75 from Chip each month.

Not yet mentioned in this thread, but it is clear that any 100% rational 20% taxpayer  would not buy PB's .

However very few people are 100% rational, and some are hardly rational at all. PB's are popular because they appeal more to the emotional side. They are more fun than a savings account ( for some people). They wait expectantly for the draw each month; they share their winning news with friends and family; they hope for a big win , they even post on forums about them 

It was mentioned a couple of pages back.

Premium Bonds are a handy tool for 45% taxpayers, a maybe for 40% folks, and probably a no for 20% or 0% basic raters.

The marketing is very (very) clever. Sticking "premium" in the headline normalizes a gloss of high-end product for posh middle class people. Reinforcing that you "win" every month adds a neverending four-week loop of excitement, discouraging people from withdrawing. Posh, fun, sticky... A marketer's dream.

In reality, Premium Bonds don't offer premium rates for most (3.3% net), and most people with small stakes don't earn a bean most months. They are Average Bonds. Or Disappointing Bonds. Or Random Bonds.

In effect, PBs are a state-run gambling lottery, where the odds are heavily stacked against poor people. Very clever marketing!

eskbanker

Millyonare said:
Sticking "premium" in the headline normalizes a gloss of high-end product for posh middle class people.

[...]

In effect, PBs are a state-run gambling lottery, where the odds are heavily stacked against poor people.

Yeah, that'll be it, they're just a weapon to oppress the proletariat.... 🙄

The odds are of course the same for everyone, in terms of the chance of any bond winning a prize in any draw (1 in 24,000), but obviously owning more bonds improves your chances of a win, by virtue of simple maths!

Swipe

I do enjoy a good moan so when I don't win, at least I get something new to moan about 

Albermarle

Millyonare said:

Albermarle said:

SVts said:

I've just invested 25k but after reading this thread I am regretting it already. My first eligible draw is June so I'll wait until then and see what happens. Think I'd be better off accepting the guaranteed £75 from Chip each month.

Not yet mentioned in this thread, but it is clear that any 100% rational 20% taxpayer  would not buy PB's .

However very few people are 100% rational, and some are hardly rational at all. PB's are popular because they appeal more to the emotional side. They are more fun than a savings account ( for some people). They wait expectantly for the draw each month; they share their winning news with friends and family; they hope for a big win , they even post on forums about them 

It was mentioned a couple of pages back.

Premium Bonds are a handy tool for 45% taxpayers, a maybe for 40% folks, and probably a no for 20% or 0% basic raters.

The marketing is very (very) clever. Sticking "premium" in the headline normalizes a gloss of high-end product for posh middle class people. Reinforcing that you "win" every month adds a neverending four-week loop of excitement, discouraging people from withdrawing. Posh, fun, sticky... A marketer's dream.

In reality, Premium Bonds don't offer premium rates for most (3.3% net), and most people with small stakes don't earn a bean most months. They are Average Bonds. Or Disappointing Bonds. Or Random Bonds.

In effect, PBs are a state-run gambling lottery, where the odds are heavily stacked against poor people. Very clever marketing!

Although using the word 'Premium' is not some recent marketing tool. They were called Premium Bonds when they were launched 67 years ago.

Criptine

Albermarle said:

SVts said:

I've just invested 25k but after reading this thread I am regretting it already. My first eligible draw is June so I'll wait until then and see what happens. Think I'd be better off accepting the guaranteed £75 from Chip each month.

Not yet mentioned in this thread, but it is clear that any 100% rational 20% taxpayer  would not buy PB's .

However very few people are 100% rational, and some are hardly rational at all. PB's are popular because they appeal more to the emotional side. They are more fun than a savings account ( for some people). They wait expectantly for the draw each month; they share their winning news with friends and family; they hope for a big win , they even post on forums about them 

This! And having the chance to win £1M with Premium Bonds helps me resist the temptation of buying Lotto tickets, which I think we can all agree are a complete waste of money.

Albermarle

Criptine said:

Albermarle said:

SVts said:

I've just invested 25k but after reading this thread I am regretting it already. My first eligible draw is June so I'll wait until then and see what happens. Think I'd be better off accepting the guaranteed £75 from Chip each month.

Not yet mentioned in this thread, but it is clear that any 100% rational 20% taxpayer  would not buy PB's .

However very few people are 100% rational, and some are hardly rational at all. PB's are popular because they appeal more to the emotional side. They are more fun than a savings account ( for some people). They wait expectantly for the draw each month; they share their winning news with friends and family; they hope for a big win , they even post on forums about them 

This! And having the chance to win £1M with Premium Bonds helps me resist the temptation of buying Lotto tickets, which I think we can all agree are a complete waste of money.

Do not want to disappoint you but the chance of winning a Million is almost non existent.
I think if you have the Full £50K , you would win  a Million something like once every 40,000 years, so you will have a long wait 
Maybe best to lower your sights to say a £5K prize !