Do the odds of premium bonds wins change regularly, can they become worse quickly?

isayhello

It seems there is no limit to how many people can buy the max 50k amount of bonds, so if in January lots of people got the max amount that would make the odds of winning worse correct?
In theory if 5 million new people over the course of next year bought the max amounts, then the odds would be much worse, do the amount of prizes get adjusted so the odds don't become too extreme? Is there a way to keep on top of the odds so the money isn't just left there with the wrong odds assumed? Thanks.

Alderbank

isayhello said:

It seems there is no limit to how many people can buy the max 50k amount of bonds, so if in January lots of people got the max amount that would make the odds of winning worse correct?
In theory if 5 million new people over the course of next year bought the max amounts, then the odds would be much worse, do the amount of prizes get adjusted so the odds don't become too extreme? Is there a way to keep on top of the odds so the money isn't just left there with the wrong odds assumed? Thanks.

No, not correct.

As of 2023, the chance of winning any prize in a single draw is 24,000 to 1. It doesn't really matter how many bonds other people buy. If you double the number of bonds you own, you double your chance of a win. If your neighbour doubles the number he owns, your chance of a win is unchanged.

The annual prize fund rate is currently 3.70%, which means that on average, for every £100 invested in premium bonds, you can expect to win £3.70 per year. That rate is the same however many bonds you own and however many bonds other investors own.

However many or few bonds you own, you could win £1million every month, equally you could never win anything.

I was given some as a child, when they were launched about 70 years ago. None has paid anything yet, but I live in hope. They have the same chance as any others.

If you are interested in the curious mathematics of lotteries and Premium Bonds there are lots of guides on the web such as https://www.nsandi.com/get-to-know-us/monthly-prize-allocation

kfm

The odds of winning a prize are slightly better at 21,000 to 1 and the prize fund rate is now 4.65%

See https://www.nsandi.com/interest-rates

masonic

In answer to the question posed in the thread title, the odds of premium bonds wins can change regularly, and they can become worse quickly. NS&I will always announce such changes in advance. The winning odds and prize rate is not dependent on the number of bonds issued, they are decided based on NS&I's assessment of savings rates in general, and will be set to avoid premium bonds paying a market leading rate.

forgotmyname

4.65% is not bad, not quite as good as the Santander 5%+ account we use the most.  But I still have £1200 or so in premium
bonds and won £50 once, daughter and mum both have considerably more and win £25 - £150 a month quite often.

Possibly better saving accounts now that will give more interest but I see it like the lottery where you get your money back.
1200 lucky dips please....  I didn't win so can I have my money back please, try that with the lottery. 

masonic

forgotmyname said:

4.65% is not bad, not quite as good as the Santander 5%+ account we use the most.  But I still have £1200 or so in premium
bonds and won £50 once, daughter and mum both have considerably more and win £25 - £150 a month quite often.

Possibly better saving accounts now that will give more interest but I see it like the lottery where you get your money back.
1200 lucky dips please....  I didn't win so can I have my money back please, try that with the lottery. 

Comparisons with the lottery could make any savings account look good.

tetrarch

forgotmyname said:

4.65% is not bad, not quite as good as the Santander 5%+ account we use the most.  But I still have £1200 or so in premium
bonds and won £50 once, daughter and mum both have considerably more and win £25 - £150 a month quite often.

That would be true were Premoum Bonds wins not tax-free

Regards

Tet

isayhello

masonic said:

In answer to the question posed in the thread title, the odds of premium bonds wins can change regularly, and they can become worse quickly. NS&I will always announce such changes in advance. The winning odds and prize rate is not dependent on the number of bonds issued, they are decided based on NS&I's assessment of savings rates in general, and will be set to avoid premium bonds paying a market leading rate.

I'm confused as to why the number of bonds doesn't affect the odds? if there are 5 million bonds vs 15 million bonds out there and the number of prizes remains the same, how does the chance of winning not worsen?

isayhello

Alderbank said:

As of 2023, the chance of winning any prize in a single draw is 24,000 to 1. It doesn't really matter how many bonds other people buy. If you double the number of bonds you own, you double your chance of a win. If your neighbour doubles the number he owns, your chance of a win is unchanged.

The annual prize fund rate is currently 3.70%, which means that on average, for every £100 invested in premium bonds, you can expect to win £3.70 per year. That rate is the same however many bonds you own and however many bonds other investors own.

I get that 21k to 1 might be the current odds but if millions were bought soon by other people, how can the odds remain the same?

Martico

isayhello said:

masonic said:

In answer to the question posed in the thread title, the odds of premium bonds wins can change regularly, and they can become worse quickly. NS&I will always announce such changes in advance. The winning odds and prize rate is not dependent on the number of bonds issued, they are decided based on NS&I's assessment of savings rates in general, and will be set to avoid premium bonds paying a market leading rate.

I'm confused as to why the number of bonds doesn't affect the odds? if there are 5 million bonds vs 15 million bonds out there and the number of prizes remains the same, how does the chance of winning not worsen?

The number of bonds eligible for the January draw is known well before the draw (end of November for new bonds, start of December for reinvested winnings). And then the odds are applied, according to how many bonds are eligible for the January draw. If a million more bonds are bought in December, they'd be eligible for the February draw.

Money_Grabber13579

isayhello said:

masonic said:

In answer to the question posed in the thread title, the odds of premium bonds wins can change regularly, and they can become worse quickly. NS&I will always announce such changes in advance. The winning odds and prize rate is not dependent on the number of bonds issued, they are decided based on NS&I's assessment of savings rates in general, and will be set to avoid premium bonds paying a market leading rate.

I'm confused as to why the number of bonds doesn't affect the odds? if there are 5 million bonds vs 15 million bonds out there and the number of prizes remains the same, how does the chance of winning not worsen?

Because the number of prizes doesn’t remain the same. 

To use some random numbers to illustrate the point - if there are £10m bonds in issue and the interest rate used to determine the prize pot is 5% (not accurate, but used to make the maths simpler), then the prize pot will be £0.5m. Let’s say that all of the prizes are £100 prizes, so there are 5000 prizes in total.

If the bonds in issue increase to £20m, the prize pot will become £1m and that would give 10,000 £100 prizes, so you should have exactly the same odds.

in practice, it won’t work out exactly like that because of the distribution split of the prizes but it’s a good enough approximation.