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

Schoey90

Money_Grabber13579 said:

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.

So if the question was, do my chances of winning the 2 x £1m prizes worsen, we're agreeing it does right?

As there's more bonds vying for the same 2 maximum prizes? However, the chances of winning something (be it a tenner) seem to be unchanged.

Money_Grabber13579

Schoey90 said:

Money_Grabber13579 said:

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.

So if the question was, do my chances of winning the 2 x £1m prizes worsen, we're agreeing it does right?

As there's more bonds vying for the same 2 maximum prizes? However, the chances of winning something (be it a tenner) seem to be unchanged.

It’s very unlikely that there would be radical movements in the number of bonds in issue from month to month e.g. a doubling of the bond value, but if there was, I’d expect them to double the number of prizes at each tier, so the odds would remain exactly the same. Given a doubling of bonds is unlikely, then the increase in prize fund will be used to increase the number of smaller prizes. Whilst that may reduce your chance of winning £1m, it should increase your chance of winning one of the increased number of smaller prizes. But all of this is adjusted by NS&I on a monthly basis - take a look at the number of prizes in each tier and you’ll see they change on a monthly basis (perhaps not the £1m prizes)

barafear799

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. 

Can't have bought a lottery ticket for a while - that would be 600 lucky dips for your £1200 these days!! 8)

isayhello

Money_Grabber13579 said:

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.

Thanks, I did wonder about that in my original post, that the prizes must be somehow adjusted, I just hadn't linked it with the percentage of the prize pot but the way you've explained makes sense now, thanks. I think I will give them a go.

Albermarle

Schoey90 said:

Money_Grabber13579 said:

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.

So if the question was, do my chances of winning the 2 x £1m prizes worsen, we're agreeing it does right?

As there's more bonds vying for the same 2 maximum prizes? However, the chances of winning something (be it a tenner) seem to be unchanged.

Yes the more bonds are bought then your chance of winning a Million gets worse. However the chance of winning a Million is so small that it is hardly relevant in reality. If you have the full £50K in bonds then on average you would win a Million every 45,000 years ( approx)

The headline rate of 4.65% is skewed by the 2 X One Million Pound prizes every month .
It is more realistic ( especially when comparing with savings accounts) to say the average rate is slightly less than 4 % + an infinitesimally small chance of winning a Million.