Premuim bonds versus National lottery which has the higher probability to win??

goodgirl_3

Premuim bonds versus National lottery which has the higher probability to win??

Trying to convince my partner that 2 lottery tickets per week plus scratcards (arround £100 a month) is better spent on premium bonds you have the change of winning £1 million and keep your cash...not getting very far though does anyone know which has the higher probability of a win???

JohalaReewi

Neither really. Chances of a big win are almost zero in both cases. You would be better off paying into a cash ISA.

With the lottery, you only get one go. With premium bonds, you get entered into each draw and when you have had enough, you can get your stake back.

See martin's premium bond article

http://www.moneysavingexpert.com/savings/premium-bonds

nilrem_2

goodgirl wrote: »

Trying to convince my partner that 2 lottery tickets per week plus scratcards (arround £100 a month)

Do you seriously spend £100 per month on the lottery?

I honestly cannot believe that people spend (waste) that much on it!

IMHO I would say that if you want to 'gamble' that much per month put it in premium bonds, you may loose interest but at least you keep your stake!

davetrousers

£100 a month £1200 a year. The guy has a problem!

Paul_Herring

JohalaReewi wrote: »

With premium bonds, you get entered into each draw and when you have had enough, you can get your stake back.

No - you don't get your stake back. Your stake in the premium bonds is the interest you should be earning on the principle (which is what you can get back.)

Premium bonds are just like placing your money in a high interest savings account, and spending the interest received on lottery cards - your principle reduces in real terms, but you can always get the principle back.

Aegis

goodgirl wrote: »

Premuim bonds versus National lottery which has the higher probability to win??

Trying to convince my partner that 2 lottery tickets per week plus scratcards (arround £100 a month) is better spent on premium bonds you have the change of winning £1 million and keep your cash...not getting very far though does anyone know which has the higher probability of a win???

Believe it or not, the lottery has a higher probability of winning big than Premium bonds do if you play with the interest that you'd earn on your bond value in a savings account. However, the best standard savings account has an overall higher expected "prize" than either Premium Bonds or the Lottery, so personally I'd avoid both like the plague.

I made a comparison between holding the full investment in Premium Bonds and playing the Lottery in this post: http://forums.moneysavingexpert.com/showpost.html?p=5973313&postcount=61

I state the probabilities of winning in this post, calculated using fairly basic probability theory and correct at the time of writing: http://forums.moneysavingexpert.com/showpost.html?p=5973520&postcount=62

isofa

This has been discussed in detail on the various PB threads, as Aegis says, as odd as it may seem, the lottery has the higher chance of winning.

However I don't play the lottery, but I have PBs, and during the last 12 months they returned a better percentage than any instant access account offered, but it's not always the way!

You do loose your stake as Paul_Herring says, the stake is the interest you'd be earning each month, so unless you are winning regularly your capital is loosing value with inflation.

Monkey_Gold

Surely with the interest rates, being as poor as they currently are, then premuim bonds, are a better option? As depending on how much you have saved obviously, but even one win of £25, is better than 1% interest?

barrymoney

Monkey_Gold wrote: »

Surely with the interest rates, being as poor as they currently are, then premuim bonds, are a better option? As depending on how much you have saved obviously, but even one win of £25, is better than 1% interest?

This is the logic a lot of people will be following, i.e. its worth a punt and your money is safe there. But, statistically I've seen it worked out (see posts above) that you won't get a good return over time. I recently bought some bonds, but I've got more in an NS&I savings account.

If I were cynical I'd say its part of Gordon Brown's grand plan to get everyone to move their money from highstreet banks into NS&I, where he can spend it...

Paul_Herring

Monkey_Gold wrote: »

Surely with the interest rates, being as poor as they currently are, then premuim bonds, are a better option? As depending on how much you have saved obviously, but even one win of £25, is better than 1% interest?

Given PB's interest of (I can't be bothered looking up the rates now) roughly 1%, and of the totals subscriptions, that 1% needs to generate one £1,000,000 prize, how much of that 1% do you think is left to generate the other prizes?

If you hold a bond of £100 (as I do), how likely do you think it is that I'll get either £1 (1%) in a savings account or a £25 win (the minimum prize now)?

Or to make it slightly more relevant... How likely do you think it is that I'll get either 10p (0.10%) in a savings account or a £25 win?

That £100 is there purely on the off-chance it'll win something. It hasn't yet, I'm treating it as lost money in that it won't. And it'll depreciate over the years.

G_M

£100 per month?!
Either go to a casino for a night out once a month, or sign up to gamblers anon.