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

chopperharris

steve23144 wrote: »

£30,000 on PB gives a chance of a jackpot win of 1 in 100,000 over one year.

Put the money in a savings account with 2% interest = £600. Spend that on lottery tickets gives odds of 600 in 14 million = 1 in 23,000, 4 times better than PB. Plus lottery jackpots are bigger on average (average size of shared jackpot = £2m). And you've still got your £30,000 sitting safely in your savings account.

Average winnings over a year it's the other way round:

PB is £300.

With the lottery I'd guess at 600 / 60 * £10 = £100, based on a roughly 1-in-60 chance of matching 3.

As I see it 600 quid interest put into lottery only gives those odds if put in in one draw.The odds of 14m to 1 for the jackpot will always be 14m for every single draw due to random generation , 14m divided by 600 is 23333.3r - 1. IF you are only entering say 10 quid from the interest you will only get 1,400,000-1 odds for that jackpot.

the odds of matching 3 from 6 for a single entry is 56.7-1 , would you back horses with those odds regularly?

alared

http://cstadvertising.com/casestudies/nsi/

Well here`s a guy who knows how to make a bob or two and he`s dead keen on PBonds:T

steve23144

chopperharris wrote: »

As I see it 600 quid interest put into lottery only gives those odds if put in in one draw.The odds of 14m to 1 for the jackpot will always be 14m for every single draw due to random generation , 14m divided by 600 is 23333.3r - 1. IF you are only entering say 10 quid from the interest you will only get 1,400,000-1 odds for that jackpot.

With 10 different tickets in a single draw, you're right - you have 1 in 1.4 million chances of the jackpot.

However, with £600 the chances are 1 in 23,000. It scarcely matters whether you spend it all in one go or spread it over the year, because you're covering such a small proportion of the possible outcomes.

Paul_Herring

alared wrote: »

Would you put a safe,secure £30k on PB --- YES

Would put £30k in a savings account and spend the interest on the lottery

---

NO

Why are you finding this second concept so difficult? Why do you think the two are that different when they aren't?

alared

:rotfl: :rotfl:

Paul_Herring wrote: »

Why are you finding this second concept so difficult? Why do you think the two are that different when they aren't?

Of course they are different.
My money is safe and secure in PB and I have a chance to win prizes every month.
If I put £30k in a bank account paying 3.5% (which may be hard to get just now) after tax this earns me £840 to waste on the lottery with very little chance of scooping a prize.
Meanwhile by not investing in the safest bet in town,I`m missing out on the chance of winning.
You cannot lose your capital with PB, unlike the N lottery where the chance of even winning a tenner is slim.

Your theory is just that because when it comes to the crunch of gambling £840 on the lottery most people would bottle out and probably look for a safer bet such as

---

PBonds:rotfl:

Shyofrisk

Just joined.....consider me a voice in the wilderness. I used to win at least 100 per month on P.Bs and became accustomed to the extra income. I haven't won a bean in three months - three months! But given how little interest I am losing I am not about to cash them in just yet. Besides, there is nothing quite like the thrill of possibility every first of the month..... I have never won more than 250 in all and no bigger prize than a 100, but still I dream.

Shy

alared

Shy welcome to the forums.
At least you know your money`s still there with PB and not "gone down the swannie" on the lottery.

Paul_Herring

alared wrote: »

Of course they are different.

They aren't that different - which is what I said in my last post.

My money is safe and secure in PB

As it would be in a bank's savings account.

and I have a chance to win prizes every month.

As you do with spending the interest on the lottery.

If I put £30k in a bank account paying 3.5% (which may be hard to get just now) after tax this earns me £840 to waste on the lottery with very little chance of scooping a prize.

As opposed to the '1%' from April that your Premium bonds are 'earning,' (£300) meaning that your chance of winning a prize is lower...

Meanwhile by not investing in the safest bet in town,I`m missing out on the chance of winning.
You cannot lose your capital with PB,

nor will you lose your capital in the bank

unlike the N lottery where the chance of even winning a tenner is slim.

which also applies to premium bonds.

chopperharris

Paul_Herring wrote: »

They aren't that different - which is what I said in my last post.
As it would be in a bank's savings account. As you do with spending the interest on the lottery.

As opposed to the '1%' from April that your Premium bonds are 'earning,' (£300) meaning that your chance of winning a prize is lower...

nor will you lose your capital in the bank which also applies to premium bonds.

They are as much different as they are alike imo , bit i still reckon pbs win , heres my thinking.

Both - 30k is secure.tick

Lottery-:Using interest only is dependant on roi and tax rate.Limited number of entries based on interest accrued , it wont ger higher than a lock in rate , but nor will it get lower.All on one draw increases the odds of a win but not by any great deal , and not in any means near that of pbs.Your wating the first 12 months for the stake money to maximimise the odds of any win.

Pb , 30000 entries each time from the beinging of the 2nd month , 11 draws first year , so thats 330000 entries .Beats the number of lottery entries from savings interest hands down.

For defining which one has better odds you have to consider the odds winning of each prize in each of the systems versus the stake.EG compare established lottery odds for one draw(the odds of winning are decreased by spreading across more draws with stake hence only one draw) and all prizes divided by 850 entries(interest gained) , versus , pb odds for all prizes divided by 30000 over 11 months.

I can see where the idea of savings interest for lotto comes from , but in no way do I reckon it approaches the staggering entries v odds ratio in its favor in this scenario....BUT as we know my maths looks up to poo.

The only way it could is if the odds ratio of a win on pbs were astronomically high , not merely in reduced payout interest , but also in proportion to the stake itself.

For anyone with considerably less than in the thousands it is most likely better to just bung a few quid on the lotto if it would take too long to amass the full and protected stake for pbs....but in reality the odds on the nags would be an even better choice for them , preferrably less than a 15-1 shot , no accumulators , with a bent irish trainer and jockey.

Aegis

alared wrote: »

Well I know where my money`s staying.
Every month I get a free bet with PB and I cannot lose my stake.

You can and do lose your stake. Every month you fail to win at least £60-70, you have lost your stake. Given that you have a 45% chance of winning exactly nothing in any one month, you are losing part of your stake in the majority of months.

Your stake is lost, but because you aren't given it in the first place you don't notice that you are losing so much.

With the lottery,12.5% is grabbed right away by the gov.,so much is "wasted" on "good causes" and you have a very tiny chance of winning a tenner.

I agree, I wouldn't want to play the Lottery because I think it;s a mug's game. However, I've done the calculations myself, and the expected winnings are higher if you use savings account interest (minus 1% to account for the expected winnings from Premium Bonds) to fund Lottery ticket purchases.

Premium Bonds are popular because they're a poor gamble dressed up as a decent savings product. Popular with the people who believe the hype, and popular with the government because they get to borrow money at an absolute pittance of an interest rate.