Premium Bond Winner ?

melena

Just to give a simple [simplistic?] indication of what your expectations should be after the April rate reduction if prizes were handed out in a less random way. Assuming a full holding;

Your monthly win would alternate between £75 and £125 - £25 every month plus £50 or £100 in alternate months.

You'd also win a £500 prize every five years.

And a £1,000 prize a couple of times in your lifetime, assuming you weren't given a FH at birth.

But probably nothing better - ever. There's a slim chance of a £5,000 prize but there's little point dreaming of anything more. A £1m prize should come your way every 114,000 years.

In the years you don't get a £500 (or better) prize, so most years, your expected return is only about 2.6%, and still only 3.6% when you do win £500. Over 50 years it's under 3% 'with average luck' and still only about 3.14% even if you're one of the lucky few to win a £5,000 prize in that time.

Obviously it doesn't work this way, and one or two people each month do win a million so there's always hope, but the odds are heavily stacked against you - or me - ever winning a significant prize, or even beating a good building society account.

Are you feeling lucky?

Kim_13

My £500 should be due then - FH for 3 years, built up gradually from £5k in 2008.

melena

https://forums.moneysavingexpert.com/discussion/comment/81900406#Comment_81900406

I wouldn't count my chickens. For most of that time rates were so low that you had less chance of a £50 win then than of a £500 win now. It was essentially £25 or nothing unless you were incredibly lucky. Rates will continue to fall too.

I still have a few Rolls-Royce shares - not enough to make much difference - but I recently calculated that if I'd cashed in my PBs and bought RR shares when they hit rock bottom at the start of the pandemic, rather than the few quid I've won on PBs I'd have made nearly £2m! Of course, I'd have had to be mad to take such a risky punt - either that or have a shedful of homunculi. Makes you wonder though.

jak22

Assuming a median winnings of now £550 over a year with £20K, a rate around 2/3 of some fixed cash ISAs, and with a new 20K ISA allowance arriving in some weeks, the ISA could return £810, and that's without considering any further PB rate changes.

eskbanker

Rates will continue to fall too.

Not necessarily? PB rates are driven by a range of factors, such as NS&I's annual funding targets…

melena

https://forums.moneysavingexpert.com/discussion/comment/81900517#Comment_81900517

I think we can be pretty certain there will be at least one more drop in the next year though I don't expect the rate to fall back to 2020 levels. Sure as hell there won't be an increase!

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81900547#Comment_81900547

I agree that it's likely but disagree that it's certain/sure!

melena

https://forums.moneysavingexpert.com/discussion/comment/81900557#Comment_81900557

Just wait. Time will prove me right. Almost anything can happen, or not happen, but lots of things are so extremely unlikely as to be discounted. And it's perfectly acceptable to be certain about something that isn't actually 100% certain and in this case it would make far more sense to assume that the rate will fall if you're deciding whether to buy/sell/keep bonds. I'm certain/sure I won't win the £1m prize, but it's theoretically not impossible.

eskbanker

And it's perfectly acceptable to be certain about something that isn't actually 100% certain

Anything less than 100% isn't certain, that's what the word means!

melena

https://forums.moneysavingexpert.com/discussion/comment/81900599#Comment_81900599

Don't be so silly!