Premium Bond Winner ?

eskbanker

Oldbiggles said:

My wife on 50K invested has received nothing in aug or sept. I think that because of the low inteest rates around at the moment, they should consider paying only one of the million pound prizes and share the other million around the lower prizes. Perhaps more of us would win small amounts and others would be encouraged to invest, this would benefit all of us long term investors.

Aside from the negligible impact of increasing the number of winners by about 1% (as highlighted every time someone suggests that idea on here), I disagree with your conclusion at the end.

The prize fund is calibrated as a percentage of the bonds in circulation, so the chances of an individual bond winning a prize each month are fixed at 1 in 34,500 and would still be the same even if there were twice as many bonds in circulation, i.e. more bonds wouldn't make any difference to the chances of winning, so it isn't clear what benefit you believe long term holders would gain if more punters were to join the game?

However, it's a moot point anyway, since NS&I have annual funding targets set by the Treasury and so there is no desire to attract too much money into premium bonds, as the government has cheaper ways of raising funds.  If they were to become too popular (and we may already be dangerously close to this) then chances are the prize fund percentage would be decreased in order to suppress demand, so the actual effect would probably be the exact opposite of what you describe....

lr1277

£25 win on a £32k holding.

Sea_Shell

RG2015 said:

Sea_Shell said:

I wonder what will happen if we start to see sustained increases in interest rates available in mainstream easy access unlimited accounts.

A rush to withdraw?

Currently at an annualised 0.945% since investing 11 months ago so I am better off compared with easy access accounts.

Exactly, but what if you could get, say 1.5% guaranteed in an instant access account elsewhere?

RG2015

Sea_Shell said:

RG2015 said:

Sea_Shell said:

I wonder what will happen if we start to see sustained increases in interest rates available in mainstream easy access unlimited accounts.

A rush to withdraw?

Currently at an annualised 0.945% since investing 11 months ago so I am better off compared with easy access accounts.

Exactly, but what if you could get, say 1.5% guaranteed in an instant access account elsewhere?

I am talking about now when the best available rate is 0.65%. I am not expecting 1.50% in the near future.

Once we start approaching 1.50% though, I agree that people will move out of PBs. They will however, remain attractive for those paying tax on interest received.

Sea_Shell

RG2015 said:

Sea_Shell said:

RG2015 said:

Sea_Shell said:

I wonder what will happen if we start to see sustained increases in interest rates available in mainstream easy access unlimited accounts.

A rush to withdraw?

Currently at an annualised 0.945% since investing 11 months ago so I am better off compared with easy access accounts.

Exactly, but what if you could get, say 1.5% guaranteed in an instant access account elsewhere?

I am talking about now when the best available rate is 0.65%. I am not expecting 1.50% in the near future.

Once we start approaching 1.50% though, I agree that people will move out of PBs. They will however, remain attractive for those paying tax on interest received.

I wonder where that tipping point will be?  It'll vary from person to person, obviously.

It probably won't need to get to 1.5%, maybe 0.8% will be enough as it'll be guaranteed, rather than 0.9% with a following wind!!

Oldbiggles

My wife and I have averaged an annual 1.2% return on our bonds. The best year was 2013 with a return of 1.45%. At the moment there aren't any saving accounts with that return unless you're prepared to lock away for several years.

Cash-Cows

4 x £25k on £60k (combined holding). Seem to average £50 pm so I'm hitting expected returns I guess. 

masonic

Sea_Shell said:

RG2015 said:

Sea_Shell said:

RG2015 said:

Sea_Shell said:

I wonder what will happen if we start to see sustained increases in interest rates available in mainstream easy access unlimited accounts.

A rush to withdraw?

Currently at an annualised 0.945% since investing 11 months ago so I am better off compared with easy access accounts.

Exactly, but what if you could get, say 1.5% guaranteed in an instant access account elsewhere?

I am talking about now when the best available rate is 0.65%. I am not expecting 1.50% in the near future.

Once we start approaching 1.50% though, I agree that people will move out of PBs. They will however, remain attractive for those paying tax on interest received.

I wonder where that tipping point will be?  It'll vary from person to person, obviously.

It probably won't need to get to 1.5%, maybe 0.8% will be enough as it'll be guaranteed, rather than 0.9% with a following wind!!

I don't think we'll see the same exodus we did when NS&I slashed rates on their other savings products. Those were particularly wounding, and the inertia of the average saver means there would need to be a meaningful difference to make it worth the effort of moving. Those who would otherwise pay tax will obviously have a higher hurdle.

0.8% is already available in a 30 day notice account. Some could benefit already by transferring a portion each month into a ladder of 1 year fixed savers.

csgohan4

0 for 2 months running on max

MX5huggy

Oldbiggles said:

My wife and I have averaged an annual 1.2% return on our bonds. The best year was 2013 with a return of 1.45%. At the moment there aren't any saving accounts with that return unless you're prepared to lock away for several years.

Rates have been cut since then and you would of easily beaten 1.45% in 2013. 

I’m in until there’s an simple easy access savings account probably paying 0.5% more so that’s costing me £150 a year on £30k for the gamble of a bigger prize if it keeps Mrs Mx5 off the lottery tickets it’s worth it.