Premium Bond Winner ?

Gorgeous_George

Right, let's try it this way.

My mortgage interest rate is 5.99%. Therefore, if I 'invested' £30K in PBs (rather than paying £30K off my mortgage), I would be gambling £149.75 per month.

On average, PBs return a paltry 3.6%.

Effectively, only £90 of my £149.75 goes to the prize fund.



GG

meanmachine_2

mayb wrote:

That is the point about bonds for you - but not for me and many others - that is the point - we are not looking at inflation and notional profit losses but somewhere 'safe' to put our money and some fun in the process.

Get the point now? If it doesn't work for you then it doesn't work for you. I may not be moneysaving in your eyes but I am not money risking either - but if I win I could invest that money somewhere else - I still have my original stake and no risk to that. It has not been affected by China at all!

Every month you gamble the interest you would otherwise have earned in other areas - stock market, property, Ladbrokes and so on.

Given how prizes are heavily skewed towards 10-12 people each month, the vast majority will be LOSERS every month.

That's how it works. Not losers in a casino sense, but you're still losing. Meanwhile your initial investment is being diminished by inflation.

The fact is, most PB investors would statistically be better off putting their money elsewhere.

But then, people is people.

Lopo

meanmachine wrote:

Your posts are inaccurate. If you don't understand simple opportunity costs you need to think about if you should be "investing" at all.

There is a finite amount of money in the prize pot. We've ALL contributed to it, putting our 3.4% interest into it. Remember I can easily get that 3.4% anywhere else I please GUARANTEED.

For one person to win a million quid of that prize pot tens of thousands of others will have lost out.

That's how it works. It isn't rocket science.

If you honestly think premium bonds are risk free you need your head examined.

Lol....! Sure fired you up !!

Anyway....guess my original post that got you going was not quite clear at all.

I agree with your later post comments too by the way....

My point is the same, and I add for the sake of clarity in that for those who complain that they are not winning frequently enough, and for those who similarly state some are winning "too much" at the "expense of others" frankly should NOT be investing in PB's as their chain of thought is TOTALLY WRONG

Nobody should think/expect a guarantee of a win of any percentage when "investing(!)" in PB's....

Its a GAMBLE of what the money "invested" could have earned elsewhere!

For your benefit, I do clearly comprehend the dynamics of the true costs involved -

mayb_2

I agree with you GG except when you gamble and lose you lose your stake - when you gamble with premium bonds you keep your stake so it is not Exactly the same.

This thread is called Premium Bond Winner? so it will be the right place to discuss premium bonds and winnings (not premium bonds as investments perhaps but certainly premium bonds as a type of gamble)

nrsql

This gambling debate is a bit odd.
Every investment is a gamble - and it's nothing to do with getting the stake back as to whether it's a gamble or not.

Aside from everything else the stake isn't secure - on the stock market you could lose everything, a bank could go bust (the guarantee is only as secure as the guarantor) or decide to impose unlawful charges, the treasury could decide to take all the PB funds or your registration could get "lost".
OK some are more secure than others and PBs are probably one of the securest for your original stake.

Apart from that you are gambling on the amount you will win - the stake isn't at risk but the amount you will receive isn't certain.

Now this idea about the gamble being due to lost interest doesn't really hold water either. It depends on what you would do with the money. If you would have held it in an account that cost you money then PB's will get you a relative return even if you don't win.

Big winners only win at the expense of everyone else in the respect that they get the money that everyone else has agreed should go to the big winners.

Are PB's an investment? I would say so. You can calculate an expected return and be pleased or miffed if you don't get it just like the stock market or a bank account.

Madiba_2

£50 for me this month. Yay!

I just have them for fun. I dont need the money per se, so I can afford to be happy when I "win".

If I'd gone and boguht 30,000 lotto tickets, I doubt I would be winning every month forever!

hyphenlh

I won £5000 for a £1 bond bought 1956

Madiba_2

hyphenlh wrote:

I won £5000 for a £1 bond bought 1956

Thats not bad.

About 25% interest. I think.

pbw

Madiba wrote:

Thats not bad.

About 25% interest. I think.

more like 18.57% per year compounded...without sounding like a padantic s**t that is...

Gorgeous_George

mayb wrote:

I agree with you GG except when you gamble and lose you lose your stake - when you gamble with premium bonds you keep your stake so it is not Exactly the same.

This thread is called Premium Bond Winner? so it will be the right place to discuss premium bonds and winnings (not premium bonds as investments perhaps but certainly premium bonds as a type of gamble)

In that case, you could not disagree with me more if you had a badge with "I disagree with Gorgeous George" written on it.

mayb, we disagree because you are thick.

This post refers



GG