Premium Bond Winner ?

69bertie

I use to have £35k of premium bonds and found that I was getting on average at least 2x £25 prizes a month, every so often 3x £75. I had to take out some money recently - £10k, to pay for my recent solar installation. Rather than have the money sitting around, I elected to wait until after the next draw before it was paid out. Next draw, I received £200 in prizes with my £10K being credited back into my bank account on the 3rd of the month. How much £25k will bring in, wait and see. I do know that I wished I'd bought more Gold than I did in 2019. £700 up at the moment on an investment of £940 is much better than all my returns to date. 

worriednoob

Totally new to premium bonds.  Just wondering if you have large amounts of savings, whether it's better to place the money in a high interest savings account or a premium bond.

Gary1984

It probably depends on your tax situation. The best high interest savings accounts would usually pay more than premium bonds for a basic rate tax payer.

eskbanker

worriednoob said:

Totally new to premium bonds.  Just wondering if you have large amounts of savings, whether it's better to place the money in a high interest savings account or a premium bond.

Although the notional prize rate from premium bonds is 3.3%, this is distorted by the small number of large prizes, so a more realistic expectation is about 2.6% with average luck, but the nature of the random draw is that some months will be better than this and others will be worse, so it's not directly comparable with a savings account with a predictable return.

As above, the fact that it's tax-free means that a basic rate taxpayer (with no personal savings allowance headroom) would beat PBs with a savings account paying 3.3%, and about 4.4% for higher rate taxpayers....

Sarahspangles

worriednoob said:

Totally new to premium bonds.  Just wondering if you have large amounts of savings, whether it's better to place the money in a high interest savings account or a premium bond.

There are a couple of other scenarios where PBs are worth considering.  The FSCS covers £85k savings per bank/group of banks but in theory if you had high savings you might run out of banks to open accounts with, in which case PBs or other N&SI accounts are a further option.  And (this one is 'niche') PBs can be convenient towards the end of life, as they can remain invested for a year after someone dies and any winnings are tax-free, unlike income from savings that fall into the estate.

At one time it used to be common for people who were self-employed to use bonds to 'save up' the money that they predicted they would be due to pay under self-assessment, but you don't see that mentioned nowadays, I assume there was some advantage to doing it at the time.

sugar_daddy1237

Question for the wise ones. One of my AXA cashbuilder plan is maturing in June. I will have 50k to invest. Am I best to buy lump sum 50k in bonds at once, buy multiple smaller sums or doesn't it make a difference at all?

Sarahspangles

sugar_daddy1237 said:

Question for the wise ones. One of my AXA cashbuilder plan is maturing in June. I will have 50k to invest. Am I best to buy lump sum 50k in bonds at once, buy multiple smaller sums or doesn't it make a difference at all?

Some people theorise that specific blocks of bond numbers come up more frequently than others, but I'm not convinced - it's not like specific bond numbers are substandard because they've been created on a Friday after someone came back from the pub.

The more bonds you have the more likely you are - in statistical terms - to win something and over time to get closer to the average expected return.  They have to be invested for a full month so the optimum time to buy is just before a month end.

eskbanker

Sarahspangles said:
Some people theorise that specific blocks of bond numbers come up more frequently than others, but I'm not convinced...

It's true, some specific blocks of bond numbers do come up more frequently than others - trouble is, there's no way of telling in advance which ones those will be!

It's exactly the same principle as the Lotto numbers, where, nearly 30 years on from starting, there's a fairly significant difference between the frequency of the most-drawn number from the original 1-49 range (39, 366 times) and the least (13 and 20, 299 times each) - some believe that randomness should equate to evenness but not so, or at least not exactly....

However, the answer to "Am I best to buy lump sum 50k in bonds at once, buy multiple smaller sums or doesn't it make a difference at all?" remains 'it makes no difference to the odds and the expected return'.

londonice

It's a combination of luck and obtaining new bonds gradually.  
Now, my holding increases with prizes reinvested.  I've been pretty lucky recently, so I've stopped putting extra money in.
Over the last 6 months, I've won prizes, except for December.
50, 75, 125, 100, 125 = £475 all reinvested in more bonds.

sugar_daddy1237

Good Morning everyone 
May's big winners results are out.
Good luck 

https://www.nsandi.com/prize-checker/winners