Premium Bond Winner ?

justwantedtosay

polymaff said:

To an investor, worth somewhat less  than 3.5% directly, 4.4% to a 20% taxpayer, 7.3% to a 40% taxpayer.  The smaller the holding the lower will be the return.

I'm not sure I agree with your second statement. If you only hold a few bonds then you're unlikely to win anything, but I'd have thought the percentage returns would be pretty consistent above a certain level, or in the very long term. In any case, such definite language as "will" shouldn't be used here as it's down to chance, someone could buy 25 bonds and win £4.3m in their first draw, though it's about as unlikely as me ever winning anything more than £100. 
I'd also suggest that the return should be almost bang on 3.5% with a large enough holding and, obviously, more in those years when you win a larger prize, which should be once in 3 or 4 years on average with a full holding. 

eskbanker

https://premiumbondsprizes.com/ offers a model that's been updated to reflect the new prize distribution, which does support median ('average luck') returns increasing in percentage terms with larger holdings:

£1K: 0%
£2K: 2.5%
£3K: 3.33%
£4K: 3.13%
£5K: 3.5%
£10K: 3.5%
£20K: 3.63%
£30K: 3.75%
£40K: 3.81%
£50K: 3.85%

justwantedtosay

eskbanker Surely it all depends on time? Can anyone explain how holding £5,000 bonds for 10 years should give you any less chance of winning than holding 50,000 for one year?
I always base all my 'calculations' and expectations [hopes] on the assumption that I won't ever win a prize of more than £100. I reckon the returns suggested with larger holdings are because the chance of winning big is so much higher with a full holding but in reality it is still so small that it can be ignored and in most years you should hope for 3.5% with a fair sized holding. As I wrote, chances are you'll never win a £10k prize however many bonds you hold. On an infinite timescale every bond should return 4.4%, or whatever the rate is.

eskbanker

justwantedtosay said:

eskbanker Surely it all depends on time? Can anyone explain how holding £5,000 bonds for 10 years should give you any less chance of winning than holding 50,000 for one year?

Yes, my understanding is that the above figures are based on the expected return over a year, and (assuming no changes to prize distribution) the expected return from £5K for ten years should be the same as from £50K for one year, or £10K for five years, or £1K for 50 years, as they all equate to 600,000 individual bond entries each with an identical one in 21,000 chance of winning a prize.

The long-broken MSE calculator reflected these two different dimensions of holding size and duration, but the one quoted above doesn't seem to offer that as an option - https://moneymarvel.co.uk/calculators/premium-bonds/ is perhaps worth a try once adjusted for the new distribution....

Dizzycap

I've put £50 a month into Premium bonds for 10 years and never won a bean. So the theory of new bonds win more is well out of the window.

Nice amount of savings though but getting bored of winning nothing!

 I have noticed when looking through the monthly results that Norwich bond holders do very well each month! Had more £1,000,000 wins than any other area to date!

Essex & southwards seem to generate the most winners and that too gets boring to see after a while.........

It has made me wonder just how random the draw actually is when its the same areas winning large amounts everytime?

I use the NS&I Premium Bond checker every 2-3 months to see if by some miracle I've won £25 and the answer is always a NO!

garfield33

Dizzycap said:

I've put £50 a month into Premium bonds for 10 years and never won a bean. So the theory of new bonds win more is well out of the window.

Nice amount of savings though but getting bored of winning nothing!

 I have noticed when looking through the monthly results that Norwich bond holders do very well each month! Had more £1,000,000 wins than any other area to date!

Essex & southwards seem to generate the most winners and that too gets boring to see after a while.........

It has made me wonder just how random the draw actually is when its the same areas winning large amounts everytime?

I use the NS&I Premium Bond checker every 2-3 months to see if by some miracle I've won £25 and the answer is always a NO!

I'd always assumed the areas with more winners were areas that have more people with PBs, and with larger numbers of PBs too.
I live in a large city and there are relatively few big winners each month given its size, and I put this down to most people here not having much in the way of savings, or at least not putting them into PBs. 

To check, we'd need a list of all PB holders' locations and total holdings - which sounds like a fun project for someone with the right skills

eskbanker

Dizzycap said:

I have noticed when looking through the monthly results that Norwich bond holders do very well each month! Had more £1,000,000 wins than any other area to date!

Essex & southwards seem to generate the most winners and that too gets boring to see after a while.........

It has made me wonder just how random the draw actually is when its the same areas winning large amounts everytime?

Even if it was true that certain areas had been luckier than others over various time periods, in itself that's no proof of the draw not being random - randomness doesn't actually mean completely even distribution!

However, whenever articles analyse this in more detail, over significant time periods, there's no evidence of any meaningful patterns that would demonstrate that the draws aren't random, such as this one from last year, covering the time since the introduction of the £1m prize in 1994:

polymaff

justwantedtosay said:

polymaff said:

To an investor, worth somewhat less  than 3.5% directly, 4.4% to a 20% taxpayer, 7.3% to a 40% taxpayer.  The smaller the holding the lower will be the return.

I'm not sure I agree with your second statement. If you only hold a few bonds then you're unlikely to win anything, but I'd have thought the percentage returns would be pretty consistent above a certain level, or in the very long term. In any case, such definite language as "will" shouldn't be used here as it's down to chance, someone could buy 25 bonds and win £4.3m in their first draw, though it's about as unlikely as me ever winning anything more than £100. 
I'd also suggest that the return should be almost bang on 3.5% with a large enough holding and, obviously, more in those years when you win a larger prize, which should be once in 3 or 4 years on average with a full holding. 

I purposefully started my post with "To an investor" to stave off your points.  This, after all, is not moneygamblingexpert.com.

On the point about lesser holdings, NS&I live in a different world from other similar institutions.  With others the same applies, but as they only truncate to the nearest penny you don't really notice the permanent loss of that fraction of a penny.  In NS&I-world the truncation consists of a fraction of £25.  That is a pretty big truncation to those who have small holdings; and the smaller, the bigger.

justwantedtosay

polymaff 

I purposefully started my post with "To an investor" to stave off your points.  This, after all, is not moneygamblingexpert.com.

I didn't understand the Investor bit - to my mind you don't 'invest' in PBs, certainly not small sums which absolutely is gambling. Either you buy a lot and expect a small, fairly regular return with the tiny chance of a big win or just buy a few in the same way you might by a lottery ticket, knowing you probably won't win anything. Your truncation thing works the other way too, if you do win, even £25, with a small holding it's a good return, like someone I knew who bought 100 bonds and won £100 in their first draw. And we've seen really big wins from a small holding. It's pointless to argue about the return to two decimal places of a percentage point.

Only 18 days until the next disappointment...

polymaff

justwantedtosay said:

polymaff 

I purposefully started my post with "To an investor" to stave off your points.  This, after all, is not moneygamblingexpert.com.

I didn't understand the Investor bit - to my mind you don't 'invest' in PBs, certainly not small sums which absolutely is gambling. Either you buy a lot and expect a small, fairly regular return with the tiny chance of a big win or just buy a few in the same way you might by a lottery ticket, knowing you probably won't win anything. Your truncation thing works the other way too, if you do win, even £25, with a small holding it's a good return, like someone I knew who bought 100 bonds and won £100 in their first draw. And we've seen really big wins from a small holding. It's pointless to argue about the return to two decimal places of a percentage point.

Only 18 days until the next disappointment...

What do you think "invest" means, then?  The Latin Investire means to wrap. or enclose.  Ever heard of Investment Castings?

A smart investor pays no more heed to "someone I knew who bought 100 bonds and won £100 in their first draw" than to any other advice that some geezer down the pub offers him.

As for your "Your truncation thing works the other way too, if you do win, even £25, with a small holding it's a good return", you're making my eyes pop !