Premium bonds - raise limit?

nrsql

Just wondering why they don't raise the limit for premium bond investment.
Sounds like an easy way of bringing in money.
Don't know how much an extra £5k on the limit would bring in.

Or maybe it's not so easy to do that.
When was the last time it was increased?

Aegis

nrsql wrote: »

Just wondering why they don't raise the limit for premium bond investment.
Sounds like an easy way of bringing in money.
Don't know how much an extra £5k on the limit would bring in.

Or maybe it's not so easy to do that.
When was the last time it was increased?

Well, they could do. Personally it makes little difference to me, as I would be really reluctant to have even £5 of them, let along £35k!

Oblivion

nrsql wrote: »

Just wondering why they don't raise the limit for premium bond investment.
Sounds like an easy way of bringing in money.
Don't know how much an extra £5k on the limit would bring in.

Or maybe it's not so easy to do that.
When was the last time it was increased?

I think the limit was last raised from £20k to £30k on the 12th May 2003. It seems that the limit is only raised in response to increasing demand for premium bonds, and the fact that it hasn't been raised since 2003 might imply that there aren't that many people currently at the limit.

Dave.

chesky369

I think it would be the law of diminishing returns. Lots of people would have no problem having the old rate of £20k; fewer holding the maximum then went on to increase to the new £30k rate - I certainly didn't and am actually thinking of jacking them in, since the returns are not so great now. Don't think many would buy into £40k.

Oblivion

nrsql wrote: »

Just wondering why they don't raise the limit for premium bond investment.
Sounds like an easy way of bringing in money.
Don't know how much an extra £5k on the limit would bring in.

Or maybe it's not so easy to do that.
When was the last time it was increased?

Last increased from £20k to £30k on the 12th May 2003. It seems that they only raise the limit in response to demand, so that implies that there are not that many people currently at the £30k limit. Quite why they need to impose a limit at all is a mystery to me.

Dave.


Oops, apologies for duplicate post, first one didn't seem to go anywhere. Slow Inet connection tonight ... must be the weather.

Paul_Herring

chesky369 wrote: »

I think it would be the law of diminishing returns.

Indeed. I seem to recall reading somewhere that the optimum amount to hold is £100 - the minimum you can buy that gives you a chance of winning.

Aegis

Paul_Herring wrote: »

Indeed. I seem to recall reading somewhere that the optimum amount to hold is £100 - the minimum you can buy that gives you a chance of winning.

My own calculations show the optimum amount to be 0

With a £100 holding you have a statistically insignificant chance of winning the jackpot, so you might as well do something nice with it instead. Of course, if you really wanted to gamble, you could put a bet on at a bookie with, say, £10 of it and keep whatever was left over in with the rest of your savings.

Failing that, you could always buy £100 of lottery tickets and get the losing out of the way in one go

nrsql

So you think the reason the limit isn't increased is because the government doesn't want people wastiong their money? I would doubt that otherwise they would scrap the product entirely.

There are a lot of people who have £30,000 (I hope you don't disagree with that whether you think it's a good idea or not).
If the limit was increased presumably a lot of those would invest up to the new limit (or leave winnings to increase) and so more money invested.

The question is why the limit isn't increased to bring in that extra money.
I very much doubt it's because it's a bad product.

nrsql

It's not about the optimium to hold for investors - it's about why the limit hasn't been raised.

Please start another thread (or join one of the myriad others) if you want to discuss whether it's a good idea to invest.

Paul_Herring

Aegis wrote: »

My own calculations show the optimum amount to be 0

I meant the optimum amount if you wanted to be in with a chance of any prize.

With a £100 holding you have a statistically insignificant chance of winning the jackpot

But what of any prize? The calculator here tells me I have a 6% chance of winning £50/£100 on a £100 stake. Enough of a gamble for me to have only £100 with them.

, so you might as well do something nice with it instead.

I have much more money stashed in other products (Both ISA's, pension etc.,) and easily spend more than that per month on 'luxuries.' I can afford to leave £100 in there.

Failing that, you could always buy £100 of lottery tickets and get the losing out of the way in one go

That's the arguement with the fallacy. Dumping it in a savings account and spending the interest on lottery tickets... Well I could do that already if I wanted to. (I don't)

Pendle_Gazza

I think I'd be tempted to cash mine in if it went any higher (IMHO £30K is too much as it is), and I'm actually one who likes the concept of them and has a small percentage of my dosh in there!