markyh

Premium Bond Odds On A £30k Holding?

113 posts in this topic

Hi,

Had the carpet cleaners in today in the final preperations for STR. final DIY this weekend and then estate agents in next week to get it on the Market before HIPS. All going well and based on my joining semi that was put on at £180k in Oct 06 and sold within a month and was completed in Jan 07 for £176k I will have £100k+ equity to invest after I pay all the selling fees from the equity.

I had various amounts around £1k to £9k in premium bonds in the last 18 months for a wedding fund and we won at least £700 off them (auto reinvested each time) which I thought was quite good, now i'm down to £10 im getting zilch the last few months (wedding was 1/3/07).

So I was thinking of putting £30k of my equity into premium bonds as when I check every month I would say 75% of the big prizes £5k to £1m are won by holders with £10k to £30k holdings.

I know on the NS&I website it says each bond has a 24000 to 1 chance of winning a prize so I tried to work that out in excel. My understanding is that every £1 bond is drawn for every prize. But if it wins on more than one prize it is allocated to the highest only? So it a £1 bond is drawn and wins £50, £500 and £10k you will get the £10k prize only.

So I looked at the total estimated amount of prize draws listed for Julys draw, 1,474,310 (1.47 million approx). So assuming you had a £30000 holding you would have 30000 x 1474310 chances of winning a prize? This is 44,229,300,000 chances? Am I correct that this is 44 billion, 229 million, 300 thousand chances?

So, If you divide that 44 billion + by the Goverment 24000 to 1 odds, you have 1,842,887 (1.84 million) realistic chances of winning at least £50 each month?

This seems a good punt to me. I should think that you are virtually gaurenteed £50 a month winnings on £30k holding which is only 2% p/a nett i know but it must be worth it for the gamble as only a few medium wins will get you near the best taxable savings of about 4.7% net p/a (on basix rate tax)

Can someone please explain if my figures are roughly right as I am guessing about the odds. If I am wrong can they give the real odds on a £30k holding? Also, are there any £30k PB holders here who can confirm you have a high chance of winning at £50+ prize every month?


Thanks


Mark Edited by markyh

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[quote name='markyh' post='626151' date='May 3 2007, 12:44 PM']Hi,

Had the carpet cleaners in today in the final preperations for STR. final DIY this weekend and then estate agents in next week to get it on the Market before HIPS. All going well and based on my joining semi that was put on at £180k in Oct 06 and sold within a month and was completed in Jan 07 for £176k I will have £100k+ equity to invest after I pay all the selling fees from the equity.

I had variuous amounts around £1k to £9k in premium bonds in the last 18 months for a wedding fund and we won at least £700 off them (auto reinvested each time) which I thought was quite good, now i'm down to £10 im getting zilch the last few months (wedding was 1/3/07).

So I was thinking of putting £30k of my equity into premium bonds as when I check every month I would say 75% of the big prizes £5k to £1m are won by holders with £10k to £30k holdings.

I know on the NS&I website it says each bond has a 24000 to 1 chance of winning a prize so I tried to work that out in excel. My understanding is that every £1 bond is drawn for every prize. But if it wins on more than one prize it is allocated to the highest only? So it a £1 bond is drawn and wins £50, £500 and £10k you will get the £10k prize only.

So I looked at the total estimated amount of prize draws listed for Julys draw, 1,474,310 (1.47 million approx). So assuming you had a £30000 holding you would have 30000 x 1474310 chances of winning a prize? This is 44,229,300,000 chances? Am I correct that this is 44 billion, 229 million, 300 thousand chances?

So, If you divide that 44 billion + by the Goverment 24000 to 1 odds, you have 1,842,887 (1.84 million) realistic chances of winning at least £50 each month?

This seems a good punt to me. I should think that you are virtually gaurenteed £50 a month winnings on £30k holding which is only 2% p/a nett i know but it must be worth it for the gamble as only a few medium wins will get you near the best taxable savings of about 4.7% net p/a (on basix rate tax)

Can someone please explain if my figures are roughly right as I am guessing about the odds. If I am wrong can the give the real odds on a 330k holding? Also, are there any £30k PB holders here who can confirm you have a high chance of winning at £50+ prize every month?
Thanks
Mark[/quote]

There's no guarantee about it, however the statistical odds of each bond winning a prize is 1 in 24000. So if you have the full complement, then statistically you'd expect to win around 15 prizes a year.

The prize fund is derived from their target return rate, which is currently 3.6%. Prizes are tax free. If a £1 Bond unit is drawn more than once in a draw it will be allocated the highest prize for which it is drawn

Last year I did better than average and my wife and I, who each have the maximum holding, returned 5.4%.

I won £100 this morning (you can check whether you've won on-line)

The real fun is the chance of winning the big prizes, althought the biggest I've ever won is £1,000. Edited by Casual Observer

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I can't tell you what the odds are but if you have £30k invested and you win £50/month that only gives you a return of 2%. You would need to be winning at least £100/month to make it worthwhile.

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I have the maximum amout and here are my winnings over the last 6 months.

today - £500 + £50
April - £50 £50
March - £100
Feb - Nothing
Jan - £50
Dec - £50

I was going to cash them a couple of months ago, but I heard they were doing another bonus month of 5 x £1m prizes in June (although you might be too late for this one?) so I thought I'd hang on to them for a few more draws - so I was glad that I did today. I think it is now beyond what it would have been if i stuck it in a 5% interest account.

Money saving expert has a big thread on PBs.

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[quote name='nickswift' post='626185' date='May 3 2007, 01:09 PM']I have the maximum amout and here are my winnings over the last 6 months.

today - £500 + £50
April - £50 £50
March - £100
Feb - Nothing
Jan - £50
Dec - £50

I was going to cash them a couple of months ago, but I heard they were doing another bonus month of 5 x £1m prizes in June (although you might be too late for this one?) so I thought I'd hang on to them for a few more draws - so I was glad that I did today. I think it is now beyond what it would have been if i stuck it in a 5% interest account.

Money saving expert has a big thread on PBs.[/quote]
Congrats on today's win!

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I have had the maximum holding for a couple of years and I win prizes almost every month (not a bean this month though). I have won a £5,000 prize before so over the course of the investment I've had a very good return so far. Edited by Harry in Germany

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[quote name='Casual Observer' post='626168' date='May 3 2007, 01:00 PM']There's no guarantee about it, however the statistical odds of each bond winning a prize is 1 in 24000. So if you have the full complement, then statistically you'd expect to win around 15 prizes a year.

The prize fund is derived from their target return rate, which is currently 3.6%. Prizes are tax free. If a £1 Bond unit is drawn more than once in a draw it will be allocated the highest prize for which it is drawn

Last year I did better than average and my wife and I, who each have the maximum holding, returned 5.4%.

I won £100 this morning (you can check whether you've won on-line)

The real fun is the chance of winning the big prizes, althought the biggest I've ever won is £1,000.[/quote]

Thanks CO , I did think my figures seemed a bit fantastic. Still I think I will do it as you say i like the idea of having 60000 attempts at winning £1m every month, and 1/2 million chances of winning £100k whilst still keeping your inital stake! Still I believe I am correct that you have approx 44 Billion "attempts" to be picked at random by "Ernie" to win a prize each month on a £30k holding whatever the odds!

Like it!

M

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The majority of people will get less than 3.6%, and a few will get much more.

It's the equivalent of putting your bank interest, tax-free in a lottery that pays out 100%. Most will lose out, some will gain wads of cash.

I had some once, and they are good fun. In my opinion there aren't enough big prizes though - the novelty of winning yet another £50 soon gets boring!

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[quote name='Harry in Germany' post='626188' date='May 3 2007, 01:12 PM']I have had a 30k holding for a couple of years and I win prizes almost every month (not a bean this month though). I have won a £5,000 prize before so over the course of the investment I've had a very good return so far.[/quote]

I keep a tab on percentage returns. Some years I've beaten the target, some years I've been below. On average I'm probably no better or worse off than in a BS over the years.

But it's that chance of winning the big one that keeps me in, just the fun of gambling without losing your stake I suppose.

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I've held the 30k max in premium bonds for a couple of years now, the returns haven't been great but neither have interest rates.

I won £800 in 2006.

So far in 2007, excluding any I may win in May, I've won £600.

The small wins are good to see, as I don't need to use the cash for anything else atm, I'll keep the bonds and hope for one of the large prizes.

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We had two lots of max holdings and won on average about £50 per week each. I suppose its fair to say that, while the odds per bond remain stable, it is not as good a return as you might get elsewhere. Having said that, you do get a guaranteed return.

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I have the full allowance too and here are my stats:

Prize value (£) Winning month
50 May
50 May
500 March
50 March
50 March
50 February
100 January
100 January
50 January
50 December
50 December

For me, the excitement of hitting a big win every month is a real bonus that is difficult to factor into any interest rate comparison - although I seem to be doing ok there too.

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[quote name='bulltraderpt' post='626204' date='May 3 2007, 01:18 PM']Hello,

No i disagree.

You need to be pulling in more than £100 a month to make this 'worth your while'.

£100 per month only 'gives' you 4%. This is a crap return, especially when you take in to account High St interest accounts @ 6%. Not to mention the 'money supply' argument as well as your own personal inflation rate!

With that aside we did have the maximum in there for three, but have since reduced it to one person holding the maximum. Will consider binning it after June's draw. (In reality should do it now, but I'm as greedy as the next man, but am really stupid when you consider the odds!) :blink:[/quote]
The 4% would be tax free, so it would compare favourably to the net return from a BS.

After you've used up your ISA allowance of course

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I wouldn't get caught up about a single pound bons winning twice in the same month. The odds don't even fit on a calculator. I have £12100 of PBs, I got my 1st £300 from a part time job at 16. I'd say at least £3k of my current holding is auto-reinvested £50 and £100 prizes. The prize fund is currently 3.60% of the total number annually, paid tax free and off your self-certification.


If you are a higher rate taxpayer they are compelling.

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They're not good as a rational investment unless you are a higher-rate taxpayer. I have them largely because I don't factor interest into my financial plans, and it's not big enough to need, so I effectively am doing what the poster above said - spending my interest on a 100% payout lottery.

That said, I haven't had a sniff of a prize yet this year (hold just under 10k, haven't checked the May draw) and my father seems to win every month, often twice.

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[quote name='Bear Monger' post='626207' date='May 3 2007, 01:19 PM']I have the full allowance too and here are my stats:

Prize value (£) Winning month
50 May
50 May
500 March
50 March
50 March
50 February
100 January
100 January
50 January
50 December
50 December

For me, the excitement of hitting a big win every month is a real bonus that is difficult to factor into any interest rate comparison - although I seem to be doing ok there too.[/quote]
3.7% net in 6 months sounds pretty good to me!

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[quote name='DaggaDagga' post='626194' date='May 3 2007, 01:14 PM']The majority of people will get less than 3.6%, and a few will get much more.

It's the equivalent of putting your bank interest, tax-free in a lottery that pays out 100%. Most will lose out, some will gain wads of cash.

I had some once, and they are good fun. In my opinion there aren't enough big prizes though - the novelty of winning yet another £50 soon gets boring![/quote]
Good point the median will be below the 3.6% because the average is skewed by an unlikely jackpot.Sooner have the certainty of 6% plus in a Bond.There again ,in the present financial turmoil created by Merv and the boys some would argue better to have the capital safe with NSand I. Edited by crashmonitor

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The wife & I have 30K each and have been averaging 100 a month each...as a high rate tax payer, it's worth it. Just. But if IRs creep up to 6% (we live in hope) I will take the lot out and go with Icesave for a while. If maxed out on ISAs, also consider the RPI linked NS & I savings certs. This accounts for the low-risk side of one's 'porfolio', I guess. 354 BTL flats are my high riskers... ;)

See [url="http://www.housepricecrash.co.uk/forum/index.php?showforum=32"]http://www.housepricecrash.co.uk/forum/ind...hp?showforum=32[/url] where this thread really belongs...

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[quote name='crashmonitor' post='626223' date='May 3 2007, 01:23 PM']Good point the median will be below the 3.6% because the average is skewed by an unlikely jackpot.Sooner have the certainty of 6% plus in a Bond.There again ,in the present financial turmoil created by Merv and the boys some would argue better to have the capital safe with NSand I.[/quote]
You are right. If you calculate the return based on £50 wins only it works out to 2.5% by my reckoning. The prospect of higher prizes pushes this up, but as you say, the average is skewed by the prize distribution.

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[quote name='red' post='626224' date='May 3 2007, 01:24 PM']But if IRs creep up to 6% (we live in hope) I will take the lot out and go with Icesave for a while.
See [url="http://www.housepricecrash.co.uk/forum/index.php?showforum=32"]http://www.housepricecrash.co.uk/forum/ind...hp?showforum=32[/url] where this thread really belongs...[/quote]
NSand I are pretty good at adjusting the premium bond "interest rate" as rates move generally. Currenly it's 3.6% net

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The same bond cant win twice, it doesn't work like that.

Rather than each bond being considered for a win the computer ERNIE generates random numbers which may or may not correspond to an existing bond number. So if GR 12345678 XP is generated, if you, or anyone else has a bond bearing that number, it wint a prize. If the bond does not exist the number is discarded. Similarly once a number that has been generated has been matched to a bond, it too is finished with and will not be picked again.

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[quote name='red' post='626224' date='May 3 2007, 01:24 PM']The wife & I have 30K each and have been averaging 100 a month each...as a high rate tax payer, it's worth it. Just. But if IRs creep up to 6% (we live in hope) I will take the lot out and go with Icesave for a while. If maxed out on ISAs, also consider the RPI linked NS & I savings certs. This accounts for the low-risk side of one's 'porfolio', I guess. 354 BTL flats are my high riskers... ;)

See [url="http://www.housepricecrash.co.uk/forum/index.php?showforum=32"]http://www.housepricecrash.co.uk/forum/ind...hp?showforum=32[/url] where this thread really belongs...[/quote]


I already have the rough plan on safe investements. Cant do the RPI NS&I bonds even though they look good as I want monthly interest payouts to my current account as me with wife and kiddy are thinking quit this HPI madness at the top, (I hope) STR, and watch the drop then get our family home 2-4 years time with less of a huge morgage slave debt around our necks if prices have dropped.

Our current mortgage is £435 p/m on our 2 bed semi and I have set us a target of £800 to £950 max to rent a nice 3 Bed with a garage as this is what out mortgage would be now on a fixed rate to go straight to a 4 bed detached. So I want to pull in as much net interest as possible a month from my £100k pot to fund the extra "roof over my head cost" of renting a bigger house.

Plan is £6k between us in best monthly pay out ISA (not Barclays unfortunately as the interest is pay in monthly only i,e added to the £3k limit but cant get hold of it for a year), £30k in premium bonds as a risk free punt giving at least £50 p/m payout (hopefully) and the other £64K+ in the best monthly interest payout savings account, currently ICESAVE I think @ 4.56% nett p/m. I know A&L savings is better monthly rate but they have the 1 months penalty if you make a withdrawl that month I might want to swap it to new ISAs next April etc so I avoiding the A&L and HSBC etc.

A sound plan?

M

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only worth it if your a higher paying tax payer....
[url="http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1161700153,9594"]http://www.moneysavingexpert.com/cgi-bin/v...1161700153,9594[/url],

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Great thread - interesting so see what others have won with max holding.

Here's mine:

100 April
50 February
50 February
50 February
50 February
50 February
50 February
50 January
100 November

3.6% return if my maths is correct.

£100 is the most I have ever won. Hubby has won £500 once.

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I've had 30k for 4 years and it's returned an average of £65 per month, bit shite but more exciting than interest statements.

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