Casual Observer
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Posts posted by Casual Observer
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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.
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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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.
3.7% net in 6 months sounds pretty good to me!
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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!)
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 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.
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 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.
Congrats on today's win!
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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
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.
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seemingly you've found a better way forward is to base your economic strategy in a fantasy land make believe world where you are pretending to be an opportunistic, vulture like sc*mbag BTL'er who just pocketed 3.75 million by selling 100 properties in around 6 months (If I remember correctly).
In this dream world you live in a chateuax in France spending your days throwing juvenile insults around on the internet, all the time managing to avoid being in any way witty or amusing. Your web persona's rampant homophobia is pretty revealing also, considering your avatar is one of a muscular handlebar moustached man who makes a living grappling sweaty men in the WWF; an unusual choice for anyone over the age of 12 (or maybe someone struggling to come to terms with their sexuality.
BTL tw*ts like your imaginary alterego are the reason I am unable to buy a house at a decent price right now and presumably the type of speculating non entity this site was created to combat, so you get no respect from me by pretending to be one.
Well said, and far more eloquent than my earlier offering to PG!
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Is it worth reminding you that you did not 'expect' rates to go beyond the paltry 4% range CO?
At what interest rate do you have to write a letter to CO jr, explaining the current situation?
Sorry, mustn't laugh. Mods, can we have a 'stifled chortle' icon?
Is it worth exploring your past predictions since you've been posting, Tahoma, and check them for accuracy?
After all, at least I didn't STR in 2005
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Hello. This is my first attempt to post a picture, so apologies if it goes horribly wrong. I thought it might be interesting to take the BoE base rate and the Nationwide average price index to work out what the average interest per month would be, if the mortgage were 100% LTV at the base rate.
It's... interesting. I imagine 2005 will interest some people especially, though really what it says is that things were stable.
Can you adjust it for wage inflation over the period? I'll bet it would be remarkably flatter
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I see you have championed the 'no rates rise' this month and I am starting to think you could be right.
I feel there could be some nasty spin/suprise/bull call it what you want in order to smooth over the expected rise in rates, thus leaving no change.
Coupled with Blair leaving surely this news would paper over the cracks of the economy for now?
However what if there is a further rise in CPI in the short term how does Merv (or Gordon) explain that one to skeptical economists?
No, I reckon a rise this month, but that's the lot in this cycle. There's so much expectation of a rise that it would be dangerous for them not to raise.
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Could it be this? As previously posted.
Energy prices to weigh down inflation
Inflation could be set for an even more abrupt fall this year than originally expected, after the Office for National Statistics announced it has dramatically increased the weighting of gas and electricity prices in the Consumer Price Index.
"We are already talking about it knocking 1.5pc off inflation. This will add a little bit extra to that. Inflation will probably hold steady for next month or so and start to fall in April or May. We're expecting CPI to fall to 2.3pc in April, and down to 1.6pc by the end of the year."
http://www.telegraph.co.uk/money/main.jhtm...piweights20.xml
Yeah, that would be it.
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So what does this statement mean?
Current CPI has had a brief blip and inflation will come down later this year?
CPI is expected to be contained therefore there will be no immediate hike to IR?
I have a suspicion they have some nasty little trick up their sleeve but what this could be I no not (apart from Gordon's selling of UK assets probably at lowest value...again)?
Thoughts anyone?
Me too. Brown in his budget speech and now King, have both said CPI will revert to 2% soon. They didn't have to put their necks on the line to that degree.
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http://www.residentiallandlord.co.uk/news990.htm
stagnation ?
Could have written it myself. This is the most spot-on forecast I've seen.
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Want a fist-fight, BTL scummer?
Bought at the top? What in 1994?
Seriously, let's meet up, and you can call my kids that to my face.
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You are wasting your time. Casual Observer bought at the very top, then persuaded his own kids to do the same. He's desperate. Even though it's over, he's still hoping some magical convolution will save his bacon (and the unsalted pork of his children). Unfortunately,
hope was never a good thing to base an economic strategy on
He must be feeling like Jordan's left one right now. If he wasn't such an unremitting GIT, I might even be feeling sorry for him. Makes no difference of course. He can post here 2 x as much as RB for all the difference it makes. 40% falls on their way
Want a fist-fight, BTL scummer?
Bought at the top? What in 1994?
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They are big disparities. CPI is 33% higher wage inflation. Interest Rates are more than 40% higher than wage inflation.
And what are these "lower" IRs. This isn't the 70s, CO. 6% is a very average IR and houses are at record inflation adjusted levels. I seems as if you have seen that one flawed affordability graph that has become one crux in your argument, even when the figures work against you.
I obviously haven't explained my theory about the need for a lower correction in a non-70s environment well enough.
And it's not the percenatge difference between wage inflation and cost inflation that's relevant it's the absolute difference. Woould you rather have a 50% wage rise with costs doubling, or a 2% wage rise and 4% cost inflation?
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It's not working out that way is it? Consumer prices rising and interest rates rising while wages fall.
We are not getting wage inflation. The moment we do a load of jobs will simply move offshore. Gordon is keeping public wages low.
RPI 4.8%
IRs 5.25% and rising
Wage Inflation 3.6%.
Those big mortgages are going to stay big for a very, very long time.
These are not huge disparities. My point was that we won't get the 9% Mortgage rates that would require a big correction to the p-e whilst wage inflation is 3.6%
And yes, big mortgages will stay big for a long time. But they don't need to get smaller as quickly as usual because mortgage IRs are lower than usual.
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Would you care to explain why?
Because wages are a big influence on inflation measures, and immigration, overseas competition and lack of union bargaining will keep wages contained.
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Significant wage inflation in an economy that has falling productivity, a decades worth of growing trade deficits seems unlikely. Especially when you consider that wage deflation is the Japanese experience of competition from the BRIC nations.
I think wage inflation will remain low. And accordingly so will IRs
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I'm sure many others who need to move up the ladder but currently can't comfortably afford to will reason the same way as me (e.g. Tuffers, though he's more bearish) ...leading to a glut of properties on the market... and guess what happens next?
I'm pretty convinced that the number of STRs will not influence house prices!
And if I accepted that they would, I'd also claim that they would affect rents too.
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After 4 years I'd be better off by about £10K, and that's assuming interest rates don't rise!
presumably it also assumes that rents don't rise.
Have you factored in the transaction costs of selling and eventually re-purchasing? E.g. stamp duty, agent's fees, moving costs. You should also factor in savings on repairs and maintenance.
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Stagnation need silly inflation.
Well, I went to a bit of trouble to explain how, in a low IR environment, stagnation does NOT need silly inflation...
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Now, for your model to play out, wages must go up, without interest rates following. This would involve sending the Monetary Policy Committee on a fact finding mission to Siberia for five years.
But my whole point is that a much lower rate of wage inflation is needed in a low mortgage rate situation than if we were in a high mortgage rate situation.
In other words, because IRs are what they are, we only need, say, 20% correction, which can be achieved by about 4 years of flat HPs and wage inflation of 4ish %
Whereas, if we were at this p-e level with IRs of 12%, we would need 4 years of 15% wage inflation to achieve the correction needed for that situation.
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Problem is, increases in wages bring inflation.
Yes! Which brings us to more normal scenario where stagnation-led corrections are more likely.
I think the basic difference between our arguments is that I don'tr foresee a situation where IRs are high and wage increases are low. Where are we now? IRs of 5.5% this week with wage inflation of about 4.%?
If IRs became 10% it would be because of wage-led inflation pressures on the CPI, IMO. But I don't think it will happen.
Premium Bond Odds On A £30k Holding?
in Investment in general
Posted
NSand I are pretty good at adjusting the premium bond "interest rate" as rates move generally. Currenly it's 3.6% net