Premium bond holding limits

In message , Pet Lover wrote

Me too

With the new system, I have received two certificates of investment (detailing consecutive numbers ) for a single investment.

The whole system seems to be wasteful of resources. Every communications I've had regarding premium bonds results in two sheets of paper - one to throw away and one to keep :( When paying the 'prize' they treat each bond as a separate entity with regards administration. NS& must know that bond holder xxxx has won two or more prizes in a month and they only need to send one letter with the _combined_ prize value.

I bought 30K last November and got sent 6 5K bonds.

The minimum amount you can initially buy is 100 or 100 bonds as the bonds are 1 each. After which you can buy them in chunks of 10 or multiples of.

There was an article in The Times this week where it stated that the odds of winning a million on the pools was something like 1 in 6 million, of winning the jackpot on the lottery was 1 in 14 million but winning the million on the premium bonds was something ridiculous like 24 BILLION to 1. However, unlike the previous two you do get your stake back if requested.

"John Smith" wrote

That's better than **1 in a million**, if you have the full 30K in premium bonds!

[24,000,000,000 / 30,000 = 800,000]

Bitstring , from the wonderful person John Smith said

Nope. There is 1 million quid prize each draw, iirc. There are about 24 billion quids worth of bonds held - there certainly aren't 720 trillion quids worth .. even Gordon Brown hasn't quite managed to borrow that much yet (mostly because nobody would lend it to him).

I think, although could be wrong, that the 1 in 24 billion odds is IF you have the full 30,000. I will try and dig up the article from The Times.

Here is the article of a few days ago - can't find the url.

August 18, 2004

Easy Money

Luck of the draw remains at a premium By Anne Ashworth

IF ERNIE has not been in touch lately to inform you of a Premium Bond win, you may be pleased to hear that he is retiring. His look - Eighties game show meets glam rock - and his technology have been deemed out of date and he has been supplanted by a younger model; a piece of electronic random number indicator equipment for the 21st century.

But before you start saying things like "serves the old machine right for ignoring me", you should know that Ernie 4, the streamlined replacement that made its debut yesterday will merely select winning numbers much faster - there will be no answer to the enduring mystery of why some people never win.

The number selection is random, which should give each of the 25 billion bonds an equal chance of winning a prize (one in 24,000 in each monthly draw). Curiously, however, some holders never seem to get a sniff of a prize.

Yet the recent surge in sales suggests that millions think themselves born under a lucky star. Since the maximum holding was raised to

30,000 in May last year, more than 5 billion of bonds have been sold - the main reason why Ernie 3 has been superseded, as new 11-digit bond numbers will now be required. Doubtless this demand will please the Chancellor, for whom National Savings & Investments (NS&I), Ernie's controller, is a handy source of cash.

NS&I says that an individual with "average luck" who has purchased the 30,000 maximum should win 15 prizes a year - anything from the 50 minimum to the 1 million jackpot, and all tax-free. The odds against winning any prize each month is 5-4.

For any bond holder, the chance of scooping the 1 million prize is 25 billion to one. This may seem to compare poorly with the chance of winning 1 million on the pools (six million to one) and the chance of taking the main Lotto jackpot (14 million to one), but you do not lose your stake and all NS&I schemes offer a moneyback guarantee.

While your stake remains safe, however, you are gambling with the interest you would otherwise have earned on the cash. The amount paid out in prizes, as a percentage of the total invested in Premium Bonds, should compensate for this, but NS&I has been stingy of late. Next month, the rate rises from 2.6 per cent to 2.8 per cent, and to 3 per cent in October. NS&I is likely to respond to the latest change in the base rate with a further change to make Ernie 4 more competitive.

While you wait, why not check whether your bond numbers appear on the list of 350,000 unclaimed prizes, worth 21 million. Just visit

Ernie 3 may have smiled on you after all.

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Should you trust to luck? Grainne Gilmore considers the pros and cons of one of Britain's favourite flutters

And this from today's Times...

PREMIUM BONDS, a Fifties innovation, have become one of the favourite investments of the 21st century. More than 23 million people have certificates worth 27 billion stashed in their investment portfolios or bedside drawers.

Bonds sold in the past year account for close to a fifth of this total as investors who want to gamble without putting their cash at risk have turned to National Savings & Investments (NS&I), the executive agency of Government which operates Premium Bonds. There are now 150,000 people with the maximum 30,000 holding, drawn to NS&I's 100 per cent money-back guarantee. With "average luck", these bond holders should win 15 prizes every year.

The sixfold increase in demand for bonds has prompted NS&I to revamp Ernie, the electronic random number indicator equipment used to generate the winning bond numbers each month.

Ernie 4, which was unveiled this week, has been designed to cope with the new 11-digit Premium Bond numbers to be introduced next June. The new machine, which selects numbers using thermal noise, is state of the art, or so says NS&I. But are Premium Bonds equally impressive as an investment? From next month, the odds against winning a prize will improve from 27,500-1 to 24,000-1. The prize fund rate, that is the percentage of the amount invested that is paid out in prizes, will increase from 2.6 per cent to 2.8 per cent. For the first time, one million prizes, ranging from 50 to the 1 million jackpot, will be paid out - all of them tax-free, another attraction of Premium Bonds.

However, if you want to gamble, you would still be better off buying a lottery ticket. The chance of winning the Lotto jackpot is 14 million to one, but the odds against winning any prize on the lottery are

54-1. However, NS&I points out that Premium Bond investors can have their money back at any time - the only gamble where you do not lose your stake.

But Premium Bond gamblers are still playing a game of chance, not with their hard-earned cash, but with the interest they could be earning on it if the money was deposited in a savings account. For those whose numbers come up, the prize fund rate is the equivalent of interest.

In response to widespread criticism of the low level of the prize fund rate, it will rise again, from 2.8 per cent to 3 per cent, in October and then to 3.2 per cent in December. NS&I says that these increases reflect the upward direction of the Bank of England base rate.

But even when tax is taken into account, this new prize fund rate will still be below the returns available on market-leading savings accounts. The current best-buy account from cahoot, the online arm of Abbey, pays 5.5 per cent. After the deduction of tax, this is worth 4.4 per cent if you are a basic-rate taxpayer and 3.3 per cent to a higher-rate taxpayer - still better than the Premium Bond prize fund rate.

If you deposited 30,000 with cahoot, you could earn 1,650 in interest in a year. This would be worth 1,320 if you were a basic-rate taxpayer and 990 if you were a higher-rate taxpayer. If you opted for Premium Bonds, there is no guarantee that you could equal this or get anything at all, although there is the chance that you could win the 1 million jackpot.

The possibility that you may see no return whatsoever on your money means that independent financial advisers (IFAs) recommend that you think carefully before deciding to invest your cash in Premium Bonds.

Simon Farrant, of Towry Law, the IFA, says: "The traditional argument is that if you invest the maximum in Premium Bonds, your winnings should give you an average retun of about 3 per cent tax-free. But there are savings accounts available that will give you more interest, even after tax, and the certainty that you will receive returns on your investment."

Anna Bowes, of Chase de Vere, another IFA, acknowledges that Premium Bonds can provide a great deal of entertainment for those who win prizes regularly. "They are a fun way of saving," she says, "but those looking for regular interest payments should look elsewhere."

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"John Smith" wrote

This is, of course, rubbish.

A bond holder holding the 30,000 maximum premium bonds has a much, much,

*much* better chance of "scooping the 1 million prize" than someone holding just a single bond (possible, because the minimum holding was not always 100 - someone could have bought a single bond many years ago).

"John Smith" wrote

So, the chances of a 30K bondholder getting the million is :- 27,000,000,000 / 30,000 = 900,000 to 1. Still less than a million-to-1 !