Premium Bonds as an investment?

..just to rewind a bit....

shows the largest number of prizes issued are £50s, not £100s.

Is this link not up to date?

Thanks all for answering and yes I should have done some research first. One other question: the bonds are constantly being compared to an "ING" what's that?

"curiosity" wrote

Saying "this time it might be you" made it sound (to me) as though the envleope could contain the million prize. Which, of course, it **never** will ...

Never say "never" :-) You've about a 1 in 20 billion chance......

Anyway, for the interested, I doodled the code I mentioned earlier. It's in perl and dirty & *exceedingly* inefficient. But I've run a simulation using the web figures for last Dec, assuming a holder of 6000 bonds and asking for the return in a year. Did that about 170,000 times to get the prize distributions. Code and results are at

(I hope it's right - the results look not unreasonable, and I'm happy for anyone to eyeball the code!) The most likely yearly return for a holder of 6000 bonds is £150 (probability just under 20%), but there's a fairly broad peak - 15% chance of exactly £100 or £250. £6000 invested at 5% less basic-rate tax is ~£240, and you have a chance of around 40% of getting this or more in a year from ernie instead.

E&OE :-)

ING Direct - a Dutch bank operating in this country. They're currently offering a no-catch 5% interest savings account.

Not really. The timing of the receipt of the envelope is indicative of the size of the win. If it comes about the 16th (as they always do) it is at most a cheque for 100 quid.

If you get a big win you don't get an envelope, but a knock on the door (so I'm told, sadly).

tim

In message , curiosity writes

It is up to date, but that wasnt my point.

Apparently, research for the National Lottery and the experience of National savings is that it is the prospect of the big prize that pulls in the punters, not an increased chance of winning a smaller prize.

"We did some research recently which indicated that of all the people who used to play the Lottery once, but no longer do so, or who have never played the Lottery, 75 per cent of those would play again if, one or a combination of these, all profits went to good causes, there were better odds of winning a million and there were more smaller prizes. "

I didn't realise that - I'll avoid telling the other half, it'll only dampen the excitement. ....then again people do occasionally knock on the door....

"Mike Scott" wrote

Currently, even someone with the maximum 30K holding still has *zero* chance of an envelope containing a million prize. Unless, of course, they change the rules....

"curiosity" wrote

I've quoted, not authored the paragraph. It's at:-

If he'd been successful you could reasonably have taken issue with Richard Branson who tried to wrest control from its existing operators and promised a 'no profit' lottery,

Don't you remember that?

In message , curiosity writes

&

"The risk is actually staying with a game which in our opinion does not work in the long run for the size of population we have. The current game gets very, very few rollovers and the game we are introducing will get three, four, five triple rollovers a year and that is what gets the excitement going with the Lottery. We believe that the game needs to be changed. We believe that the new game we are introducing, which will make many more millionaires and will reduce the odds of becoming a millionaire from 50 million to one against to three million to one against, is something which will be popular. It will be easier to become a millionaire playing the Lottery now than premium bonds or the horses, so the odds of becoming a millionaire would be increased."

But here they're talking about the attraction of rollovers (I didn't mention those and neither did you) and, of course, the utterly obvious appeal of having more millionaires. But they also very specifically say - it couldn't possibly be any clearer, and they say it in the *concluding* paragraph - that more smaller prizes will result in greater participation..........which negates your assertion that:-

"...it is the prospect of the big prize that pulls in the punters, not an increased chance of winning a smaller prize."

To put it another way, and paraphrased exactly in your language, they say:-

"...it is the prospect of the big prize AND the increased chance of winning a smaller prize that pulls in the punters"

In message , curiosity writes

I am sure your quote is right but Im struggling to find it in the report, can you post the exact link?

How about with a £100 worth? I have had around that number since 1967 and never won any prize at all. In almost 40 years.

MM

it's the link I've already given you:-

item #157, penultimate sentence,

"....more smaller prizes."

MM wrote: ...

*Assuming* my code is correct: for 100 bonds, and after doing 10,000 test runs to get the distribution, I make it (per annum) p(£0) = 95%; p(£50) = 4%; forget anything more. Chance of winning nowt in 40 years isn't slim: p(£0) p.a. is 95% => p(£0) in 40 years is about 13%. Not negligible.