premium bonds, yay or nay ?

If you're a high rate taxpayer and buy the max amount it ought to be worth it, 'cos that's enough of 'em to give you a reasonabble income. Otherwise, the prize money "interest rate" ain't too good, and with fewer bonds it's a gamble, but better, of course, than the lottery.

Putrid poetry, dismal doggerel, extrava-stanzas...

"Tiddy Ogg" wrote

In what ways do you think the lottery isn''t as good as premium bonds?

In message , Tim writes

I like the ad "Guaranteed to win! (or your money back)"

Exactly, which in low inflation times is a fair compensation. Study the odds of wining the lottery.

Putrid poetry, dismal doggerel, extrava-stanzas...

Well it's different - at least with Bonds you can't lose your money.

One strategy I have seen discussed here before is to invest the money in somewhere like ING and put the interest into Lottery tickets.

Andy

"Fred Smith" wrote

Yes, but you have to invest huge wodges of dosh to get the same chances of winning a jackpot - and so lose lots of interest on that wodge! Try comparing the interest lost against the cost of lottery tickets -- quite similar, for similar odds of winning...

Teehee! Yes, they can sure pretend that makes it much better, to people who don't understand!

"Tiddy Ogg" wrote

I have - very similar odds for winning the jackpot for the same money "spent" either way (ie **interest lost** by buying premium bonds, or

Really? Does your "interest lost" figure make allowances for the "interest earned" from small PB prizes, bearing in mind they're tax free? Isn't received wisdom that -at least for higher rate taxpayers- expected winnings from PBs are broadly equivalent to net-of-tax interest from a typical savings account?

"Ronald Raygun" wrote

Yep; for me, that "interest earned" is only around *half* of the "interest lost" figure...

"Ronald Raygun" wrote

Depends on your other circumstances, I suppose - even higher-rate taxpayers can effectively obtain (the equivalent of) tax-free, high interest savings a/c's via offset mortgages. ;-) [And even someone with a non-offset mortgage could probably hold a lower mortgage loan balance if they didn't invest in premium bonds!]

I dare say there will be one or two HRTPs who've long since paid off their mortgages. Where should *they* stash their cash?

We don't *all* have mortgages you know!

If you have some cash lying about and no debts to spend it on, then why not? There is some chance of a win, the worst way your money has reduced by inflation. I understand that the trick is to cash in your bonds and buy more on a regular basis (yearly?) As although there should be the same chance of winning with any age ticket, it appears that newer ones are actually more likely to win !!

I have recently taken an interest free CC loan and bought some bonds with it. I shall repay the cc (ON TIME for anyone that read my thread on MBNA recently) from other sources and leave the bonds for a while and see what happens.

There was a thread a while ago (on here?) about buying the maximum amount of pbs and how much the winnings came to, it was a little over normal interest for the first year or so, then tailed off, so the poster said he would cash in and repurchase, I don't recall seeing the follow-up.

mrcheerful

"mrcheerful ." wrote

That's probably the worst thing to do - every time you "cash in" and then immediately "re-buy" the bonds, you miss one month's draw. So doing this yearly, you'd only be in 11 of the 12 draws each year.

"mrcheerful ." wrote

You appear to be confusing the fact that more of the prizes are won on newer bonds (true), with the impression that newer ones are more likely to win (false). It doesn't follow!

Eg - suppose that only 10% of all current premium bonds are more than 5 years old (I don't know the actual distribution, but this supposition illustrates the effect). You'd then expect 90% of the prizes to be on bonds purchased in the last 5 years. That's even when the chances of winning are the *same* for every bond in existence.

Lots and lots of premium bonds have been bought over the last few years, so fuelling your (erroneous) interpretation of the results.

"mrcheerful ." wrote

My own bonds produced over 25% *more* prizes (monetary value) in the

That is very useful information, as you can see I am conducting my own investigation at present. Have you actually worked out a profit percentage by year on your own investment?

The case I mentioned above was probably on this newsgroup about a year or so ago, the writer detailed all the prizes, month by month and had calculated the returns which were a bit above what could be expected from normal interest paying investment in the first year. IIRC

mrcheerful

It wasn't me - but I purchased £30K of bonds in June and won 2 x £50.

mrcheerful . wrote: ...

I've recently run some simulations for various numbers of bonds, looking at likely rates of return. IIRC on average the most likely return is about 2.5% in one year, if you hold in the thousands. The curve is pretty broad though. If there's enough demand, I might even write up and publish the results: they could do with some independant checking :-)

Heres some good odds for you...prize winning list for September,,perosn in Ireland buys £500 prem bond in May 2005,september

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