The Lemon Fool

I am holding premium bonds and I hesitate to call them an investment as my return is only around 1% pa in prizes. I inherited a small amount of money and in lieu of knowing what to do with it (some will be spent) just parked it in NSI. A major reason for not taking the money out of them is the fall in GBP against AUD. I'm unwilling to exchange into AUD at these rates.

Anyone else use premium bonds?

Halicarnassus wrote:I am holding premium bonds and I hesitate to call them an investment as my return is only around 1% pa in prizes. I inherited a small amount of money and in lieu of knowing what to do with it (some will be spent) just parked it in NSI. A major reason for not taking the money out of them is the fall in GBP against AUD. I'm unwilling to exchange into AUD at these rates.

Anyone else use premium bonds?

Yes, on and off.

A sensible temporary home for cash, while deciding what to do with it, in my view.

I have noticed that they raised the holding ceiling in the last few years (I'm no where near it!) making the chance of returns for the small guy more unlikely

i don't think the max investment level makes any difference to the chances of an individual bond winning.
they have reduced the payout though
http://www.moneysavingexpert.com/savings/premium-bonds

AleisterCrowley wrote:i don't think the max investment level makes any difference to the chances of an individual bond winning.
they have reduced the payout though
http://www.moneysavingexpert.com/savings/premium-bonds

Depends on how they "pick"

If it's randomly selected from the bonds in play, the more there are, the less chance you have. I think.

It's not like the Lottery

Halicarnassus wrote:Anyone else use premium bonds?

Yes. My parents bought 2 for me in 1956. Never won anything, neither has my sister who was also bought 2.

Lousy investment

--kiloran

kiloran wrote:My parents bought 2 for me in 1956. Never won anything, neither has my sister who was also bought 2.

That's about right. Extrapolating from http://www.moneysavingexpert.com/saving ... alculator/ only about 1 in 8 people who held 2 bonds for 60 years would have won anything at all.

(The odds have probably changed over the years, but the implication won't be far off.)

Scott.

I hold some Premium Bonds. I've never been that excited by the prizes I get but I suppose it pays better than some other bank accounts I have so I should worry about sorting them out first. I normally get a prize or two each month.

Also, it would be nice if they just said how much I'd won in the email they sent rather than telling me I'm a winner and getting my hopes up.

A firm believer in PB here and also NS income bonds. I manage to return as much if not more than a ISA cash account but a major factor is the 100% guarantee of capital. If the government doesn't go bankrupt, that is.

A few years ago there was a lottery syndicate going in the office but after winning zilch for quite some time, I started up a PB syndicate to replace it. After about 10 years we had about £30k in it. Would we have won £30k in the lottery in that time ? Very unlikely.

The chances of winning a prize don't depend how many bonds are in play - the odds are fixed, each bond currently has a 30,000 to 1 chance of winning a prize. However there's only one million-pound prize, so the chances of winning that do depend on the number of bonds in play.

Geebert wrote:Also, it would be nice if they just said how much I'd won in the email they sent rather than telling me I'm a winner and getting my hopes up.

I've yet to get my advisory email for April 2017 but I can already see I have won via:

https://www.nsandi.com/prize-checker

You'll need Your holder’s number.

SteelCamel wrote:The chances of winning a prize don't depend how many bonds are in play - the odds are fixed, each bond currently has a 30,000 to 1 chance of winning a prize. However there's only one million-pound prize, so the chances of winning that do depend on the number of bonds in play.

I'm not sure you have the facts right and there are certainly two prizes of a million pounds each month.

RC

ReformedCharacter wrote:

SteelCamel wrote:The chances of winning a prize don't depend how many bonds are in play - the odds are fixed, each bond currently has a 30,000 to 1 chance of winning a prize. However there's only one million-pound prize, so the chances of winning that do depend on the number of bonds in play.

I'm not sure you have the facts right and there are certainly two prizes of a million pounds each month.

RC

Quotes from NS&I leaflet:

How are winners chosen?
Once ERNIE has generated the random numbers, we match them in order against eligible Bond numbers to determine the lucky winners. So, each £1 Bond number has exactly the same chance of winning, no matter when or where you bought your Bonds

Why do old Bond numbers never win?
They do win. But there are so many more new Bond numbers in the draw that it’s less likely.

Not sure those two are consistent.

chas49 wrote:Not sure those two are consistent.

But they are.

Let's say (figures plucked from the air) that there are 1 million "old" numbers and 100 million "new" numbers.

Each individual bond number has exactly the same chance of winning. But it's much more likely that the winner will be a "new" number.

Scott.

ReformedCharacter wrote:

SteelCamel wrote:The chances of winning a prize don't depend how many bonds are in play - the odds are fixed, each bond currently has a 30,000 to 1 chance of winning a prize. However there's only one million-pound prize, so the chances of winning that do depend on the number of bonds in play.

I'm not sure you have the facts right and there are certainly two prizes of a million pounds each month.

RC

Yes this was changed some time back from one 1 million pound prize to two prizes of 1 million in the same month.

As others have said, I do like the capital guarantee and the chance, even though that may be ever so slight, of winning a substantial cash sum. This is regulated by my understanding that the bonds are held at that level of capital only for the shorter term, as the money will soon be allocated elsewhere.

I do think though that when I am older I might use the premium bonds as an element of balance in my portfolio: as the cash element. You can basically get your money electronically transferred into your current account in a couple of days, so it's accessible enough to be called that.

I seem to be in the minority here, not having held any since the days when the limit was about £23000, and there were still reasonable odds of a regular £50 win.

IMO they are currently a very poor place to keep funds.
Do holders think that sentimentality is playing a part?

baldchap wrote:I seem to be in the minority here, not having held any since the days when the limit was about £23000, and there were still reasonable odds of a regular £50 win.

IMO they are currently a very poor place to keep funds.
Do holders think that sentimentality is playing a part?

Well the average "interest rate" is still over 1% (it would be a bit less if you discount the possibility of winning £1million). That's certainly comparable with, if not more than, instant access savings accounts or cash ISAs.

Scott.

Hi Baldchap
Definitely sentimentality. My Dad (God rest his soul) had a fair old whack of them and I figured that until I get round to using the money he left me, I'd keep it in the NSIPBs until I need it. I also want to wait until there is some weakening of AUD against the GBP before I send it all to the antipodes.

Halicarnassus wrote:Hi Baldchap
Definitely sentimentality. My Dad (God rest his soul) had a fair old whack of them and I figured that until I get round to using the money he left me, I'd keep it in the NSIPBs until I need it. I also want to wait until there is some weakening of AUD against the GBP before I send it all to the antipodes.

Halicarnassus, I think it is one of these things in the national psyche We all trusted ERNIE, we grew up with him.
1% is just insulting though isn't it?

As Scott suggests, some may like it as an alternative to an instant access saver. But not for me.
No doubt one of you will win the million next month just to teach me a lesson!

baldchap wrote:

Halicarnassus wrote:Hi Baldchap
Definitely sentimentality. My Dad (God rest his soul) had a fair old whack of them and I figured that until I get round to using the money he left me, I'd keep it in the NSIPBs until I need it. I also want to wait until there is some weakening of AUD against the GBP before I send it all to the antipodes.

Halicarnassus, I think it is one of these things in the national psyche We all trusted ERNIE, we grew up with him.
1% is just insulting though isn't it?

As Scott suggests, some may like it as an alternative to an instant access saver. But not for me.
No doubt one of you will win the million next month just to teach me a lesson!

I'll buy you a pint if I do. Only £25 this month so a wee bit off the million! Yes the return is naff but I'm aware of that and it suits purposes at the moment. I would probably have cashed most of them in by now but with BREXIT and the pound slumping simultaneously against a strengthening AUD$ I reckoned that there was no hurry. I expect the pound to strengthen significantly against the aussie this year. Partly due to a weakening dollar here in Australia, but also because I think the pound will pull out of its slump.