Premium Bonds - £30k in 1 block or multiple blocks?

[The Dent Guy]

I know a number of you have Premium Bonds so, while the bank interest rate has dropped so badly, i figured it was a good time for a punt on these myself.

I know that any number is capable of being drawn but, statistically speaking, newer numbers are more likely to win a prize and those bought in blocks of consecutive numbers are also more likely to win. Also, the full whack of £30k is even more likely to win a prize - (not guaranteed of course).

So, my question is, are there any statistics out there which show the difference between buying £30k in one hit or £30k in multiple blocks of £2k or £5k or whatever etc etc?

 

[gbjeppm]

I thought I read somewhere that as the interest rate has dropped, then so has the number of premium bond prizes accordingly!!!

As for your question, i have heard differing theories from people, but don't have any stats for you.

 

[The Dent Guy]

Yes i heard that too - im treating it as a punt, while bank interest is so awful.

 

[crockers]

Have a look at this

http://www.moneysavingexpert.com/savings/premium-bonds-calculator/


Good luck

 

[nigel cross]

Between myself , dad wife and brother we have £90,000 worth, but the winnings are getting less and less, no one has had a large win, over £100.
Average between us all is £200 per month

 

[mw_C32]

I've done the same.

In six months I have won the equivalent of 5% interest on my 30K. All tax free too.

I heard it was better to buy in batches so I bought 6 x £5K lots over 6 days.

I have not won on one month so far........

At least should the need arise I can get the money back fairly quickly and it's pretty much guaranteed.

Always the chance of a big prize and unlike the Lotto I get to keep my original punt. Stuff the banks.

Good luck.

Mark.

 

[trapperjohn]

Some of my better off friends (touch forelock) kicked off with max holdings in one block. Now they have moved onto smaller blocks of holdings, but with the same capital. (Oiks like me dont know what split) If a block is not winning they will take it out and reinvest it back and lo and behold up pops a 50 win (or more) on the new block. Stiring the pot they call it. I should be so lucky.

 

[Stratman]

Some of my colleagues are freelance and they use Premium Bonds to 'store' the tax they will eventually have to cough up. No big wins but they do stand the occasional round in the pub.

 

[scumbag]

each bond has an equal chance of winning, but unlike a lottery, if you buy the full 30k worths, you will have 30,000 consecutive bonds.

So you have 30,000 chances of getting win. if you have 6 blocks of 5k, each block has 5000chances, and you have 6 of them.

if your numbered bond was selected, it would have more chance of being yours in a block of 30000 consecutive numbers, than splitting them 6 times.

There is definantly merit in taking them out and reinvesting them every 18months or so. ERNIE works in an unusual way, and the reasons they tell you they don't delete old numbers is...........well basically, it selects from numbers it knows are valid. it does not select bonds that are cashed in.

Numbers is also letter in the case of Bonds. I think it running new bonds with 11 numbers/letter now.

With interest as it is, you will not lose much money, if you invest in this for 18months and see what happens. In fact, over 18months at 2% its about 900.

You may easily win that in the 18months. you may not, but you still have the £30k


Nothing ventured, nothing gained.

But its about 70million to 1 you will get the jackpot, so don't hope for it.

I had £25k in for 12months and won £850 all in £50's. Cashed them in for the flat deposit last september.

 

[Dieselman]

Between myself , dad wife and brother we have £90,000 worth, but the winnings are getting less and less, no one has had a large win, over £100.
Average between us all is £200 per month

That's still 2.6% tax free. Pretty good at the moment.

 

[The Dent Guy]

Some of my better off friends (touch forelock) kicked off with max holdings in one block. Now they have moved onto smaller blocks of holdings, but with the same capital. (Oiks like me dont know what split) If a block is not winning they will take it out and reinvest it back and lo and behold up pops a 50 win (or more) on the new block. Stiring the pot they call it. I should be so lucky.

if your numbered bond was selected, it would have more chance of being yours in a block of 30000 consecutive numbers, than splitting them 6 times.

Difference of opinions here........

Is anyone aware of any statistics which show one way is "theoretically" better than the other?

 

[Dieselman]

It's random in the fullest sense, ERNIE works like a bingo caller, it doesn't have the numbers stored.
The odds are 36,000 : 1 of a win (minimum £50) giving 2% tax free.

See
http://www.nsandi.com/products/pb/surprisingfacts.jsp

 

[nigel cross]

But if you cash them in and re-invest back with new numbers you miss out on a months draw, as new numbers aren't put straight in, but wait one month

 

[The Dent Guy]

I'm aware its totally and utterly random but, statistically speaking, one way might be better than the other. Just like saying 1,2,3,4,5,6 could be the next lotto draw as thats also totally random - however, statistics taken from past history might show that one or several particular numbers are more likely to come up.

In essence thats what im asking. Does history show 1 block or several blocks to be the more successful?

 

[Mr E]

I'm aware its totally and utterly random but, statistically speaking, one way might be better than the other. Just like saying 1,2,3,4,5,6 could be the next lotto draw as thats also totally random - however, statistics taken from past history might show that one or several particular numbers are more likely to come up.

In essence thats what im asking. Does history show 1 block or several blocks to be the more successful?

That's a common mistake to make in thinking about probabilities in "lotteries". The stack is reset each time and so the probabilities reset each time too.

I'd have to go away and crunch some numbers to make absolutely sure but there should be no reason why a block of numbers have a different probability of a win as compared to a random distribution...assuming that it is a random selection process.

 

[Dec]

In essence thats what im asking. Does history show 1 block or several blocks to be the more successful?

There is no answer to that question, yes someone could analyze the results and say yes 1 block did better in 2007 but several blocks did better in 2008, but the are just statistic, the results of the law of averages.

If you through up a coin 30k times, statistically it will be heads 15k times and 15k times tails if the result is different then that’s down to luck.

I did the same as yourself, I got one block, I don’t think it will make any difference what way you buy them, so far I won 2 X €75, (Irish Prize Bonds) I expect, statistically or with luck to make about €500 and save about €250 by not buying Lotto tickets.

Dec

 

[robert.saunders]

I love statistics. Did you know a 2-legged human being has an above average number of legs!

 

[wemorgan]

I love statistics. Did you know a 2-legged human being has an above average number of legs!

The mean average but not the model or median.

 

[scumbag]

its not as random as they lead you to beleive.

ERNIE does not select all the bond numbers issued. It only selects bonds that are current. Cashed in ones do not come out in the draw for obvious reasons.


From a statistic point of view, you have more chance of a big win in the lottery than Bonds.

However as I stated. You can buy a 30k block. This gives you 30000consecutive numbers. Each one has an equal chance of being selected at 70million to 1 or whatever it is.

Look at it like this.

You have number 1 to number 49. if number 2, or 48 come out. you will win a jackpot. if any number from 50 onwards comes out, you will get nothing. With the lorrery you have to pick 6 numbers, and hope the machine picks the same 6.

ERNIE randomly selects numbers and displays the 6 figure bonds, first, then 7 and so on. So if it selects a number within your 30000 consecutive number you will win. Your bond that won had as much chance as any other. but you have 30000 attempts.

Its a bigger dartboard to hit thats all.

If you have 6, 5000 bond dartboards, you spread your chances over a greater area, but you have 6 more times of the dart missing your block too.

If you have 30 x 1000 bond blocks. you have 30 more chances of it missing your selection. But each bond still has an equal chance of winning. The chances of a bond coming up don't alter if you have more, or less. You just have more chance of it finding yours.

Which is easier, hitting a moving target, or a fixed object. You fixed object is 30000consecutive numbers. or you can have 6 seperate fixed targets, or 30 smaller fixed targest, on indeed 300 smaller still fixed targets. If you buy them all in the same month, you will give someone else a chance to win in your bracket of numbers unless you group them all together.


I had 1 block of 5000 about 6 years ago. over 2 years, it won £250. Also over those years I kept reinvesting the wins, and added to them until I had 7000 bonds. All the wins came from the 5000block. Nothing came from the others


If you have a block of 30000. they estimate you will drop lukcy 8 times a year. (Thats with a random number generator? Interesting point) however, if you have less, you will win less.

You can prove this by doing the following.

Invest either 20k or 25k in one block, and the rsst in stages. One 5k block and maybe 5 1k blocks and see what happens in the year.


By taking them out and replacing them its submits new numbers to the end of the line and deletes the old ones. For some reason it seems to help, even though is random.......


same as if you write to them and ask if your old bond has won anything. Suddenly you find it comes up with a £50 win during the year.


Its electronic, it doesn't do Random in that sense. Whats random about it is, it is not programmed to pick a specific number, and it is unable to pick a specific number. However it is only programmed to pick from a range of numbers that cover all current bonds.

If it was genuinely random as people are led to beleive, it has a excellant habit of always picking a winner every month.

When you see a bond number, you will see that the statement they make about it picking a number, and the bond closest to matching that is selected, really isn't that accurate.

Wehn you see how many people are investing in it, you can see why your chances of the big win and pretty small indeed. But you do get to keep the investment so you only lose any possible interest on the money.

Its worth it, as its a safe way to gamble really.

But I say again, don't hope or expect the big win. a 1 in 70m chance, really does mean you have a better chance of being runover by a bus. There are only 60m or so people in the country.


invest in it for 12months and see.

I don't do the lottery, but at the moment money is not as free an commodity to me, so I am saving up for some bonds. I will buy 5k worth, then when I have another 5k I will cash in the first lot and buy 10k block, and so on. Or maybe I will buy a merc instead.

Check the winning number of ceefax, bbc 2 i think. gives you an idea of the bond holdings that generate the win. and the lucky people too.

And being lazy, one cheque for 30k is easier to write than 6, or 300 etc.

 

[The Dent Guy]

Thanks buddy - for an amazing summary.