Savers prefer premium bonds. As a nation we have £111 billion in the UK oddball savings lottery and for many it is an option to put extra cash aside, especially if it is for children or grandchildren.
We know we probably won’t win £1 million – though casually dream it anyway – and realize that we’re unlikely to get one of the rare £100,000. Prizes of £50,000 or £25,000, but it is the small victories that keep us going.
Yet, according to a new research, they may be harder to come by than you think. It stated that someone with a holding of £1,000 would wait 213 years for a better than 50:50 percent chance of winning the £50 prize.
All we need is a little patience: premium bond savers may wait longer than you think to win any prize of £50 or more, according to new research.
Crunching numbers by data scientist Andrew Zelin tried to convert a 1 percent premium bond fund rate into publicly available data from the NS&I – which is equal to the average interest rate return – which people refer to in terms of their chances of winning. can understand. Prize.
It was commissioned by the Family Building Society, which is noting it has a vested interest in the subject, thanks to its rival Windfall Bond Savings Product.
Who has won the big one?
Our premium bond tables, updated every month, show the details of the major monthly prize winners, ranging from £1m to £1,000.
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Instead of choosing how long it would take for a guaranteed prize, it focused on a better 50:50 chance, i.e. you have a higher chance of winning, and yielded some compelling results.
Someone with £1,000 saved in premium bonds should theoretically win £10 a year based on that 1 per cent rate, but they can’t really do that with the smallest prize being £25.
Instead, the research showed they would expect to wait two years before receiving a letter stating they had won £25.
This requires some patience, but they will need to be patient and defy the laws of nature to have a reasonable expectation of reaping a big reward.
A saver with £1,000 would be expected to wait 213 years to have a more than 50 percent chance of winning £50 or £100; 1,155 years to receive the £500 prize and 3,466 years to win £1,000.
It doesn’t make sense to continue listing beyond that, but if you’re interested the expected wait is 3.2 million years for a better than half chance of winning £1 million of £1,000 in bonds.
So, how long will it take you to win a £50 prize on a premium bond, even if you have a large holding of £15,000?
In fact, that saver with £1,000 would expect to wait 94.7 years to win any prize of £50 or more.
I know what you’re probably thinking here – and that’s what I thought when I first read the research.
‘Ah but, I have over £1,000 in premium bonds…’
So, how long do you believe you’ll have half your chance of winning a £50 prize on the premium bond, even if you have a large holding of £15,000?
According to Mr. Zelin’s research, just over 14 years.
Meanwhile, the £500 letter in the Post from NS&I will be celebrated once in a lifetime, as it is expected to arrive only after 77 years.
Even someone with a maximum of £50,000 in premium bonds – and an expectation of a return of £500 per year – is 4.3 years to win a £50 prize, 23 years for £500 and 69 years for a £1,000 windfall. Will wait
The table shows how long premium bond savers with varying holdings will wait for a better than 50:50 chance of winning certain prizes
Apart from meeting our love Premium Bond stories and conspiracy theories (Only new bonds win etc.) What’s the point of research?
The report noted that while the NS&I is completely transparent on the probability of winning the same bond every month, this may not be the most meaningful way for the lay public to understand premium bonds.
It states: ‘An alternative way of presenting this information involves converting it into a period of time for which an investor with a certain bond holding level has a 50/50 chance of winning this particular prize. Have to wait first.
The results are certainly arresting, but will they dampen our love of premium bonds?
it’s unlikely. Even cuts in rates and rewards have done little to dent their appeal.
Surely there are many people with large holdings who are better off investing their money to get better returns.
Still, premium bonds are a good way to save relatively easy access cash in a 100% government-protected account with a decent nominal interest rate return (1 percent beating the best easy access deal at 0.6 percent).
The icing on the cake is the hope you can win the jackpot, with the caveat that you almost certainly won’t.
As someone who puts my rainy day funds in premium bonds, so a reasonably large investment, the research highlights the importance of the £25 rewards.
They may not feel very exciting, but they are what continue to drive long-term principal returns.
In the meantime, I’ll keep dreaming and catching up on stories like the lady of Devon who won £1 million in August with £1,001 in premium bonds Bought a year ago.
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