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Premium Bonds is it a big con.


Fisherman Mike
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I know the value of holding is proportional to the chance of winning a big prize...but there never seems to be any winners of larger prizes of people who hold just a few pounds worth and there must be millions of them out there...I would have thought every child born in the 50's and 60.s would have at least one bond . !!! Something not quite right with this. :no:

 

Is this just a outdated con trick. ???

 

http://uk.finance.yahoo.com/news/premium-bonds-winners-in-february-131730817.html

 

 

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I have held Premium Bonds for many years, going back to the '60s, in varying quantities.

As a no risk place to put money, with the incentive of winning cash prizes, I can't think of a better option.

I kept a record of a couple of years in the '90's and I believe the cash prizes were 6 - 8% of the capital invested , which then was not a bad return.

 

My only criticism of Premium Bonds is that the lowest amount you can buy is £100, which puts them a bit above the Birthday/Christmas present level to give to children.

 

Unlike a lottery, you don't lose your investment.

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We held the maximum for a few years until the money was re-invested. Most months there was a cheque in the post and the return overall was slightly less than that paid by an on-line instant access higher interest account that was available at that time (even allowing for tax free status).

 

Having said that, there was always the chance of "the big one".

 

At the same time, our daughter had £500 in and only won once. But it was £100!

 

It is generally acknowledged that holding the maximum and selling/re-buying on a regular basis does seem to increase the odds, even though it shouldn't.

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I was over the moon reading the winners page a while back! Someone had a small amount bought in the 60s IIRC between £1 - £5 and took the top prize! I felt VERY happy for her! She probably forgot she even HAD the darn thing! Bet she got a very nice shock when she found out. :yahoo:

Edited by Lord Geordie
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There are wins for those with small amounts, more than you might think for. On old friend of mine scooped a big prize in the early 70s on a tiny holding and it paid for his private education. However, it all works out according to the laws of statistics.

 

 

http://www.nsandi.com/about-nsi-regulations-policies-and-procedures-freedom-information-detailed-premium-bond-statistics

 

Nine times more people have less than £5k than over, but this group is 9 times less likely to win as they hold less than 10% of the total bonds.

 

A £100 win on a £100 holding is the equivalent to over 70 years of expected 'prizes' at the current rate of return.

Edited by yod dropper
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I had quite a bit in it and used to win every other month. Normally just 25 pounds,nothing big though.

Then all the wins stopped,I was lucky to get one a year so decided to pull most of the money out.

Think I just have 3k left in but I will be pulling that out soon.

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I was over the moon reading the winners page a while back! Someone had a small amount bought in the 60s IIRC between £1 - £5 and took the top prize! I felt VERY happy for her! She probably forgot she even HAD the darn thing! Bet she got a very nice shock when she found out. :yahoo:

 

Probably be quite surprised at the number of people who have forgotten they had the bonds, particularly in small quantities, who never advise their new address when they move house!

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I've just organised a £25k investment for my mum after she sold her house...

 

Odds of 26,000 to 1 of winning a prize. Not great, but there's always a chance she might get one of the bigger prizes.

 

You can nominate a bank account and any prizes get paid automatically. You also choose whether to be informed by letter or by email.

Alternatively, the old cheque.

 

She wanted the money somewhere reasonably easy to get at, but which might prove 'interesting' :D

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As Chris B said you need to cash them in and get new ones about every two years , statistically every bond should have the same chance of winning ,but it seems new ones do better. We bough £10k worth in Nov and so far had two £25 wins and a £100.

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