The odds against an individual bond winning a prize in each draw are given as 28,500 to 1. The holder of one 1 bond (still possible if acquired before the 100 minimum) can, on average, expect to win once every 2,375 years!

So failing to win within a lifetime should be no surprise. To win once every 25 years, one would need 95 bonds. So the buyer of 100 worth should not expect more than three prizes in a lifetime.

For a holder of the maximum 20,000-worth, the odds against winning in each monthly draw are a much more appealing 1.425 to 1. More often than not, that win will be 50, but the likely frequency of wins (more than eight per year) means that if you can afford to put aside 20,000 for a few months or longer you can expect some visible returns quite quickly, albeit mainly small ones.

When I last held 20k-worth of them, the frequency of wins averaged 12-13 per year, and I did get some 500 and a 1000. But the prize allocation gets varied to match current interest rates. So this week's cut in bank rate might soon bring another slight reduction in the expected return.

It used to be possible to purchase just one bond. Nowadays the minimum is 100. I reckon the best bet is to hold at least half the maximum, so you get to see a few prizes and can dream of the biggie, or to hold just a token few, so you still can dream but don't wastefully tie up capital for something unlikely to happen in your lifetime. The worst option seems to be to hold several hundred or a few thousand, where you stand few chances of winning while alive but tie up money more useful elsewhere.

Edit: Prize fund being adjusted downwards again from June 2003, in line with recent falls in interest rates.

I have had 10k for 3 months. First month I won 500, second month 50. I also have about 10 that I have had since I was a baby (40+ years), and have never won anything on them.

Morning Jeff, you're up and around early for a Saturday.

I've 8k in bonds and win around 4 or 5 times year on average. Usually 50's but had the odd 100. I've two 50's this month but not received them yet. Still waiting for the postman. My wins are automatically reinvested so don't arrive till mid month, usually around 20th.

At 1.425 to 1 (ie 57:40) the chances of a 20k holder winning in each draw are around 38 times better than winning a prize with 1 in each Lotto draw, where the odds against are 54:1. And the minimum prize with bonds is five times bigger. And one gets ones stake back afterwards. So, no contest - as long one doesn't mind temporarily tying up 20k and foregoing whatever interest or profit one might have gained on it elsewhere.

I've held 27 worth since 1972 (I think my granny gave them to me). I have won 4 times (2x50 and 2x100). So if there is any mathematical bod out there, can work out the actual return.

27 held for 31 years, return 300. I have to say that 3 of the 4 wins coincided with me changing my address (each time I won within 3 months).

I believe premium bonds to be as good an investment as anything these days for spare cash.

Obviously the larger your holding the more likely you are to achieve the current average 2.4% tax free return over a shorter period of time (equivalent to 4% to a top rate tax payer?)
I stuck the max in to mine and my wifes name in Nov 02.
This was money we did not need till Oct this year and wanted it somewhere rock solid safe.
First eligible for draw in Dec 02 and so far 4 x 50 wins. Wow :)
Too early yet to say if I would have got a better return from a 1 year bond which I could have got at 4.25% before tax at the time.
However it is exciting when that letter arrives and you eagerly open it to see if you have hit one of the biggies.

Not the most sophisticated use of capital but a safe resting place for spare dosh with an element of fun involved.

Not the way to build a long-term capital growth plan but maybe as a % of a balanced portfolio of investments when yield and risk aversion is more important than capital growth one to consider.

I did read somewhere that they were thinking of trying of revamp the scheme with the national lottery was declining, to make it more attractive to people as a home for peoples money with that element of the dream of 1m coming your way.

Addo
I think that's about a 3.6% return.
What may have been interesting is if you had reinvested it it to get a compounding effect
M

Think you've sussed it Addo... keep moving house!
With 27 you should with average luck expect to win once every 88 years - so you are way ahead so far with 4 in 30 years.

You don't have to wait for the postman these days.

Put your holder's number in at this address to check your luck at the start of every month.

PlanB - it would be nice if they could link that to an email alert when numbers match. Maybe that's asking a bit much of old Ernie.

And check the big winners listed so far for THIS MONTH

O another 50 this month but not the sense of anticipation of opening a letter :)
I think I will stick to awaiting the letter.

Y'know.. I think I've just talked meself into reopening an account.

The advantage of knowing you have won by checking the website is that you are watching for the letter. You can do something about it if the letter does not arrive!

The big monthly prizes are also posted on C4 Teletext page 499 and Ceefax page 290, usually on the day they are drawn.

Socrates
You're just trying to spoil my little bit of fun :)
Point taken will do it later in month as a check.
M

I ahve about 500 and have so far won 150 in 2 years. Good return I reckon

Good home for cash if you're a 40% taxpayer I reckon. Pity the odds now make the 100 prizes rare, but I've had 2 x 50 in the same month that'll do nicely! :) a7

Received another 50 this week, thats three prizes in the 3 months I have held my 10k, prizes total 600.

Nice!

Odds lengthening from 1st June from 1:28,500 to 1:30,000 per bond per draw. Notional Interest rate down from 2.4% to 2.25% (tax free, worth 3.75% to 40% tax-payer).

Well i have just bought some more today, although im not usually very lucky with this sort of thing!

Bought some on last day of Feb, so I catch the April Fools Day draw :-o

I won 500 a couple of years back and a few 50 prizes so I like premium bonds as an investment.

Got another 50 this morning

enjoyed reading the life experience...informative thread guys...

They're going to reduce the prize fund again from November 2003 to 2.15% tax-free (worth 3.6% gross to higher rate taxpayers). Odds remain 1:30000 per month and maximum holding 30000 each.

OLDCRAFTSMAN.
Have just cashed my last 5000 Premium Bond to pay for a building extension.
At one time I held 20 grands worth for about 5 years, and the largest win I had
was 100, mostly 50. After carefully calculating the percentage yield, I came
to the conclusion the return would have been better in a Building Society.
My investment is now in higher yielding dividend shares in the Stock Market.

I too cashed in almost all mine and diverted the money elsewhere - using it to take advantage of the upsurge in smallcaps in recent months. These in turn will be sold off as they peak (which many of the less deserving ones are now doing imo), and held ready to make the most of the best short-term upward swings in those few smallcaps that do continue climbing.

Some years ago, I bought 16ks worth. In the first year they did very well - my rate of return was well above the current building society rate. However, in the whole of the 12 months of the second year, I only got two 50 prizes. I found this somewhat odd, and would have thought that the law of averages would have been somewhat fairer than this.

Consequently I sold all but 150s worth. I got a cheque on Friday for 50 on this holding - first for about 5 years - which was a nice surprise.

IMHO, its nice surprises like this that make it worth holding a few quids worth, you are in with a chance for a biggie, and unlike the lottery you do get your money back. I wouldnt myself stash a large amount there at present as it looks as the returns are too uncertain.