Premium Bond withdrawal & reinvestment

[pabenny]

Just because the prize fund is 3%, doesn't mean an average holder earns 3%. The handful of big prizes swallows up a good proportion of the total, leaving that much less for the majority.

Leaving aside the "fun" element, the only virtue of premium bonds is that winnings are tax free.

[Richard Frost]

Premium Bond prize rate increases to 4%

https://becleverwithyourcash.com/premiu ... -hack-more

[planteria]

good news. my £100 will on average bag £4/y

[pabenny]

good news. my £100 will on average bag £4/y

Actually, it won't.

Because a big chunk of prize money goes to a tiny number of big winners, the median average (ie what most people get) ends up being lower than the headline rate.

[Sarah]

I recently topped up my holding. Looking forward to winning that £1 million!

[blythburgh]

I recently topped up my holding. Looking forward to winning that £1 million!

In the same way you look forward to winning the Lotto jackpot as well, Sarah I am sure. I used to know someone who used to buy lotto tickets and always doubled their stake if it was a rollover "to give themselves more chance of winning". They really did believe more tickets gave them more chance, which it did but not in any meaningful way

[Sarah]

I don't play the Lotto. I purchased a ticket for the first ever draw (partly because it also happened to coincide with another significant date for me) but that's all, no more in the 29½ years since then!

[planteria]

good luck with your PBs Sarah.

Actually, it won't...the median average (ie what most people get) ends up being lower than the headline rate.

why you'd want to quote the median average in response to my comment is beyond me, but ok pab.

[pabenny]

To make the point that although the prize fund is 4% of the value bonds in issue, that doesn't mean that holders will earn a return of 4%, even those with large holdings.

A few premium bond holders, very few, will earn more than 4%. Most will earn much less.

The prize fund for the national lottery is approx 50% of stake money but average (mean) winnings are tiny because most of the prize fund goes to the jackpot winners.

[planteria]

all of that is well known amongst the contributors here, i'd have thought.
fwiw 'average' means 'mean' to me.
if i bag £25 on my £100 i'll be very pleasantly surprised.