Prize Bonds are looking attractive alternatives to deposits

Just dropped in to see how things are going. The Ghoul -- I'd say you're looking good again in spite of the hiatus from mid December to mid Feb. You've got about three quarters of your expected winnings for the year in just under half a year.
 
Janet said:
This is really interesting. Even if the amounts you've invested to get those wins is way, way beyond me.

I did get a gift of some prize bonds once from work. Years ago and I don't think I ever actually got the bonds into my hands, though. However, inspired by this thread (and my recent, er, success in dealing with an equally long ago never-updated-addess situation with Vodafone) I'm going to send them off an application for a statement and see if I'm in their records at all. Can't hurt. Is it possible to claim prizes if you don't have the actual bonds? I couldn't see anything about that in the FAQ on their website.
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Yes, if the bonds are registered to you at your address, you can claim the prizes.

I have lost prize bonds and got a replacement cert from them.

I have never actually won anything, so I don't know what the claim procedure is in those circumstances.
 
50

oWVw8u5.jpg
 
I have 16000 bonds, I have an issue with the new DIRT tax and prsi on savings, I came off fixed term deposits and for the moment I am not in any fixed term deposits which I used to be, I am leaving it in prize bonds, I thought the Ghouls link interesting, here is my actual summary to today's date...

€200k in PB's return since September 20th €1100, broadly six months seems to indicate maybe 1% ish annually, pretty poor.



These are the previous Winning Numbers that match your selected Prize Bonds.

Draw Date Prize Value
21-MAR-2014 EUR50
21-MAR-2014 EUR50
07-MAR-2014 EUR50
07-MAR-2014 EUR50
07-MAR-2014 EUR50
31-JAN-2014 EUR50
31-JAN-2014 EUR100
24-JAN-2014 EUR50
24-JAN-2014 EUR50
10-JAN-2014 EUR50
03-JAN-2014 EUR50
20-DEC-2013 EUR50
13-DEC-2013 EUR50
13-DEC-2013 EUR50
13-DEC-2013 EUR50
06-DEC-2013 EUR50
06-DEC-2013 EUR50
29-NOV-2013 EUR50
22-NOV-2013 EUR50
18-OCT-2013 EUR50
20-SEP-2013 EUR50
 
Palerider said:
€200k in PB's return since September 20th €1100, broadly six months seems to indicate maybe 1% ish annually, pretty poor.
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It's about 1.1% -- almost exactly in line with what I would expect (for the reasons outlined in this post on the first page of the thread). Of course, you could get more or less, but there's about a sixty per cent chance that your annual return will be in the range 0.8% to 1.4%, with the most likely being a fraction over 1.1%. (There is a very small additional component due to €100 prizes, but this has reduced since I wrote that original post). So I'd say you're getting about what you should expect.
 
Following this with interest and hoping that The Ghoul and Postman Pat won so much on Friday that they are still celebrating...
Glad to say I won 50x2....
 
I also follow this with much interest. I'm thinking of maybe a few thousand and once I do it -that's it -in for life. Should I bother? -should i just keep at the 10 year bonds with the post office - interest guaranteed.
 
Nothing for me on Friday, would have posted if I had won anything! Well done to usual, two wins in one draw is sweet.

Re: PBs vs 10 year SBs, I regard my PBs as a 7 day notice account that pays "interest" on average every few weeks which can then be invested (into SBs in my case)

I have a fair amount in the 3, 5.5 and 10 year state savings products and plan to leave that money invested for the full term. I think its a good idea to have savings split between short, medium and long term products.
 
That makes sense,To have a spread,but I dont have sense so when I sold a property last year deposit interest was so low that I put every cent into prize bonds...
I know I need to diversify but love the Fri lunchtime buzz,,,and I really think you need large amount of bonds to get any return.Am just about recieving the expected 1.2% this year,,,,Last year was better.1.8% so the drop in prize fund is accurately reflected..
Good luck to all.....Another Fri coming soon,,,,
 
theresa1 said:
I also follow this with much interest. I'm thinking of maybe a few thousand and once I do it -that's it -in for life. Should I bother? -should i just keep at the 10 year bonds with the post office - interest guaranteed.
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theresa1, and anyone else thinking of investing "a few thousand" in prize bonds, do make sure you understand the likely variability in your returns. This is dramatically different for someone investing a thousand euro, versus someone investing a million. The average percentage return is the same for both -- you will get about 1.1% in both cases. BUT ... and this is an enormous BUT ... the chance of things averaging out in a given timeframe, say, a year, are very different. In fact for very small investments they are, of course, impossible.

To illustrate that point, let's say you just buy a single prize bond for €6.25. Your 1.1% return will be just under 7c/year, right? But you can't win 7c -- the smallest prize is €50. So actually, on average what you will get is a €50 win every (wait for it...) 700 years or so! Ok then, that clearly isn't going to yield any return at all in a viable timeframe, so let's up our investment to €4,550. At 1.1%, that gets us a nice even €50/year ... a single prize, right?

Not so fast! As well as being able to calculate that your average return is 1.1% (with a crucial emphasis on average) we can also calculate the likelihood that you will diverge from the average by a given amount. Here was the graph for a €10k investment from my post on page 1 -- this shows the number of €50 wins along the bottom, and each bar shows the percentage likelihood of getting that number of wins:

LZW1sDH.png


Although the average number of wins per year here is just over 2 (to give you your 1.1% yield) the chances that you'll only get one win -- halving your return -- are very significant, at over 20%. And the chances that you'll get no wins at all are 10%. (Of course, you could equally win more than two, so to some extent this boils down to whether you are looking at this as an investment or a gamble).

Things get even worse if you reduce the investment to, say, €1k. Actually, the €10k graph above is a good reflection of the odds for €1k after ten years. In other words, with €1k invested there is a 10% chance that you will have won nothing at all over 10 years. Conversely, consider the graph for someone who invests €100k for one year:

1q80B2W.png


Now, this person stands to win just over 22 x €50 euro prizes each year, to make up their 1.1% return. To only get half that yield they'd have to win 11 prizes or less. I didn't even bother showing those numbers on the graph because they are very low. But if I did it, and added up all the bars for 11 prizes or less, they would sum to about 1%.

To reiterate: at €100k you have a 1% chance of getting less than half the average return in a given year. At €10k, you have a more than 30% chance of getting less than half your anticipated average of 1.1%. (Another way of putting this is that if ten people reading this invest €10k expecting two prizes, three of them will be back here next year complaining they won zero or one). This is the crucial point. The average is still 1.1% for everyone ... but, what I like to call the "lumpiness" of the different possible returns, is much greater for the smaller investor.

In the long run, it all evens out of course. But the less you invest, the longer it may take to even out. So the small investor needs to consider whether they are prepared to wait years or even decades to achieve their average 1.1% annualised return.

(This also explains why I used the figure of 1.1% in the first place, and not the 1.6% that the Prize Bonds company tells you is in the prize fund. Some of the fund is made of large prizes which even the very large investor is unlikely to ever win in a viable timeframe. The average is indeed 1.6%, but even the €100k investor would probably wait millennia for that to average out because of the lumpiness in the odds for the big prizes. I did point out that at €100k+ your likely returns start to edge toward 1.3% because you can include some €100 prizes within a viable time horizon, but that figure is now reduced somewhat again since changes in the prize structure this year).
 
dub_nerd, very informative posts, thanks.

Time to change the name of this thread ??
 
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The way I would look at investing around €1,000 in Prize Bonds is this:

You are foregoing around €15 in interest after DIRT etc.

This is roughly 30c per week. So for 30c you are entered into a weekly draw with the chance of winning a big prize.

Better value than the lottery IMO.
 
I'm with callybags on this. I have 18k in PB's.(6k only put in in last few weeks). I have won 3x€50 since start of year.. Last year won 2x€50. I see it as my lotto draw every week. I see groups at work putting in vast amounts of money over the years for the lotto with no significant win and thy never get the money back. With the PB's you can always cash in.
 
The cost of an alternative that must be forgone in order to pursue a certain action
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What about the opportunity cost?
A return of 1.1% is very poor versus the return on Savings Best Buys Deposit accounts or investing in a company that has dividends, for example,(Vodafone 4.8% and you would also had the windfall as new investors, BP 4.9% + share capital growth, etc)
And the inflation loss as well.
 
monagt said:
What about the opportunity cost?
A return of 1.1% is very poor versus the return on Savings Best Buys Deposit accounts or investing in a company that has dividends, for example,(Vodafone 4.8% and you would also had the windfall as new investors, BP 4.9% + share capital growth, etc)
And the inflation loss as well.
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Prize Bond wins are tax free. So 1.1% grosses up to 1.86% or 2% depending on whether you are liable for 4% PRSI in addition to the 41% DIRT on deposits. That doesn't compare too badly to the best lump sum deposit rates. If you're trying to spread money across institutions, it may be a better rate than some of your banks. It can't be directly compared to risk assets such as shares.
 
t can't be directly compared to risk assets such as shares.
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Say BP @ 4.9% or Vodafone @ 4.8% - nett return better that Prize Bonds (1.1% not guaranteed )
Capital Gain on shares compensates for risk..........I would hope :)

My portfolio lost 50% in 2008 and now up 150 % since then + Dividends
 
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