Why not Prize Bonds? Expected 3% tax-free

It'll be interesting to see how they perform. I reckon you should win a 75 prize every month perhaps, but I actually think you'll get about 500 back, probably as 6 or 7 x 75 prizes.

Your 3% would be 1,200... but about half the prizes are given as the 1,000,000 top prize... so I believe you are gambling about half your 1,200... i.e 600 Euro a year on winning the top prize. I'm not sure of this but I think you have about a 1 in 1666 of winning the top prize once in a year, with 6,400 bonds. That seems quite low to me, i.e quite good for you. But then, if 1666 people all invested 40,000 there'd be 66 million invested, and it's only 50-50 that one of them would win the 1,000,000.

I'm not sure about the later figures, especially the ones about the odds of winning the million. But I do think you'll win between 4 and 7 x 75 Euro prizes in twelve months.
 
Incidentally the Prize Bonds company ran a World Cup promotion to win tickets to South Africa when you made a purchase.
I have emailed them to find out who won the draw as I had invested heavily in Bonds during the promotion.
To date nobody has even bothered to answer the email.
 
Interesting thread, thanks to the posters.

Plywood - good luck, hope you win the million ;)
 
One final point is that the winners are drawn by computer... I don't want to suggest that they've got this wrong but it's possible.

Computers are deterministic, and can't produce true random numbers. Poker sites for example will use hardware random number generators (RNGs).. i.e something like a geiger counter measuring background radiation (for example).. this would produce true random signals.

I believe it's possible that the draws might not be fair.. depending on how the software is written, and also if they have hardware RNGs. But if the draws aren't fair it still wouldn't be possible to use this fact to your advantage (maybe).

There are similarities to the E-Voting machines... and the question of whether software can be trusted, or verified to be absolutely correct???

There is a branch of computer science which can produce mathemathical proofs that the software is bug free and will work according to spec, but this is rare, and difficult to do, and may not be possible in the case of the Prize Bond raffle software. So there may be unknown bugs or patterns, in the drawing software.
 
Just wondering with the prize bond draw, is there a certain amount of draws against each letter, lets say x amount for aa, ab and so on or is it a random draw? I might'nt be wording this clearly. Looking at the results for the 75 euro a pretty similar number of each letter seem to come out each week.
 
Well, I don't think they give out information either on the frequency of the letters used in the Bond numbers, and whether or not they're in sequence etc.. or on how the draw is actually carried out, or whether or not there are sub-draws etc, or how the computer program to do the draw is implemented, and whether or not they have hardware RNGs.

This would be in contrast to the Irish Sweepstakes, where the draws were public, and clearly explained.. with all the entries entered in multiple drums, and gradually reduced down to the winning tickets.

It would be possible for them to examine the results over time, and to see if problems might exist... I don't know if they do this either.
 
First progress report;

Won €75 in last Friday's draw. I bought these in mid June so it took 8 weeks to win a prize. Doesn't bode well for achieving my interest of €600 over the six months I intend to stay invested in them (the amount of interest I have forgone by investing in Prize Bonds as opposed to placing on deposit). I wouldn't have expected one prize a month or anything but it would be nice if they were regular. I reckon there is so many of these bonds in existence that you could win nothing for years and then three together.

I was only saying to my wife last week that I would exit after 3 months instead of 6 but I'm tempted to stay in for the 6 now.

Mad gambler that I am....

Vegas next....
 
The Prize Bonds Company ran a draw for tickets to the world cup final in South Africa. To enter you had to purchase the minimum number of Prize Bonds allowed which was 4 and complete an entry form.
Jess and I decided to increase the number of Prize Bonds that we have by about €500 during this promotion bringing our holding to about €3500.
We decided to find out from the Prize Bond Company who won the draw so we sent off a few emails to various departments. To date we have received no reply.
Being of a suspicious nature I am wondering if a draw was ever held. There is no mention anywhere, on any Prize Bond website of the draw or who the winner was.

Does anyone know anything about this or have a direct email address that I can contact to get an answer?

Clint
 
I think people are failing to take into account both the expected return and standard deviation of return for prize bonds.

The expected return is 3% but this is meaningless on it's own, if investors are risk averse they will compare the expected return to the riskiness of the investment. In the case of prize bonds the capital is risk-free but the return element has a massive standard deviation - the payoff is asymmetric (i.e. yuo can't lose anything (in nominal terms) but you do have a small chance of winning - so you can't really compare them to conventional investments like deposit a/cs, shares or bonds. They are more like a risk-free, zero return asset (the face value of the prize bond) plus a deep out of the money option (the possibility of winning a prize). I'm not great at option pricing but it should be fairly straightforward to value a prize bond playing around with black scholes.

My gut instinct would be that they are worth less than face value - I don't think the value of the option would outweigh the opportunity cost of holding the zero return investment when short term Irish gov't debt (the relevant risk free rate here given the prize bond would presumably be canceled in the event of a sovereign default) are so high.

tvman
 
Let me tell you. I bought €3200 worth of prize bonds a year ago. We have won 3 times, €75 each time. €225 which I think is about 7% return off the top of my head.
If we could get a biggie that would really do it for us.
 
I have also just purchased 8000 bonds, ( €50,000 ) I may as well after I went into EBS for the second time to open a 7 month fixed term deposit account, despite having spoken in advance by phone with the Branch Manager and having made an appointment I was still turned away and told I had to make another appointment, that's a laugh...Hello ?, EBS wakey wakey to the real world...I was a depositor, remember them ....anyways said I'd give Prize bonds a chance, the girl in the Post Office could not have been more helpful...6 months is my timeframe so we'll see..
 
Update

Ok - update, interesting debates on the PB's tempted me .....so far after about 5 months I have ' won ' €525, had I placed the €50k on deposit at 3.5% then I would have netted about €532, I'm satisfied for now to stay in and considering an additional modest purchase, what I like is the fact that the Govt who already have their fingers even deeper in my pockets since the Budget don't get the dirt ( increased now to 27%, ) my ' winning's ' being tax free and not reportable on my form 11 tax return mean that I don't pay the additional 2% levy that featured on last years tax return either so all in all satisfied so far...

I probably should pay more attention to the underlying safety of these funds but I seem to be more satisfied with PB's than having any more in a deposit account.

PS - and it is kind of fun !
 
I has €2.500 in PB's for 2 yrs and didn't win a red cent! Cashed em in (bar €400 ) and stuck it in shares. It's odd tho. apart from the people talking about winnings here, I've never heard of anyone winning a bean. Are people all coy about them or what?
 
Never won on Prize Bons

horusd said:
I has €2.500 in PB's for 2 yrs and didn't win a red cent! Cashed em in (bar €400 ) and stuck it in shares. It's odd tho. apart from the people talking about winnings here, I've never heard of anyone winning a bean. Are people all coy about them or what?
Click to expand...
.

I couldn't agree more. I bought 1000 Irish Punts worth of bonds 14 years ago and never won a red cent. I don't think there is anything dodgy I'm probably just unlucky.!! Interesting to see on here that at least some people are winning. I personally have never met anyone who won and I know quite a few people who have bonds.
 
€3,000 (1,500 in late 2008 and another 1,500 recently). Have won 3 €75 prices. Not bad I suppose!
 
I have €20,000 worth of PB's for the last 18 months and I have won 4 prizes of €75 each. Not a good investment but I'll let the dream live on for another while.
 
Just started a Direct Debit of €25 (4 prize bonds) per month as a replacement for my Euromillions monthly spend. Under no illusions as to the expected return, I am content with winning a million being a dream. I'm thinking of it as a no lose lottery. Plus next month I will have 8 bonds, so I've halved my odds of a prize win, and the same in 4 months, then 8 and so on - ( I am probably utterly wrong statistically but please let me remain happily ignorant) It's a bit of fun :)
 
You must log in or register to reply here.
Back
Top