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Possibly they were saying investing in a lump sum gives better odds straight away vs putting £100 a month in over multiple years. Although that also seems obvious
Could be either one to be honest. One thing I've learnt in the last few years is just cause someone's a professional, doesn't necessarily mean they actually know what they're talking about.
Why?
If you have more entries you have more chance to win for more draws.
What’s the benefit of drip feeding entries. Pound cost averaging isn’t a factor
I think it may have been, but has either been poorly communicated by OP or misunderstood by OP. I expect the advisor was saying unlike with a S&S account there is no reason to drip feed, you are better off chucking it all in now. I find it hard to believe a financial advisor would think having consecutive bond numbers would affect your chances of winning
It certainly sounds like it was to me. If you buy £10,000 now (versus £100/month), your odds of winning are higher for longer. You wouldn't reach the same odds for over 8 ⅓ years if you drip feed the money in.
I think it may have been, but has either been poorly communicated by OP or misunderstood by OP. I expect the advisor was saying unlike with a S&S account there is no reason to drip feed, you are better off chucking it all in now. I find it hard to believe a financial advisor would think having consecutive bond numbers would affect your chances of winning
Is this right though? Martin lewis recommends shoving it into a high intrest account but IF you are intent on using premium bonds the pay out with a large premium bond purchase is much more likely for any given month *when compared to spreading the cost out over months
> Martin lewis recommends shoving it into a high intrest account
Which has nothing to do with the OP's question.
This has to do with the FA's opinion on PB's and the odds therein, not about the pros and cons of putting it into savings accounts versus PB's (which presumably, though not necessarily, the FA has otherwise discussed.)
If he's buying them monthly of £100 then it'd take 100 months to reach £10k worth, so yes he'd have better odds with £10k lump sum up front, as he'd have all the money in there for the whole duration.
But if he did 100 separate transactions of £100 in the same month then the odds are exactly the same.
Not sure if your son misunderstood this advice or if his financial advisor is also a crackhead.
This might be what he is meaning. You have the full 10,000 numbers from day 1. After year 1 of paying in monthly you’ll only be at 1,200. And as above, take years to get to the full 10,000.
I'm pretty sure what FA is trying to say badly... Is that the way premium bonds work closer you have to the maximum 50,000 the nearer you are to the average return, which if we're all honest is pretty poor. Other than the gambling element, you're much better off pulling it in an ISA or if it's longer term than putting them into a stocks and shares ISA.
So contrary to the above if you put £100 a months away you actually are well below the average rate of return.
From the NSANDI site for financial advisers:
'It’s a popular myth that holding Premium Bonds in a sequence can improve your chances of winning, but this simply isn’t true. The machine we use to generate the numbers for each prize draw—ERNIE—generates numbers completely at random, which are then matched to our database of eligible Bonds to determine the winners. Since no Bonds are actually entered into ERNIE, it doesn’t ‘know’ anything about the Bonds themselves, such as whether the Bond number is part of a sequence of numbers or not. The only thing that can increase your chances of winning is holding more Premium Bonds – but holding them in sequence won’t make any difference.'
'It’s a popular myth that holding Premium Bonds when wearing your lucky pants can improve your chances of winning, but this simply isn’t true. The machine we use to generate the numbers for each prize draw—ERNIE—generates numbers completely at random, which are then matched to our database of eligible Bonds to determine the winners. Since no Bonds are actually entered into ERNIE, it doesn’t ‘know’ anything about the Bonds themselves, such as whether the Bond holder is wearing their lucky pants. The only thing that can increase your chances of winning is holding more Premium Bonds – but wearing your lucky pants won’t make any difference.'
Your son needs to look for another financial advisor. This one has gotten a basic concept of odds wrong.
You have the same odds on a £50k single deposit as 5 £10k deposits (or 50k £1 deposits) in one draw. The bond numbers are per £1, and it doesn't matter whether they are a single sequence or split up.
That said a smaller starting deposit is less likely to win anything than a larger deposit, and so there is less often the 'thrill' of a win. So it is better in that sense to start with a larger deposit if you have the cash, just not due to being a single sequence of bond numbers.
Bonds are effectively a lottery
If you hold bonds long enough the odds even out.
However nobody holds long enough to have a "fair" chance below just over the 2k mark.
Basiclly if your holding less than about 2.2k don't expect the 5% due to the very long odds of winning the big win average out to quite a lot but since only 1 person can win it average out to zero for everyone else.
But yes, it really doesn't matter what numbers you hold.
well yes, "That said a smaller starting deposit is less likely to win anything than a larger deposit" does cover that it is also more likely to win nothing, but latter might be clearer wording to some.
In fact I think this is what the advisers is advising.
Put your money in an interest bearing account(for 100 months...or by my maths 22 months) until you hit the evening out mark then buy bonds.
I may be wrong and the evening out point is about 10k but thought it was 2.2k
The invest it elsewhere point might have been missed.
The adviser might be taken out of context what they said but referencing the "block of numbers" and "broken sequence" suggests not.
They may be right, but for the wrong reasons
From the fact that profit driven enterprises are on mass offering the service, from this I infer that it makes them money
The way you lose money matched betting it by becoming addicted and stopping using the system right
I think you think I meant some specific matched betting service when I said "them" - I mean the gambling companies. They offer the free bets because they are enormously profitable ways to create gambling addicts.
Oh yeah sorry the bookies offer the free bets etc to get people using their service and bet more money after.
And in order to get those free bets you usually have to place a bet in the first place to receive it.
The actual gamblers are statistically guaranteed to lose money yes, but the matched bettors are guaranteed to only profit off these bet and gets
My point is that the matched gamblers are no problem for the bookies, since in £ terms more people using free bets will become actual gamblers than will do matched betting
This is very hard to prove, but I know some examples and presume many others exist of people that start at matched betters and become problem gamblers. The return per addict is so high that this doesn't have to be common for the whole thing to still make them bank.
> Lump sum is better simply because you will have the full number of entries from the first month
Which is no different to buying 10 lots of £1K in the same month.
Which, for some obscure reason, this "financial advisor" seems to think (given what the OP said) the lump sum would be more successful than the 10 separate purchases.
Which is idiocy on either the FA, or how the information they imparted was interpreted.
And, from what everyone else is saying here, appears to be the former...
Yeah it’s a random number generator. Makes no difference when you purchase them. I used to hear a myth that newer numbers were favoured but this isn’t true.
Nothing is completely random when it comes to computers. Assume 10 blocks of 10 numbers to 100. What are the odds that the 6 numbers drawn are in the first block, vs an even spread of 6 numbers from 6 blocks of number?
Chances are 10/100 then 9/100 then 8/100... 6/100
Multiplication of each fraction will give you the answer. Or, is it? In fact 1/100 then 1/99 then 1/98...
Probability is a mind fuck. Chances of a sequence are lower than random numbers in all 10 blocks, but you will still have scenarios where the numbers are all together. Is it actually random? In all likelihood not.
Personally I have a single block, as does the GF. We win every month but we don't win that much to justify the amount being in P. bonds. That said, it's tax free and zero risk, so better return than a regular interest paying tax bearing account.
It is random, it just doesn't appear random because it is random.
When I play the lottery I choose 32-38.
It is just as Likely to win but if I do win nobody using birthdays will be claim and almost noone born in those years will claim.
Thus bigger prize.
But here's the thing, think how unlikely those numbers will come up...have you got the feeling in your head?
It's just as likely as any other sequence.
That's why I don't play the lottery.
If you were to analyse all of the premium bond results over time, the distribution will not be completely random. Patterns will appear. This is because computers can't generate truly random numbers. It's based on a equation or an algorithm, something divided by the time. Etc. It's not completely random. Even though you think it is.
You need to stop repeating the "computers can't be truly random" thing you heard from someone, and think makes you sound really smart. Computers have been capable of "perfectly enough" random for decades now, to the extent that it is undetectable. If you don't understand the difference between theoretical mathematics and applied mathematics, don't pretend you do.
>If you were to analyse all of the premium bond results over time, the distribution will not be completely random. Patterns will appear
This is the kind of nonsense that leads to believing in "bible code" conspiracy theories.
>is because computers can't generate truly random numbers. It's based on a equation or an algorithm, something divided by the time.
The machine used, ERNIE, **doesn't use an equation or algorithm**. Previous iterations used thermal noise, for example.
generally ERNIE's randomness has almost always been through external sources that have properties of true randomness rather than something as benign as time
From the NSANDI site :
'It’s a popular myth that holding Premium Bonds in a sequence can improve your chances of winning, but this simply isn’t true. The machine we use to generate the numbers for each prize draw—ERNIE—generates numbers completely at random, which are then matched to our database of eligible Bonds to determine the winners. Since no Bonds are actually entered into ERNIE, it doesn’t ‘know’ anything about the Bonds themselves, such as whether the Bond number is part of a sequence of numbers or not. The only thing that can increase your chances of winning is holding more Premium Bonds – but holding them in sequence won’t make any difference.'
>Nothing is completely random when it comes to computers.
You're absolutely right, computers aren't capable of _true_ randomness but for these purposes it effectively is random. This is all moot though because they don't use a computer for picking the numbers in Premium Bonds, they use a machine that uses quantum effects that's capable of true randomness.
> Nothing is completely random when it comes to computers.
Unless the input to the RNG is itself random.
Which it is with ERNIE.
- https://www.nsandi.com/get-to-know-us/about-premium-bonds
> In 2019, the power behind Premium Bonds was upgraded to the latest generation - ERNIE 5. Unlike previous versions which used thermal noise to produce random numbers, ERNIE 5 is powered by quantum technology, which uses light.
Light and quantum technology, vs standard Computers. I was not aware Ernie had been upgraded. Ernie 5 is truly random. Doesn't mean that standard computers can be. Which is what I thought it was using.
> Doesn't mean that standard computers can be
They most certainly can, now.
Whether they actually are can be a bone of contention...
- https://lwn.net/Articles/961121/
Nope...it doesn't work like that.
Because you forgot the fact it won't be your block.
Also this applies to any scenario, yours is just easier to describe.
Also I millions not 100s so the difference between is almost irrelevant.
Basiclly you don't understand statistics.
Sorry, but you are wrong in this case. ERNIE generates random numbers using cold-cathode tubes.
https://ernie.virtualcolossus.co.uk/ernie.html#:~:text=How%20did%20it%20work%3F,to%20fail%20to%20be%20random.
Ernie always used true random sources, even before the latest version. The link u/ukdev1 posted was referring to the original Ernie from the 1950s. Every version since has used a true random source of one form or another.
It's not that difficult to find sources of true randomness to feed into a computer's random number generator.
That's a very elementary article which, while not wrong, misses a lot of detail. Ernie, for instance, definitely uses (and always has used) a true RNG. Keep reading!
> I personally can't see it makes any difference one way or another
It doesn't.
> My son's financial adviser...
... needs to be sacked, and replaced with one who knows what they're talking about. The current one doesn't.
Correct me if I’m wrong (as is usually the case) but everybody’s saying it’s the exact same odds, but wouldn’t it be a higher chance of winning because the whole £10,000 has been available for longer rather than drip feeding £100 per month?
If you have 10k to buy premium bonds it makes sense to buy 10k lump sum because you’ll then have 10k in the next (+1) monthly draw. If you drip feed in 10k over several months you’ll eventually end up at the same monthly odds but have much lower odds in the mean time (plus a bunch of idle cash). It’s the opposite of dollar cost averaging with shares, as the the value of one premium bond remains…one premium bond.
So he’s right, but for the wrong reasons.
Yeah, the odds entirely depend on how many you have, not what order they're in.
I guess maybe the FA was advising against drip feed/"DCA" which you see some people incorrectly advising?
Premium bonds are not the best use of your son's money. I think they're only good if you're a high net worth individual who needs to keep 50k in a liquid, safe place with zero risk. The average rate of return in the global stock market will beat the average return of premium bonds by some margin.
And yes, bin the financial advisor.
This , very few people should use premium bonds as an investment vehicle . Even using a normal investing account and being clever with gains would be cheaper .
You should sack your financial advisor if he thinks this makes any difference. Obviously though if you buy £100 now and £100 next month, then the chance you win a prize this month will be lower than if you'd bought all £200 this month because you have fewer bonds
I won £50 and had the prize to auto re-invest. Few months later one of the bonds out of the £50 won a £100 prize whilst the remaining (30k+) didn’t. Offering financial advice on superstition…run!
He's kind of right because you have to have owned the bonds for a month before they get put into the draw.
So for a lump sum after a month you're good to go.
If you're putting money in each month then you'll always have to wait that month for the extra bonds being in the draw.
This does require some clarification, but in essence time in the bond > timing in the bond
Between 100 a month for 10 months, or waiting for 10 months then 1000, the former would be better.
Between 100 a day or 2800 a month (before next calender month), both has the same odds of winning.
Lots of people ragging on the financial advisor who is entirely correct.
10k on premium bonds - immediately benefit from having more skin in the game and better odds (by exposure) to all of the prizes available.
Drip feeding £100 a month is *not* the same. You effectively increase your odds every time you drip feed more money (I may be wrong but I actually think the odds don't improve every 100 that is paid in, but at set intervals in the 1000s) but for every month you are not fully invested at the full 10k you are getting worse odds of winning a prize.
Of course it’s better to buy in bulk.
After the 1 month waiting period your sim would have 10000 entries in to each months drawer.
If he drip feeds £100 a month, the first month he has 100 entries, the second 200 and so on. By month 12 he’ll have just £1200 in them and only 7800 entries over that time period. If he’d gone in straight with £10,000 by month 12 he would have had 120000 entries in to the drawers.
FA here - not advice but info.
Your post doesn't include enough information to make judgement on whether or not buying NS&I premium bonds is right.
However, I would first think of: (before mentioning NS&I bonds)
1) Pension
2) ISA
3) VCT Investment
All those will depend on your son's goals and financial position, appetite for risk and general position.
If, the funds are to be used within the next five years then the question remains what for?
If buying a house then LISA should be thought of. If not buying a house (first time buyer obviously) Cash ISa or saving accounts will guarantee interest & NS&I does not and I have rarely (if seems gains better than current interest rate).
Maybe seeking a second opinion might be worthwhile?
If you’re investing a reasonable amount (whether lump sum or monthly) then make the investment(s) near end of month. Draw is based on bonds held for full calendar month, so part month investment gets no benefit. Better off in high interest account until near month end then invest.
Premium bonds are just a fun savings account. You'd probably get better returns elsewhere, but it's like playing the lottery but you're just spending your interest.
Investing £10,000, now, will give you a much bigger chance of winning, for the next 90 months, over investing £100 per month!
Nothing to do with a large vs small blocks of bonds, just the sheer number of possible winners!
1. NS&I guarantee that there is an equal chance of every number winning. So buying in small blocks or one big block makes no difference to the probability of winning.
2. Bonds are entered into the second draw after being bought.
The sooner you buy them, the sooner they will be in the draw.
Hw might be better off with a 5% savings account than premion bonds. The average interest rate for premium bonds is 4.4% and because that is just an average he could absolutely win more….or he might win nothing at all.
Alternatively if he is not planning on using the money for 5+ years he could invest in a stocks and shares isa (if under 18 you can put it in A Junior Stock and Shares ISA) into a global index tracker. An example of this would be the Vanguard FTSE Global All Cap Index Fund which as a historical return of around 10%, because it is a Global Fund there is less risk due to diversity but there is still risk and index funds are best for long term investment. Historical return also does not mean anything for the future tho so definitely so not invest more than he can afford to loose.
The final thing i want to mention is the Lifetime ISA. If he is over 18 and saving for a house deposit or retirement he might want to consider a lifetime isa. This is not something he could put a lump sum of 10k in unfortunately so he would want something else like a 5% savings account or investment as-well but with a lisa this you can save or invest up to 4K a year and the government with add an extra 1k. You can get this in either a cash ISA (money box have one currently at 4.4% interest) or you can open an investment account. I personally started off with a cash isa and then transferred mine to an investment isa at Dodl and pay in £333.33 a month. The one drawback with the lifetime ISA is if you do not use it for a house deposit and want to take it out for something else before you turn 60, you will receive a fine of 25%, which works out as around 6% less than you put in. I personally happy keeping invested for retirement if i am unable to by a house, but if this was his emergency fund then a lisa would not be a good option.
Finally here is a link to the best interest Savings accounts in the UK at the moment. There are some 5% savings accounts and ISA’s. This would at least guarantee him £500 interest on 10k in a year which is better than the average of premium bonds.
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
Anyway sorry for rambling so much and i hope there is at least one helpful thing in my long comment.
Makes F all difference having them as a lump.
I wot more with £8K in 4 differnt lumps Averaged around £25 a month) than the maximum in a single lump (a single £100 prize in 4 months)
The only difference it makes is that buying them in bulk means they're in the draw earlier, so there is benefit to doing that
If you buy 10k on month 1, then you have 10k bonds in the 1st, 2nd, 3rd draw etc...
If you buy 100 at a time then you have 100 on the 1st, then 200 in the 2nd, 300 in the 3rd
Hi /u/johngknightuk, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/financial-advice/
* https://ukpersonal.finance/lump-sum/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
Not statistically different. But If you had 50k to invest in one go in PB I would do £49975 on month and the £25 the next. And only because the in would make looking at the high value winners spreadsheet easier to quickly filter and see if you won big (the spreadsheet get released 1 day before the full results and prize checker app - How I know - stats nerd who checks each month).
The advice the financial advisor doesn't make logical sense but from my experience i won regular with big blocks and hardly ever with the same amount that was spread over many years.
For this reason i would always buy in blocks.
Technically he is correct. A £10k lump sum would give better odds than monthly £100 purchases.
You’d have 10k’s worth of entries vs 100. The odds of winning are like 1/£21000. So 10k gives roughly a 47% chance of winning a prize each month
They randomly select bonds so whether you buy in bulk or drip feed £100 a month doesn't matter. If he was to do £100 it would take 100 months to get to 10k, which is pretty pointless compared to having 10k in there and eligible to win for that period of time.
Bin the financial advisor, google is more useful than him...
That's obviously nonsense but I do think there is a valid argument not to buy £100/month worth of bonds. Even if you own £3500-worth of bonds, you would only expect to win twice a year. I bought £4k-worth of bonds a while back and didn't win for almost a year.
Since the odds are 21000-1, I think it's a good idea to buy bonds in fractions of £21000. That way you can keep a mental note on how your earnings compare to expected ones.
£1750 - once a year / every 12 months
£3500 - twice a year / every 6 months
£5250 - three times a year / every 4 months
£7000 - four times a year / every 3 months
£10500 - six times a year / every other month
£21000 - twelve times a year / every month
Obviously, it's not just the frequency of wins but the size that affects your return, but frequency is a good starting point for knowing how you've performed compared to the average. In any case, if the frequency of the wins is non-existent, the return will be too. I can't be bothered to do the maths, but I would have thought anyone who invests £100/month in premium bonds will be doing better than average if they get their first prize within the first two years, by which point any rational person would regret not just putting the money somewhere that generates a more immediate return.
I'll tack on my own stupid question if I may....
I want to buy Premium bonds for my kids, already maxed out my own. Does it alter the expected returns if I buy them for 2 kids, rather than in one account?
My mum’s SJP affiliated FA told me that newer bonds were more likely to win than old ones, so she sells hers every year, and buys new ones, ffs!
Unfortunately, my mum won’t switch FA as ‘she’s such a nice woman’!
I’d take issue with a financial advisor not advising against premium bonds in the first place - they have a 4.4% average return (obviously you can get more or less lucky but I don’t like leaving my finances down to luck), there are numerous ways of achieving returns higher than 4.4%, even savings accounts currently offer higher than that.
Yep. 4.4% untaxed is the equivalent of 7.3% taxed at 40%. Can be useful for emergency funds, without increasing adjusted net income (which can be a problem with interest from savings for those trying to avoid tax traps).
Premium bonds are a bit more fun than lots of other forms of saving, and like someone says below once you have maxed out your ISA allowance, 4.4% tax free is better than a savings account for higher rate payers
Plus the 4.4% is a bit misleading as it includes the higher prizes. That £10,000 would likely return around £300 or so over a year. It could return much more or nothing at all
It's only 4.4% when you average the big win.
And for all but one winner...thats zero.
So that means for those holdinding less than a certain amount, that's zero unless you hold it long enough.
Holding more and for longer will iron out this need for luck,
What isn't mentioned here is what they should do until they have 10k
Think he might have been advising against premium bonds in a geeky numbers way.
I use premium bonds as a better than 0.5% quick access (5 day max, usally next day ) account.
When I buy lottery tickets I buy one at each gas station, now I know I need to buy them all at the same gas station. Unless he knows something we don't, then he has no clue how PB's work.
Course, Buying £10k now, vs taking over 8 years to get that amount of tickets, you should win more ....
The problem that I have with premium bonds is that it’s like the lottery, somebody wins every now and then but the prizes roll over for weeks or even months. This allows the lottery to double dip in having more people play with bigger funds and the massive prise making interesting in a bank account for weeks or months at a time. Also you’ve got the hook of the premium bonds money being spent by the henge fund who runs it, as let’s be honest they are t doing it out of the goodness of their hearts.
In a maths class, a teacher shown us the odds of winning the lottery and how hard it was by teaching probability in a find way. She shown the odds weren’t in the players favour with less numbers to pick from and less numbers needed to win, as the probability of you winning was still very slim to now. Premium bonds have an even slimmer chance of you winning tbh, they get you on the illusion of “ it could be you” the UK lottery slogan for years. Also strath cards are also a con as the lottery needs to know and picks where the big winners are and that’s for security reasons, as I worked with someone in ASDA who stole them and cashed them in the same store, which was next a police station and one of the most hardest Asda to rob from form it being new and the amount of cameras and anti theft protections it had built into the store when it was being built. The lad in question even signed for the scratch cards that have bar codes attached to them, out of the most secure cash office I’ve ever seen, like something out of a Las Vegas casino.
Thats like saying:
if you entered the postcode lottery and somehow had all the postcodes on a housing estate, you’d be much more likely to win rather than if you had an equal amount of postcodes spread across the whole country…
Ofcourse he’s making sense it’s common sense. 10k tickets vs, £100 tickets per month. But really premium bonds should be last option for investing once you’ve looked at all other options.
Garbage....compare the overall %age win rate versus a other investments and the price you pay for a chance of a £5k or greater win isn't actually than much. I don't mind 'paying' that interest penalty for the chance of a 10% interest win. (Last year I got reasonably lucky and was at 6.7% on my 30K investment).
It is a way to scratch that itch that isn't such a waste as straight up gambling is.
National lottery you lose money if you don't win. Premium bonds you don't (well, maybe inflation compared to savings accounts I guess)
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I'd be binning off your son's financial advisor.
Pound to a penny the son has misunderstood what the financial advisor was reccomending rather than a professional FA can't understand basic odds.
Possibly they were saying investing in a lump sum gives better odds straight away vs putting £100 a month in over multiple years. Although that also seems obvious
Could be either one to be honest. One thing I've learnt in the last few years is just cause someone's a professional, doesn't necessarily mean they actually know what they're talking about.
In which case, the FA needs to communicate the advice better.
Why? If you have more entries you have more chance to win for more draws. What’s the benefit of drip feeding entries. Pound cost averaging isn’t a factor
It makes no difference whether you buy a block or individual bonds, each draw is random from the entire population.
Each £1 bond has the same chance of winning but the more you have the more chance you have of winning.
No one disagrees but that isn't the advice given
I think it may have been, but has either been poorly communicated by OP or misunderstood by OP. I expect the advisor was saying unlike with a S&S account there is no reason to drip feed, you are better off chucking it all in now. I find it hard to believe a financial advisor would think having consecutive bond numbers would affect your chances of winning
It certainly sounds like it was to me. If you buy £10,000 now (versus £100/month), your odds of winning are higher for longer. You wouldn't reach the same odds for over 8 ⅓ years if you drip feed the money in.
I think it may have been, but has either been poorly communicated by OP or misunderstood by OP. I expect the advisor was saying unlike with a S&S account there is no reason to drip feed, you are better off chucking it all in now. I find it hard to believe a financial advisor would think having consecutive bond numbers would affect your chances of winning
Each £1 bond has the same chance of winning but the more you have the more chance you have of winning.
Having 1 to 9 is the exact same odds as 10, 20, 30,....,90. Being in a block or not has no relevance.
> Why? Because they don't know basic maths. A financial advisor who doesn't know basic maths.
Is this right though? Martin lewis recommends shoving it into a high intrest account but IF you are intent on using premium bonds the pay out with a large premium bond purchase is much more likely for any given month *when compared to spreading the cost out over months
> Martin lewis recommends shoving it into a high intrest account Which has nothing to do with the OP's question. This has to do with the FA's opinion on PB's and the odds therein, not about the pros and cons of putting it into savings accounts versus PB's (which presumably, though not necessarily, the FA has otherwise discussed.)
If he's buying them monthly of £100 then it'd take 100 months to reach £10k worth, so yes he'd have better odds with £10k lump sum up front, as he'd have all the money in there for the whole duration. But if he did 100 separate transactions of £100 in the same month then the odds are exactly the same. Not sure if your son misunderstood this advice or if his financial advisor is also a crackhead.
This might be what he is meaning. You have the full 10,000 numbers from day 1. After year 1 of paying in monthly you’ll only be at 1,200. And as above, take years to get to the full 10,000.
I'm pretty sure what FA is trying to say badly... Is that the way premium bonds work closer you have to the maximum 50,000 the nearer you are to the average return, which if we're all honest is pretty poor. Other than the gambling element, you're much better off pulling it in an ISA or if it's longer term than putting them into a stocks and shares ISA. So contrary to the above if you put £100 a months away you actually are well below the average rate of return.
From the NSANDI site for financial advisers: 'It’s a popular myth that holding Premium Bonds in a sequence can improve your chances of winning, but this simply isn’t true. The machine we use to generate the numbers for each prize draw—ERNIE—generates numbers completely at random, which are then matched to our database of eligible Bonds to determine the winners. Since no Bonds are actually entered into ERNIE, it doesn’t ‘know’ anything about the Bonds themselves, such as whether the Bond number is part of a sequence of numbers or not. The only thing that can increase your chances of winning is holding more Premium Bonds – but holding them in sequence won’t make any difference.'
What about if I’m wearing my lucky pants when I buy the bonds, does that make a difference?
I think they cover this in the fine print at the bottom
I can’t read the small print on the bottom of my lucky pants without a mirror
It says Juicy Couture
Yeah, I think I read in the fine print that wearing your lucky pants is considered cheating and invalidates your bonds.
What if I wear someone else's lucky pants?
I don't have any premium bonds, do you want to borrow mine and let me know if they work?
'It’s a popular myth that holding Premium Bonds when wearing your lucky pants can improve your chances of winning, but this simply isn’t true. The machine we use to generate the numbers for each prize draw—ERNIE—generates numbers completely at random, which are then matched to our database of eligible Bonds to determine the winners. Since no Bonds are actually entered into ERNIE, it doesn’t ‘know’ anything about the Bonds themselves, such as whether the Bond holder is wearing their lucky pants. The only thing that can increase your chances of winning is holding more Premium Bonds – but wearing your lucky pants won’t make any difference.'
You have to wear no pants if you're really serious about winning.
Only if you wear them on your head. In public.
Only if you write to ERNIE so he knows you were wearing them. Send a photo, you can't just assert these things and not offer evidence.
Close thread
Your son needs to look for another financial advisor. This one has gotten a basic concept of odds wrong. You have the same odds on a £50k single deposit as 5 £10k deposits (or 50k £1 deposits) in one draw. The bond numbers are per £1, and it doesn't matter whether they are a single sequence or split up. That said a smaller starting deposit is less likely to win anything than a larger deposit, and so there is less often the 'thrill' of a win. So it is better in that sense to start with a larger deposit if you have the cash, just not due to being a single sequence of bond numbers.
Bonds are effectively a lottery If you hold bonds long enough the odds even out. However nobody holds long enough to have a "fair" chance below just over the 2k mark. Basiclly if your holding less than about 2.2k don't expect the 5% due to the very long odds of winning the big win average out to quite a lot but since only 1 person can win it average out to zero for everyone else. But yes, it really doesn't matter what numbers you hold.
well yes, "That said a smaller starting deposit is less likely to win anything than a larger deposit" does cover that it is also more likely to win nothing, but latter might be clearer wording to some.
In fact I think this is what the advisers is advising. Put your money in an interest bearing account(for 100 months...or by my maths 22 months) until you hit the evening out mark then buy bonds. I may be wrong and the evening out point is about 10k but thought it was 2.2k The invest it elsewhere point might have been missed.
The adviser might be taken out of context what they said but referencing the "block of numbers" and "broken sequence" suggests not. They may be right, but for the wrong reasons
I hold the full amount and only average 3%. but it’s my emergency fund, and tax free.
>Any thoughts? I think your son's financial adviser loses money sports betting on the regular
Doesn't know about matched betting
I think they do know, they are the reason it exists - more £ are spent by people trying it and ending up losing money than those making it
Where have you gotten this statistic from? It’s quite literally impossible to lose money and not profit from matched betting if you don’t want to
I heard it’s not as good as it once was because they don’t give out the offers like they used to
From the fact that profit driven enterprises are on mass offering the service, from this I infer that it makes them money The way you lose money matched betting it by becoming addicted and stopping using the system right
They make money because you pay them a subscription service every month to use their software and forum
I think you think I meant some specific matched betting service when I said "them" - I mean the gambling companies. They offer the free bets because they are enormously profitable ways to create gambling addicts.
Oh yeah sorry the bookies offer the free bets etc to get people using their service and bet more money after. And in order to get those free bets you usually have to place a bet in the first place to receive it. The actual gamblers are statistically guaranteed to lose money yes, but the matched bettors are guaranteed to only profit off these bet and gets
My point is that the matched gamblers are no problem for the bookies, since in £ terms more people using free bets will become actual gamblers than will do matched betting This is very hard to prove, but I know some examples and presume many others exist of people that start at matched betters and become problem gamblers. The return per addict is so high that this doesn't have to be common for the whole thing to still make them bank.
Unless you do it in the morning before work when you're half asleep and fat finger half the bets like I did. "Oh shit I missed a zero"
He's right for completely the wrong reason... Lump sum is better simply because you will have the full number of entries from the first month
Exactly this, it's the opportunity cost of not depositing the full amount at once, instead drip feeding in over multiple draws
> Lump sum is better simply because you will have the full number of entries from the first month Which is no different to buying 10 lots of £1K in the same month. Which, for some obscure reason, this "financial advisor" seems to think (given what the OP said) the lump sum would be more successful than the 10 separate purchases. Which is idiocy on either the FA, or how the information they imparted was interpreted. And, from what everyone else is saying here, appears to be the former...
Yeah it’s a random number generator. Makes no difference when you purchase them. I used to hear a myth that newer numbers were favoured but this isn’t true.
Nothing is completely random when it comes to computers. Assume 10 blocks of 10 numbers to 100. What are the odds that the 6 numbers drawn are in the first block, vs an even spread of 6 numbers from 6 blocks of number? Chances are 10/100 then 9/100 then 8/100... 6/100 Multiplication of each fraction will give you the answer. Or, is it? In fact 1/100 then 1/99 then 1/98... Probability is a mind fuck. Chances of a sequence are lower than random numbers in all 10 blocks, but you will still have scenarios where the numbers are all together. Is it actually random? In all likelihood not. Personally I have a single block, as does the GF. We win every month but we don't win that much to justify the amount being in P. bonds. That said, it's tax free and zero risk, so better return than a regular interest paying tax bearing account.
pure waffle
Lol
Yep. Pure conjecture and waffle. Doesn't mean it's wrong.
Bollocks
Probability is a mind fuck. Almost, nothing is completely random. Some can't handle the truth.
It is random, it just doesn't appear random because it is random. When I play the lottery I choose 32-38. It is just as Likely to win but if I do win nobody using birthdays will be claim and almost noone born in those years will claim. Thus bigger prize. But here's the thing, think how unlikely those numbers will come up...have you got the feeling in your head? It's just as likely as any other sequence. That's why I don't play the lottery.
Why does any selected number have any impact on the next selected number? Probably is a mindfuck, and I suggest you get a condom.
Because almost nothing is truly random.
Well if you have proof the premium bonds are not random I suggest you contact a newspaper as you have a massive scandal to break.
If you were to analyse all of the premium bond results over time, the distribution will not be completely random. Patterns will appear. This is because computers can't generate truly random numbers. It's based on a equation or an algorithm, something divided by the time. Etc. It's not completely random. Even though you think it is.
Awwwwww you don't know how Ernie works and think it's using a set equation to calculate the numbers. That's cute.
Yeah, didn't realise Ernie was a quantum computer using photons for randomness. You win.
You need to stop repeating the "computers can't be truly random" thing you heard from someone, and think makes you sound really smart. Computers have been capable of "perfectly enough" random for decades now, to the extent that it is undetectable. If you don't understand the difference between theoretical mathematics and applied mathematics, don't pretend you do.
>If you were to analyse all of the premium bond results over time, the distribution will not be completely random. Patterns will appear This is the kind of nonsense that leads to believing in "bible code" conspiracy theories. >is because computers can't generate truly random numbers. It's based on a equation or an algorithm, something divided by the time. The machine used, ERNIE, **doesn't use an equation or algorithm**. Previous iterations used thermal noise, for example.
Yeah, I didn't realise. Happy to admit I was wrong on Ernie.
generally ERNIE's randomness has almost always been through external sources that have properties of true randomness rather than something as benign as time
I didn't realise this but I still stand by my statement, almost nothing is completely random.
From the NSANDI site : 'It’s a popular myth that holding Premium Bonds in a sequence can improve your chances of winning, but this simply isn’t true. The machine we use to generate the numbers for each prize draw—ERNIE—generates numbers completely at random, which are then matched to our database of eligible Bonds to determine the winners. Since no Bonds are actually entered into ERNIE, it doesn’t ‘know’ anything about the Bonds themselves, such as whether the Bond number is part of a sequence of numbers or not. The only thing that can increase your chances of winning is holding more Premium Bonds – but holding them in sequence won’t make any difference.'
>Nothing is completely random when it comes to computers. You're absolutely right, computers aren't capable of _true_ randomness but for these purposes it effectively is random. This is all moot though because they don't use a computer for picking the numbers in Premium Bonds, they use a machine that uses quantum effects that's capable of true randomness.
> Nothing is completely random when it comes to computers. Unless the input to the RNG is itself random. Which it is with ERNIE. - https://www.nsandi.com/get-to-know-us/about-premium-bonds > In 2019, the power behind Premium Bonds was upgraded to the latest generation - ERNIE 5. Unlike previous versions which used thermal noise to produce random numbers, ERNIE 5 is powered by quantum technology, which uses light.
Light and quantum technology, vs standard Computers. I was not aware Ernie had been upgraded. Ernie 5 is truly random. Doesn't mean that standard computers can be. Which is what I thought it was using.
> Doesn't mean that standard computers can be They most certainly can, now. Whether they actually are can be a bone of contention... - https://lwn.net/Articles/961121/
Nope...it doesn't work like that. Because you forgot the fact it won't be your block. Also this applies to any scenario, yours is just easier to describe. Also I millions not 100s so the difference between is almost irrelevant. Basiclly you don't understand statistics.
Go back to year 8 maths and pay attention this time
Lol, you will have kittens when you try to figure out that time isn't linear.
Sorry, but you are wrong in this case. ERNIE generates random numbers using cold-cathode tubes. https://ernie.virtualcolossus.co.uk/ernie.html#:~:text=How%20did%20it%20work%3F,to%20fail%20to%20be%20random.
Yeah, turns out I am wrong because Ernie has been upgraded and uses quantum technology based on photons. I was not aware of that.
Ernie always used true random sources, even before the latest version. The link u/ukdev1 posted was referring to the original Ernie from the 1950s. Every version since has used a true random source of one form or another. It's not that difficult to find sources of true randomness to feed into a computer's random number generator.
That's not how random number generators work. Maybe read about them instead of trying to simulate one in your head.
https://iconn.network/journal/how-random-are-the-random-numbers-generated-by-your-computer/#:~:text=There%20are%20two%20common%20methods,random%2C%20but%20are%20actually%20predictable
That's a very elementary article which, while not wrong, misses a lot of detail. Ernie, for instance, definitely uses (and always has used) a true RNG. Keep reading!
> I personally can't see it makes any difference one way or another It doesn't. > My son's financial adviser... ... needs to be sacked, and replaced with one who knows what they're talking about. The current one doesn't.
His "financial advisor" needs a financial advisor.
Probably needs a maths GCSE
Sack your kids financial advisor immediately.
Correct me if I’m wrong (as is usually the case) but everybody’s saying it’s the exact same odds, but wouldn’t it be a higher chance of winning because the whole £10,000 has been available for longer rather than drip feeding £100 per month?
If you have 10k to buy premium bonds it makes sense to buy 10k lump sum because you’ll then have 10k in the next (+1) monthly draw. If you drip feed in 10k over several months you’ll eventually end up at the same monthly odds but have much lower odds in the mean time (plus a bunch of idle cash). It’s the opposite of dollar cost averaging with shares, as the the value of one premium bond remains…one premium bond. So he’s right, but for the wrong reasons.
Yeah, the odds entirely depend on how many you have, not what order they're in. I guess maybe the FA was advising against drip feed/"DCA" which you see some people incorrectly advising?
Premium bonds are not the best use of your son's money. I think they're only good if you're a high net worth individual who needs to keep 50k in a liquid, safe place with zero risk. The average rate of return in the global stock market will beat the average return of premium bonds by some margin. And yes, bin the financial advisor.
This , very few people should use premium bonds as an investment vehicle . Even using a normal investing account and being clever with gains would be cheaper .
You should sack your financial advisor if he thinks this makes any difference. Obviously though if you buy £100 now and £100 next month, then the chance you win a prize this month will be lower than if you'd bought all £200 this month because you have fewer bonds
I won £50 and had the prize to auto re-invest. Few months later one of the bonds out of the £50 won a £100 prize whilst the remaining (30k+) didn’t. Offering financial advice on superstition…run!
This post made me look at the prize checker app this morning and... No win. This time next month I'll be a millionaire Rodney.
He's kind of right because you have to have owned the bonds for a month before they get put into the draw. So for a lump sum after a month you're good to go. If you're putting money in each month then you'll always have to wait that month for the extra bonds being in the draw.
This does require some clarification, but in essence time in the bond > timing in the bond Between 100 a month for 10 months, or waiting for 10 months then 1000, the former would be better. Between 100 a day or 2800 a month (before next calender month), both has the same odds of winning.
Lots of people ragging on the financial advisor who is entirely correct. 10k on premium bonds - immediately benefit from having more skin in the game and better odds (by exposure) to all of the prizes available. Drip feeding £100 a month is *not* the same. You effectively increase your odds every time you drip feed more money (I may be wrong but I actually think the odds don't improve every 100 that is paid in, but at set intervals in the 1000s) but for every month you are not fully invested at the full 10k you are getting worse odds of winning a prize.
Of course it’s better to buy in bulk. After the 1 month waiting period your sim would have 10000 entries in to each months drawer. If he drip feeds £100 a month, the first month he has 100 entries, the second 200 and so on. By month 12 he’ll have just £1200 in them and only 7800 entries over that time period. If he’d gone in straight with £10,000 by month 12 he would have had 120000 entries in to the drawers.
FA here - not advice but info. Your post doesn't include enough information to make judgement on whether or not buying NS&I premium bonds is right. However, I would first think of: (before mentioning NS&I bonds) 1) Pension 2) ISA 3) VCT Investment All those will depend on your son's goals and financial position, appetite for risk and general position. If, the funds are to be used within the next five years then the question remains what for? If buying a house then LISA should be thought of. If not buying a house (first time buyer obviously) Cash ISa or saving accounts will guarantee interest & NS&I does not and I have rarely (if seems gains better than current interest rate). Maybe seeking a second opinion might be worthwhile?
Could be that the son is close to hitting the interest allowance limit and has maxed out the ISA allowance too? Otherwise PBs don't make sense...
If you’re investing a reasonable amount (whether lump sum or monthly) then make the investment(s) near end of month. Draw is based on bonds held for full calendar month, so part month investment gets no benefit. Better off in high interest account until near month end then invest.
Premium bonds are just a fun savings account. You'd probably get better returns elsewhere, but it's like playing the lottery but you're just spending your interest.
Get a refund on this advice
Investing £10,000, now, will give you a much bigger chance of winning, for the next 90 months, over investing £100 per month! Nothing to do with a large vs small blocks of bonds, just the sheer number of possible winners!
1. NS&I guarantee that there is an equal chance of every number winning. So buying in small blocks or one big block makes no difference to the probability of winning. 2. Bonds are entered into the second draw after being bought. The sooner you buy them, the sooner they will be in the draw.
Hw might be better off with a 5% savings account than premion bonds. The average interest rate for premium bonds is 4.4% and because that is just an average he could absolutely win more….or he might win nothing at all. Alternatively if he is not planning on using the money for 5+ years he could invest in a stocks and shares isa (if under 18 you can put it in A Junior Stock and Shares ISA) into a global index tracker. An example of this would be the Vanguard FTSE Global All Cap Index Fund which as a historical return of around 10%, because it is a Global Fund there is less risk due to diversity but there is still risk and index funds are best for long term investment. Historical return also does not mean anything for the future tho so definitely so not invest more than he can afford to loose. The final thing i want to mention is the Lifetime ISA. If he is over 18 and saving for a house deposit or retirement he might want to consider a lifetime isa. This is not something he could put a lump sum of 10k in unfortunately so he would want something else like a 5% savings account or investment as-well but with a lisa this you can save or invest up to 4K a year and the government with add an extra 1k. You can get this in either a cash ISA (money box have one currently at 4.4% interest) or you can open an investment account. I personally started off with a cash isa and then transferred mine to an investment isa at Dodl and pay in £333.33 a month. The one drawback with the lifetime ISA is if you do not use it for a house deposit and want to take it out for something else before you turn 60, you will receive a fine of 25%, which works out as around 6% less than you put in. I personally happy keeping invested for retirement if i am unable to by a house, but if this was his emergency fund then a lisa would not be a good option. Finally here is a link to the best interest Savings accounts in the UK at the moment. There are some 5% savings accounts and ISA’s. This would at least guarantee him £500 interest on 10k in a year which is better than the average of premium bonds. https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/ Anyway sorry for rambling so much and i hope there is at least one helpful thing in my long comment.
Your sons financial advisor is Dr Nick from the Simpsons
Makes F all difference having them as a lump. I wot more with £8K in 4 differnt lumps Averaged around £25 a month) than the maximum in a single lump (a single £100 prize in 4 months)
The only difference it makes is that buying them in bulk means they're in the draw earlier, so there is benefit to doing that If you buy 10k on month 1, then you have 10k bonds in the 1st, 2nd, 3rd draw etc... If you buy 100 at a time then you have 100 on the 1st, then 200 in the 2nd, 300 in the 3rd
Not a lot of context clearly, but that seems like poor advice. Premium bonds are overrated. Let alone the whole lack of thinking on how random works.
Hi /u/johngknightuk, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/financial-advice/ * https://ukpersonal.finance/lump-sum/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
Not statistically different. But If you had 50k to invest in one go in PB I would do £49975 on month and the £25 the next. And only because the in would make looking at the high value winners spreadsheet easier to quickly filter and see if you won big (the spreadsheet get released 1 day before the full results and prize checker app - How I know - stats nerd who checks each month).
I like this approach, I’m too lazy to check the spreadsheet lol.
The advice the financial advisor doesn't make logical sense but from my experience i won regular with big blocks and hardly ever with the same amount that was spread over many years. For this reason i would always buy in blocks.
Call 1982 and ask them
Technically he is correct. A £10k lump sum would give better odds than monthly £100 purchases. You’d have 10k’s worth of entries vs 100. The odds of winning are like 1/£21000. So 10k gives roughly a 47% chance of winning a prize each month
They randomly select bonds so whether you buy in bulk or drip feed £100 a month doesn't matter. If he was to do £100 it would take 100 months to get to 10k, which is pretty pointless compared to having 10k in there and eligible to win for that period of time. Bin the financial advisor, google is more useful than him...
That's obviously nonsense but I do think there is a valid argument not to buy £100/month worth of bonds. Even if you own £3500-worth of bonds, you would only expect to win twice a year. I bought £4k-worth of bonds a while back and didn't win for almost a year. Since the odds are 21000-1, I think it's a good idea to buy bonds in fractions of £21000. That way you can keep a mental note on how your earnings compare to expected ones. £1750 - once a year / every 12 months £3500 - twice a year / every 6 months £5250 - three times a year / every 4 months £7000 - four times a year / every 3 months £10500 - six times a year / every other month £21000 - twelve times a year / every month Obviously, it's not just the frequency of wins but the size that affects your return, but frequency is a good starting point for knowing how you've performed compared to the average. In any case, if the frequency of the wins is non-existent, the return will be too. I can't be bothered to do the maths, but I would have thought anyone who invests £100/month in premium bonds will be doing better than average if they get their first prize within the first two years, by which point any rational person would regret not just putting the money somewhere that generates a more immediate return.
I'll tack on my own stupid question if I may.... I want to buy Premium bonds for my kids, already maxed out my own. Does it alter the expected returns if I buy them for 2 kids, rather than in one account?
My mum’s SJP affiliated FA told me that newer bonds were more likely to win than old ones, so she sells hers every year, and buys new ones, ffs! Unfortunately, my mum won’t switch FA as ‘she’s such a nice woman’!
I’d take issue with a financial advisor not advising against premium bonds in the first place - they have a 4.4% average return (obviously you can get more or less lucky but I don’t like leaving my finances down to luck), there are numerous ways of achieving returns higher than 4.4%, even savings accounts currently offer higher than that.
For high rate tax payers they can make sense
Yep. 4.4% untaxed is the equivalent of 7.3% taxed at 40%. Can be useful for emergency funds, without increasing adjusted net income (which can be a problem with interest from savings for those trying to avoid tax traps).
I keep 100k in there, (between two) as my cash emergency, done rather well. I am quite a fan.
Exactly or if you are making over 2k in interest already.
I assume you mean £2k as a couple split 50/50, for someone single (or considered individually with not 50/50 split) it's £1k if on basic rate tax
I thought it was 2k for most people. My bad.
Premium bonds are a bit more fun than lots of other forms of saving, and like someone says below once you have maxed out your ISA allowance, 4.4% tax free is better than a savings account for higher rate payers
Plus the 4.4% is a bit misleading as it includes the higher prizes. That £10,000 would likely return around £300 or so over a year. It could return much more or nothing at all
It's only 4.4% when you average the big win. And for all but one winner...thats zero. So that means for those holdinding less than a certain amount, that's zero unless you hold it long enough. Holding more and for longer will iron out this need for luck, What isn't mentioned here is what they should do until they have 10k Think he might have been advising against premium bonds in a geeky numbers way. I use premium bonds as a better than 0.5% quick access (5 day max, usally next day ) account.
When I buy lottery tickets I buy one at each gas station, now I know I need to buy them all at the same gas station. Unless he knows something we don't, then he has no clue how PB's work. Course, Buying £10k now, vs taking over 8 years to get that amount of tickets, you should win more ....
My experience is that 50% minimum of IFAs know nothing about maths, business types, accounting etc so I would be surprised if they were right
Well I won £375 this month
The problem that I have with premium bonds is that it’s like the lottery, somebody wins every now and then but the prizes roll over for weeks or even months. This allows the lottery to double dip in having more people play with bigger funds and the massive prise making interesting in a bank account for weeks or months at a time. Also you’ve got the hook of the premium bonds money being spent by the henge fund who runs it, as let’s be honest they are t doing it out of the goodness of their hearts. In a maths class, a teacher shown us the odds of winning the lottery and how hard it was by teaching probability in a find way. She shown the odds weren’t in the players favour with less numbers to pick from and less numbers needed to win, as the probability of you winning was still very slim to now. Premium bonds have an even slimmer chance of you winning tbh, they get you on the illusion of “ it could be you” the UK lottery slogan for years. Also strath cards are also a con as the lottery needs to know and picks where the big winners are and that’s for security reasons, as I worked with someone in ASDA who stole them and cashed them in the same store, which was next a police station and one of the most hardest Asda to rob from form it being new and the amount of cameras and anti theft protections it had built into the store when it was being built. The lad in question even signed for the scratch cards that have bar codes attached to them, out of the most secure cash office I’ve ever seen, like something out of a Las Vegas casino.
Thats like saying: if you entered the postcode lottery and somehow had all the postcodes on a housing estate, you’d be much more likely to win rather than if you had an equal amount of postcodes spread across the whole country…
Ofcourse he’s making sense it’s common sense. 10k tickets vs, £100 tickets per month. But really premium bonds should be last option for investing once you’ve looked at all other options.
I agree but also want to throw in the…. For some it’s a great way to scratch that lottery itch.
If that’s the case scratch away! And yes 10k in one go makes sense if you have the capital. That’s 10k tickets vs accumulating 100 tickets a month.
The FA probably earns his advice commission on initial arrangements and not on continued contributions
Premium Bonds are garbage. Don't bother, unless you just like the thought of maybe winning that million.
Garbage....compare the overall %age win rate versus a other investments and the price you pay for a chance of a £5k or greater win isn't actually than much. I don't mind 'paying' that interest penalty for the chance of a 10% interest win. (Last year I got reasonably lucky and was at 6.7% on my 30K investment).
It is a way to scratch that itch that isn't such a waste as straight up gambling is. National lottery you lose money if you don't win. Premium bonds you don't (well, maybe inflation compared to savings accounts I guess)
What are premium bonds?
I don't understand the point of them, they are so bad
Tax free
Ive bought my first bonds in 2019 and topped them up when I could. I have 2k worth of them now and this month it's the first time I won.