The Lemon Fool

"National Savings & Investments (NS&I) has bolstered the premium bonds prize pot by £80m, as well as upping interest rates on several savings accounts in response to upwards trends in the wider maket.

The government-backed savings organisation has announced it will increase the premium bond prize rate from 2.2% to 3%, the third rise in just a year taking the prize fund to just under £300m in January. However, the odds of a win will not change, remaining at 24,000-to-one as NS&I is offering more higher value prizes, rather than increasing the number of smaller prizes overall.

The number of £100,000 prizes will rise from 18 to 56, the number of £50,000 prizes from 36 to 112 and the number of £25,000 prizes from 71 to 223, with similar trends for the numbers ofr £10,000 and £5,000 prizes handed out."

https://citywire.com/funds-insider/news/nsandi-boosts-premium-bonds-prize-rate-to-3/a2404790 (free registration needed)
https://www.nsandi.com/interest-rates

The new January rate of payout of 3% is the highest rate since 2008, when the rate was decreased to 2.85% in November 2008 from 3.4%.

I’m sure a Lemon fool will bag a £5,000 plus win in 2023 !

And if Gengulphus was still here, he’d probably provide me with an estimated chance of the likelihood of that, albeit making certain educated assumptions about the number of Lemon fool holders, reaching a cumulative value, dividing it by the total value of Premium Bonds, which I know is an astronomical figure, and then fire back at me that, no, it is still very unlikely for someone on the Lemon Fool to win a prize of £5,000 or above…….

thebarns wrote:no, it is still very unlikely for someone on the Lemon Fool to win a prize of £5,000 or above…….

You are lucky - only 0.335% of people who have put £50,000 in premium bonds over 1 year win more than £5000
https://www.moneysavingexpert.com/savin ... or/#result

kempiejon wrote:

thebarns wrote:no, it is still very unlikely for someone on the Lemon Fool to win a prize of £5,000 or above…….

You are lucky - only 0.335% of people who have put £50,000 in premium bonds over 1 year win more than £5000
https://www.moneysavingexpert.com/savin ... or/#result

bvut do TLF PB holders hold 50K to win > £5000 in oine draw? Or to garner circa 1.4% (or whatever it is this week) over a year?

didds wrote:

kempiejon wrote:

thebarns wrote:no, it is still very unlikely for someone on the Lemon Fool to win a prize of £5,000 or above…….

You are lucky - only 0.335% of people who have put £50,000 in premium bonds over 1 year win more than £5000
https://www.moneysavingexpert.com/savin ... or/#result

bvut do TLF PB holders hold 50K to win > £5000 in oine draw? Or to garner circa 1.4% (or whatever it is this week) over a year?

The return rate is around 3% so a £50k holder can expect £1500pa with the slim chance of a much bigger one off amount. It’s just not worth holdding much less than £10K though as you’ll probably do a lot worse than 3%

The 3% return includes both of the million pound prizes, I recon it sensible for most investors except 2 to exclude these prizes from the sums which will bring the return down to more like 2%. So average luck and I recon £50k brings about £1k per year. Of course some will win much more and other much less.

kempiejon wrote:The 3% return includes both of the million pound prizes, I recon it sensible for most investors except 2 to exclude these prizes from the sums which will bring the return down to more like 2%. So average luck and I recon £50k brings about £1k per year. Of course some will win much more and other much less.

Yes - but that's my point.

TLF holders probably aren't into it to win > 5K in one hit. But rather to take that ~1K . anything else is a bonus, but that's not the resasoning.

kempiejon wrote:The 3% return includes both of the million pound prizes, I recon it sensible for most investors except 2 to exclude these prizes from the sums which will bring the return down to more like 2%. So average luck and I recon £50k brings about £1k per year. Of course some will win much more and other much less.

No the prize pool monthly is now 96.3 million so 2 x 1m does not make much of a dent in it. It certainly does not reduce the 3% to 2%

scrumpyjack wrote:

kempiejon wrote:The 3% return includes both of the million pound prizes, I recon it sensible for most investors except 2 to exclude these prizes from the sums which will bring the return down to more like 2%. So average luck and I recon £50k brings about £1k per year. Of course some will win much more and other much less.

No the prize pool monthly is now 96.3 million so 2 x 1m does not make much of a dent in it. It certainly does not reduce the 3% to 2%

That's down to the granularity of the return to bondholders, surely? (Although the million pound prizes are often attributed.)

Return on PB Fund: x%
Return typically expected by an individual PB holder: < x%

XFool wrote:

scrumpyjack wrote:

kempiejon wrote:The 3% return includes both of the million pound prizes, I recon it sensible for most investors except 2 to exclude these prizes from the sums which will bring the return down to more like 2%. So average luck and I recon £50k brings about £1k per year. Of course some will win much more and other much less.

No the prize pool monthly is now 96.3 million so 2 x 1m does not make much of a dent in it. It certainly does not reduce the 3% to 2%

That's down to the granularity of the return to bondholders, surely? (Although the million pound prizes are often attributed.)

Return on PB Fund: x%
Return typically expected by an individual PB holder: < x%

Yes but the claim was that the £1m prizes, assuming you don't win one, reduce the average return from 3% to 2%. It actually reduces the 3% to 2.977%!

The monthly payout is rather higher than suggested above, from Jan it is actually a whisker under £300m. From Jan the top tier of prizes, those over £1K add up to 10% of this value (spread over 12K prizes out of ~5m total). In reality, even if you never win a top tier payout and your holding is big enough to smooth out the quantised nature of the prizes, you should get at least 2.7%, more like >£1,350


Here is the breakdown:

https://www.nsandi.com/get-to-know-us/m ... allocation

Last month there were 5 million prizes (approx) of which about 660 were over £1k. This figure rises to just over 2000 in Jan.

From next month roughly £270M of the £300M prize pot (90%) goes on prizes of £1000 or lower, which is about 97% of the prizes.

So for the average bondholder the expected rate of return should be, erm, about 2.7%, roughly.

https://www.nsandi.com/get-to-know-us/m ... allocation

DrFfybes wrote:Last month there were 5 million prizes (approx) of which about 660 were over £1k. This figure rises to just over 2000 in Jan.

From next month roughly £270M of the £300M prize pot (90%) goes on prizes of £1000 or lower, which is about 97% of the prizes.

So for the average bondholder the expected rate of return should be, erm, about 2.7%, roughly.

https://www.nsandi.com/get-to-know-us/m ... allocation

Err didn't I say that?

Padders72 wrote:
Err didn't I say that?

Erm yes.

In my defence I probably started the post before yours, but it took a while, then I took the dog out, then finished it whilst MrsF wasn't asking me questions, and ignored the "this thread has been updated, are you aure you want to post" warning

Just makes it doubly valid!

And you corrected my type regarding number of tier 1 jan prizes, it is as you say indeed 2K not 12K.

scrumpyjack wrote:

kempiejon wrote:The 3% return includes both of the million pound prizes, I recon it sensible for most investors except 2 to exclude these prizes from the sums which will bring the return down to more like 2%. So average luck and I recon £50k brings about £1k per year. Of course some will win much more and other much less.

No the prize pool monthly is now 96.3 million so 2 x 1m does not make much of a dent in it. It certainly does not reduce the 3% to 2%

Ah yes you're right. Ta, I'll go and look at my maths again and work out why I think 2% is more likely than very nearly 3%.

The prize pool for January is estimated to be £300M, so if you want to knock off the two £1 million prizes, it will barely dent the new overall 3% rate.

For info, and purely based on our family’s 4 full holdings, which we have held for 2.5 years, then our monthly winnings, over the piece, have approximately matched the stated winning % rates, since they have been 1, 1.4, 2.2, so hopefully this will continue trending with the new 3% rate.

Padders72 wrote:Just makes it doubly valid!

And you corrected my type regarding number of tier 1 jan prizes, it is as you say indeed 2K not 12K.

Yeah, but you used "quantised"