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On Sun, Apr 24, 2011 at 11:00:03AM +0100, Brad Rogers wrote:
> On Sat, 23 Apr 2011 20:59:39 +0100 Henry Bremridge
> <henry.bremridge@xxxxxxxxx> wrote:
>
> Hello Henry,
>
> > I have a £100 in premium bonds. According to
>
> Our family has quite a considerable sum of bonds. There's rarely a
> month goes by when we don't get something. Normally, no more than £100,
> sadly.
>
The AVERAGE return on premium bonds is 1.5%
(http://www.nsandi.com/savings-premium-bonds). By definition if some people
get £1m then the average payout for most is going to be derisory.
This at a time when inflation is 4% (CPI:
http://www.statistics.gov.uk/cci/nugget.asp?id=19) and the Bank of England
believes this is going to be the case for the rest of this year
(http://www.bankofengland.co.uk/publications/inflationreport/irlatest.htm)
See http://www.bbc.co.uk/news/business-11331052 for a personal
measure of inflation.
Therefore while there is a low probability of winning a lot, there is a
high probability (say 95%) of LOSING 4% over the next year.
> > Then I have a 95% chance of getting nothing. The cash is secure, the
> > return on investment is not.
>
> Still better odds than the lottery. OTOH, the biggest pay out is only
> one million. Of course, there's no risk of having to share a bonds win
> with a (potentially large) group of other people.
>
Thats why I have a £100 (the minimum). I can afford to lose £4 a year.
A lot depends on your feelings on risk and reward.
--
Henry
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