€25k invested in prize bonds

uberalles wrote: »

Fair enough that Lotto has a fixed number of balls and PB are a variable over time but from a fixed point in time, say an end of year report stating PC qtys is it possible to calculate the likelihood of winning the jackpot?

Anyone got an end of year report for PC stating qty of PC numbers out there?

Well if you know the number in circulation at the time of the draw the your odds are simply the number of tickets in circulation divided by the number of tickets you hold.

uberalles wrote: »

Say for the top prize is there any way of calculating the odds of winning?

Say if you spend 1000 on the lotto versus 1000 on Prizebonds over a year.

Very difficult or impossible question?

Well there are 500 million (give or take a few million) prize bonds in each draw, this week there were 8,967 'prizes' given out, 8,951 of those were for €75, so you can work out your odds from that.

Haven't had a win now in almost a year.

Cute Hoor wrote: »

Well there are 500 million (give or take a few million) prize bonds in each draw, this week there were 8,967 'prizes' given out, 8,951 of those were for €75, so you can work out your odds from that.

Haven't had a win now in almost a year.

Thanks Cute Hoor

500 million - where did you get that figure from?

Winnings from yesterday's draw: €0
Total winnings since Feb 2012 on €12k: €75

According to the prize bonds web site,
"At end December 2011 the value of Prize Bonds outstanding was €1.4 billion and there approximately 231 million individual prize bonds."
so i would think there there is anywhere between 231 and 300 million prize bonds as of now
i think some where here or on their web site i read the prize fund is equal to 3% of the total fund.

^ well I've got €1,500 accounted for out of it already. I might just put the rest toward a holiday next year.

Winnings from todays draw: €0
Total winnings since October 2008 on €18K: €1200

Date of last win: Sept. 14th 2012

€0 winnings this week

Prize Bonds owned: €1037.50

Total winnings since 1982: €830.92

Last winnings: €75 in March 2010

oaklands wrote: »

Based on my calculations and the probabilities for the Nov 2012 draws the performance for your PBs over a full 30 years since 1982 should have been on average:

# Prize Bonds: 166
Duration held: 30years x 52weeks = 1560 draws
Base Value: €1,037.50
Expected Tax free return: 2.254% per annum
DIRT Equiv Return: 3.2196%per annum (assuming DIRT at 30%, equivalent Interest rate in a Bank)
Average weeks between wins: 167.3 (for 166 PBs - similarity of numbers is just a coincidence)
Expected Average Winnings: €23.38 per annum
Expected Average Winnings: €710.47 (based on a full 30 years x 52 weeks or 1560 draws)

So if my calculations are correct, your are ahead of the game

If you havent held the 166 PBs for all that time your performance has been even better.


Caveats:

1. All calculations have been made based on probabilities & prizes for Nov 2012 draws only. The number of prizes change every month. The chances generally improve ever so slightly to win €75 prizes and are slightly less for the larger prizes as the number of PBs increases.
2. For the calculation of Winnings & Expected Return rates above, I have only included winnings of €75 and have excluded the larger prize amounts.
3. Assumes winnings are not reinvested.
4. All 166 bonds are €6.25 ones. (in 1982 they would have been IR£5 or €6.35. I understand odds for the older PBs are automatically increased to take account of the difference in values)
5. Number of PBs in Nov 2012 draws: 247,832,000.
6. Number of prizes in Nov 2012 draws: 8,951.
7. Most importantly, the calculations assume average performance for the average PB on average.
8. It is possible to have multiple wins in one draw (but rare for small holdings).
9. Assumes no errors in my calculations .

Yes, I reckoned we were doing pretty well overall.

19 units were bought in the 1980s,
35 units were bought in the 1990s,
104 units were bought in the 2000s,
8 units were bought in 2012.

So considering that most of our units are relatively new, we are well up on our investment!

Btw, many thanks for all your calculations!

If you buy online, how long do they take to deliver them ?

Bugger. Needed them for the 12th, they'd be too late

Winnings from last Friday's draw: €75
Total winnings since Feb 2012 on €12k: €150

I have purchased some PBs recently & was interested in the expected returns as an input into deciding to invest or not. I have also seen a lot of queries related to chances of winning and likely returns etc.

So I did up one page showing the expected 'average' performance of different sized holdings. I also did up a second page on the probability of winning the €1 million or €20,000 prizes. (see attachment below)

Calculating probabilities is a complex challenge for such a large number of bonds (approaching 250 million), so I wouldn't be at all surprised if errors were reported. If so, I will do my best to correct and re-publish accordingly.



Some of the conclusions that jump out at me are:

• The overall return at 3% tax free isn't bad, but nearly everyone can't and won't get this 3% return. So forget 3%.
• The probability of winning big is so poor, I suggest that it shouldn't factor into any decision to invest other than for a little bit of extra fun.
• The expected performance based on €75 euro wins is OK, considering its TAX free and is effectively invested as short term money once the initial 3 months holding period has expired. (see also second last bullet point below)
• The other state savings options available, give a superior return, which is guaranteed vs 'expected' average returns with PBs. However, your money is effectively tied in for multiple years in order to get these superior returns.
• With holdings of less than 10 PBs, you will be doing very well to win once in a lifetime.
• With a holding of 500 you might expect to win once per annum
• With holdings of just over 25,000 you might expect to win on average once per week (although some weeks you would have multiple wins, which means other weeks you would have no wins)
• In order for the averages to kick in, particularly with holdings less than 25,000 bonds, there is no point in investing for short term. This of course means that for most people only a long term investment strategy would be appropriate and as such the expected returns should be compared against longer term investments elsewhere.
• If you are not liable for DIRT (some people over 65 with income under set threshold), you may even get a better return in your local bank. If you are self-employed or a proprietary director you will be liable for DIRT at a higher rate (30% + 4% prsi) - so PBs and state savings can deliver an even better nett return vs bank interest.

I have attached a PDF of the details, which I hope is of interest and help for some. Suggested corrections to the calculations or observations welcome.

CAUTION: Please ensure that any investment decision you make is based on information you are sure about or based on advice from a professional advisor. (Which I am not)

Attachemnt was updated to correct for error in 'weekly wins per annum' column on page 1.