€25k invested in prize bonds

Agent Smyth

My understanding of the prize bonds is the fund will be used by the government to offset state borrowings. Now I know the 1.7 billion fund is a small amount in the greater scheme of things but I would like to know if the government went to the markets to borrow this money, What rate would they be charged. my guess is it would be around 5 to 6 % mark.

oaklands

Agent Smyth wrote: »

.... my guess is it would be around 5 to 6 % mark.

I think they(we) got a small bit better than that recently.

Given the likely recent pressure that the banks put on the Gov/NTMA to reduce rates, which in all honesty doesnt sound unreasonable, I was just checking to see what the banks are charging for personal loans.

One of the main main banks is charging between 10->15% APR on personal loans, which I presume they only give out to rock-solid punters these days(if at all) who are asset or guarantee backed (i.e. safe-bets). So I wonder did the government seek a quid-pro-quo from the banks and get them to lower the lending rates for the citizens who are paying all the bills via tax & interest! Probably not, as that would be market interference (which the PB adjustment musn't be ???).

Agent Smyth

In April the Independent reported that Irish Government 10 year Bonds fell to 3.98% which is more then double what they are going to pay us for the PBs, considering that there is no guarantee of a return on the PBs they should at least pay market rate for the fund.

gabbytheking

Agent Smyth wrote: »

In April the Independent reported that Irish Government 10 year Bonds fell to 3.98% which is more then double what they are going to pay us for the PBs, considering that there is no guarantee of a return on the PBs they should at least pay market rate for the fund.

Very unlikely though man! I'd be surprised if they pay anything at all. If you think about the amount of Bonds that must be wrote off each year from lost bonds and unclaimed bonds(after death etc) each year, its mad. And that's before you even consider any Present Value of cashflows!

Alderwould

The 6yr instalment bond is still paying 2.41% AER Tax free which is quite good when one considers the growth required from a managed fund to net such a return after CGT, Management fees and other charges...

gordongekko

Alderwould wrote: »

The 6yr instalment bond is still paying 2.41% AER Tax free which is quite good when one considers the growth required from a managed fund to net such a return after CGT, Management fees and other charges...

how do you know what variable rates are going to be for the next 6 years?

Alderwould

gordongekko wrote: »

how do you know what variable rates are going to be for the next 6 years?

2.41% AER guaranteed and tax free is quite decent. When one considers the growth required to match it once CGT and in litany of fees are taken out of an Insurance product...

scotchy

Just in the door from work.

A cheque for €50 sitting in the hall:)

First win in a while. I Have about 6 or 7 K in bonds I think.

Seriously thinking of getting rid of them and not buying any more after the recent prize changes.

.

oaklands

In case you may be interested, attached is a merged copy of the 1993 Regulations and the subsequent Ammendments up to 2008.

Its easier to understand when all the changes are merged into one document.
Any ammendments mades are highlighted in a different colour and/or formatted with strike-through.

have fun....

NB: This is not an official document and is subject to correction.

pbwinner

Winnings from today's draw: €0
Total winnings since Feb 2011 on €25k: €1100

oaklands

It looks like the prize fund has been adjusted in today's draw in line with the new rates.

However, as per my earlier post it looks that they may have ignored regulation 11 which suggests that they should not have adjusted the prize fund until next month, as the new rate was only effective from June 2nd.

If my reading is correct, the impact is that they plan to pay out €160K less this month than they otherwise should (€40k x 4).

Will be interesting to see how this pans out.......!

Agent Smyth

Winnings from 07/06/13 draw €50
Last win 31/05/13 €50
Total wins 2013 €500
Total wins 2012 €375

Agent Smyth

Have just rung the PB to enquire why they have adjusted the fund in June and not July.
they took my name and number and will get someone to ring me about my query
probably wont get a call today but will ring again on Tuesday if they haven't called

Agent Smyth

Just got a call from the PBs about my query and they basically told me that the fund was calculated correctly with the new interest rate and quoted the press release,

"The value of the monthly prize fund is recalculated at the start of each month by applying a variable interest rate (currently 1.75%) to the value of all Prize Bonds outstanding at the end of the previous month. The Prize Bond Company reserves the right, with the prior approval of the NTMA, to amend the number and value of prizes. Prior to the introduction of any changes to the variable interest rate or the prize structure, a notice will be placed in the main daily newspapers and on the www.StateSavings.ie website."

I then asked about PB Regulation number 11

11. (1) The number of prizes and the amount of each prize to be awarded to bonds selected for prizes in a draw shall be determined by the Operator with the approval of NTMA provided always that the total amount made available for the payment of prizes generally shall not in any event be less than the amount of interest payable on all bonds outstanding at midnight on the last day of the month immediately preceding the month in which the draw is held.

The difference being they calculate at the beginning and the regulation calculates at the end of the month,
They again said they would look into it and call me back on Monday.

Agent Smyth

If my figures are correct it would seem the PB fund is about 1,779,519,99 Euro at the end of May 13,
Which means at the moment there are about 284,723,200 bonds.

During May I reckon the PB fund grew by 40,284,444 Euro,
Which means there will be an extra 6,445,511 bonds in each draw during June compared to May.

I would estimate that on average there was a net growth in the PB fund of 1,831,111 Euro each working day during May.
Unless I have made a mistake (which is quite possible) That's nearly double the daily rate in April.
There will be 812 less winners per week (€50) in June due to the percentage cut to 1.75%
but if the interest rate was left at 2.25% then there would be an extra 349 €50 winners per week

hairyprincess

Winnings from todays draw: €0

Total winnings since Feb 2010 on €500: €150
Total winnings since Feb 2011 on €50: €0

oaklands

@Agent Smyth
My own calculations agree with yours.

If the regulations were implemented incorrectly, then 1,161 additional €50 prizes should have been awarded in today's draw and similarly for the rest of this month. This would equate to a shortfall in prizes of €58k today or €232k for the full month of June'13.

The surge last month seems to fit with the expiry of the guarantee for amounts over 100k, and is likely to increase further as fixed term deposits mature.

oaklands

It is worth noting that the effective/average return on winning a €50 or €100 prizes is now at 1.347% (down from 1.4991% last month).

For people with less than €25k in PBs, then only the €50 prizes should be considered when looking at an effective/average annual return, which is 1.2%(down from 1.3496 % last month)

(if you are comparing to deposits, dont forget to allow for the 33% DIRT)

Lets face it the odds of winning any of the other prizes is so remote there is no point including/considering them at all, as only a very small number of people will ever win the 1M, 20k or 1,000 prizes in any year.

By removing 6 x 1M prizes every year, they have mitigated the impact on the average return for most people.

Based on the experience of the last 6 months, we shouldnt expect to see any material slowdown in the growth in PBs as the real issue seems to be bank guarantees for deposits over 100k. It seems the only way the Banks will get what they want is if the Gov closes down all state savings and PBs, rather than messing around with rates.

aaakev

Was going to do it last year but never got around to it, iv 2k in my pocket and was going to throw it into pb today, good idea?

aaakev

Well i bit the bullet and bought €2,000 worth this afternoon, it probably would have been spent on stuff i dont need so its safe now for a while! Fingers crossed

Agent Smyth

@ aaakev

Best of luck, Don't forget to keep us informed of any good news.

Agent Smyth

Just got a call from the people at the PBs, Informing me that the NTMA will be writing to me in relation to my query about the interest change.

FoolsGold1

No winnings from Draws of 31/5/13 and 7/6/13.
Last win 12/4/13 - €50.
Total winnings for 2013 - €500.

oaklands

Agent Smyth wrote: »

Just got a call from the people at the PBs, Informing me that the NTMA will be writing to me in relation to my query about the interest change.

Prize fund reduced for 2nd time this month & still no definitive clarification from PB office or NTMA about potential error in the application of regulation 11!

GarIT

I'm new to PBs so I was looking for a bit of advice, I got €1,500 worth at the end of April and I won €50 today. It says at the bottom of the tracker page to write to them, Do I actually need to do this? I thought they would have contacted me.

It also says to send them the bond certificate, do I actually need to do this or would a copy do?

oaklands

You should get a cheque in the post mid next week, without doing anything.
If you dont get anything within 10 days call them up.

FoolsGold1

No and No! They'll post your cheque which will probably arrive on Tuesday or Wednesday. Congratulations too - you are one of the lucky ones.

My winnings from today's Draw - Nil. :mad:
Last win 12/4/13 - €50.
Total winnings for 2013 - €500.

Agent Smyth

Winnings from 14/06/13 draw €0
Last win 07/06/13 €50
Total wins 2013 €500
Total wins 2012 €375

hairyprincess

Winnings from todays draw: €0

Total winnings since Feb 2010 on €500: €150
Total winnings since Feb 2011 on €50: €0

pbwinner

Winnings from today's draw: €50
Total winnings since Feb 2011 on €25k: €1150