€25k invested in prize bonds

Agent Smyth wrote: »

It's very easy to calculate what the fund value is at the end of each month
This is because the prize fund is .5% of the total fund

I think it may not be that straightforward. Because a fixed €5,280,000 was allocated to big prizes in 2018 and 2019, and it would depend how that calculation is done in conjunction with the monthly change in €50 prizes. A sort of unintended consequence of fixing the value of big prizes, is that the return given to all €50 winners as a collective keeps going up. As long as more bonds are bought each month than are cashed in. But that can't be known at the start of the year.

In 2018 €5,280,000 was paid out in big prizes, €11,169,100 in €50 prizes. Percentage of prizes money to €50 prizes 67.9%. In 2019 €5,280,000 was paid out in big prizes, €12,352,400 in €50 prizes, 70.05%. That can be applied to the 0.5% overall return to say that €50 winners as a collective got a DIRT free return of 0.3395% in 2018, 0.3502% in 2019. Equivalent to 0.473% subject to DIRT (35% in 2019), which is a decent return in today's interest rate environment.

Of course you need a lot of bonds to achieve that average. Somewhere along the way if the fund keeps going up, a re-balancing of the prize structure might happen. It will happen if the notional interest rate changes, like it did in August 2017.

Agent Smyth wrote: »

Your all over thinking it

I was simply trying to express it as a formula.

If I alter the formula above to (((wpf*52)+1,900,000)/i) where wpf is the weekly prize fund and i is the declared interest rate then I get exactly the same result as you did:

=(((€328,400*52)+ €1,900,000)/0.005) = €3,795,360,000

The difference is whether a year is 52 weeks or 365 days, which is probably moot as the results are very similar.

The Indo seems to be the only paper so far to use the media briefing. Sometimes the papers can mangle the information, but they have covered it accurately. They picked up on something I noticed with the figures. The sales were actually down in 2019 compared to 2018, but because encashments were lower the overall fund increased.

https://www.independent.ie/business/personal-finance/prize-bond-sales-surge-of-530m-raises-fund-to-365bn-39192647.html

abff wrote: »

Look at the latest figures, the prize fund available for €50 prizes is just 0.36% of the total fund. This means that a person with a total holding of €25,000 can expect on average to win 1.8 prizes a year. Someone with €100,000 can expect to win on average 7.2 times a year.

Of course there will be huge variations around this average. With a total holding of €100,000 I waited almost 6 months between wins from mid July last year to early January this year (when I won €100) and another 3 months for my next €50 win. Then I won €50 on April 24th, another €50 the following week and €100 this week.

Total wins to date are as follows:

2017 (8 months): €500
2018: €200
2019: €500
2020: €350

Overall my net annualised return has been just over 0.5%, which is somewhat ahead of expectations and an awful lot better than I would have earned if I had put the money on deposit.

2017 is slightly distorted because the notional interest rate was 0.85% for the first seven months, changed to 0.5% on 01 August. 2018 and 2019 combined are exactly on the expected average, and you are looking good to exceed it in 2020. I also got a return of around 0.5% in both 2018 and 2019, which I posted about. I have a bit more than €100K, but like you I have had 26 weeks and 15 weeks with no win in the past three years.

You may have seen my post #5963 where I counted the wins achieved by 60 million bonds. That is a big enough sample to prove the average luck 1.8 and 7.2 calculations. But someone would need to have many multiples of 100K to guarantee that return over a one or two year time scale.

abff wrote: »

Absolutely. I think the “residual” return for the first 3 months I held bonds was around 0.5%, but that’s a relatively small proportion of the 3 years for which I have held them. The variation from feast to famine and back again strikes me as somewhat untypical, but I’m probably not an extreme outlier.

At today’s retail rates, even one €50 win or better (a 99.93% probability) is better than the net return I would receive by putting the money on deposit, so I think I’ll stick with my current approach for now.

Needless to say, this should not be looked at in isolation. It should form part of an overall investment strategy that includes both higher risk and lower risk assets.

That is a function of you owning about 0.003% of all the bonds. Much too small statistically to establish a regular pattern. It would be far less likely to get your 14 prizes in 2018/2019 at regular intervals of 7 or 8 weeks.

I can echo your experience in that 11 of my 15 wins in 2018 were concentrated into just 3 months, 2x4, 1x3, obviously leaving just 4 wins in the other 9 months.

Just realised I won €50 last Friday, was wondering why there was a random lodgment to my bank account and then the penny dropped :-)

Having had wins in each of the last three drawings, I find myself irrationally disappointed that I didn't feature in this week's list. Another long famine looms.

Havent logged in to the tracker for ages. Logged in to see that I won €50 last week. First win in a year.

Nothing for us this week.

abff wrote: »

I agree that an even distribution of prizes would be unlikely, but I suggested that the actual pattern was somewhat untypical, but probably not a complete outlier…….

While I know it’s completely random, I can’t help feeling that I’m on a bit of a roll at present and will probably be checking my results with more anticipation that usual over the next few weeks. Not very logical, but human nature I guess.

I was interested in this series of posts and I think we have all had the “lucky streak” feeling from time to time (sometimes calling it a glitch or whatever!) I’ve graphed my wins over the last few years to see what the pattern was.


Note that my holding changed at the very end of 2018. So my win rates are as follows:
2018: Holding - €200,000, number of €50 wins is 12 – .3%
2019: Holding - €250,000, number of €50 wins is 20 – .4%
2020: Holding - €252,000, number of €50 wins is 11 to date

Points of note:
Low point: 13 consecutive weeks in 2018 with no win
High point: 5 consecutive weeks in 2018 with a €50 win each week (all in the month of June)
High point: 3 consecutive weeks in 2019 with a total of 5no. €50 wins

Gaps between wins:
1 x 13 weeks
2 x 7 weeks
3 x 6 weeks
3 x 5 weeks
1 x 4 weeks

Conclusions:
Viewed by week, no pattern emerges
Viewed by month, its slightly better, in that I win most months, but the number of wins is very unpredictable, varying between 0 and 5.

dxhound2005 wrote: »

That is a function of you owning about 0.003% of all the bonds. Much too small statistically to establish a regular pattern.

This really says it all. While my annual winnings are somewhat in line with the notional interest rate (adjusted for the large prizes), for even the larger holding here monthly and weekly winnings viewed in isolation are very unpredictable.

Negative_G wrote: »

Winnings on 15th May 2020: €50
Last win on 4th October 2019: €50
Previous win 14th June 2019: €50

I must say, 7 months for a €50 return is pretty applying when there is €70k 'invested'.

I presume you intended to say 'appalling'? I agree that it's less than would be expected based on an average prize fund of around 0.36% per annum, excluding the larger weekly prizes. Your average expectation over 7 months would be €150 and over a full year would be €250.

So your actual 'winnings' were around 1/3rd of expected winnings over the past 7 months and around 3/5ths of expected winnings over the past 12 months. In percentage terms, it equates to a net annualised return of around 0.12% over the past 7 months and 0.21% over the past year.

This is disappointing, but probably still better than you would have earned if you had put the money on deposit, given the abysmally low interest rates that are currently available on deposits. An Post accounts currently pay 0.15%, subject to DIRT and rates from the various banks are generally a lot worse, with most offering 0.01% or 0.02% or even 0.00%.

Mantis Toboggan wrote: »

I'm trying to buy prize bonds but it's saying I need to download a form complete it and post it off.

Is it possible to just buy these online?

You can buy them online. Are you a new customer for them?
"Existing customers may already be registered for online purchases of Prize Bonds and Fixed Term State Savings Products.
Please complete Personal Details to proceed."
https://www.statesavings.ie/prize-bonds

Yeah new customer. Perfect cheers.

€50, happy days.

dxhound2005 wrote: »

Maybe you have done some research in the last few days, with a view to getting a better return? It is a bit of a recurring theme on the thread, but it turns out there is very little choice if you want to fully protect your capital. 0.21% per annum, subject to 33% DIRT is the best you can get with easy access. Even tying up your money for longer periods is not much better.

http://www.moneyguideireland.com/best-savings-rates/instant-access

Of course there are lots of other ways of making money out of money. But the occasional visitors to the thread who derided us for not being in the stock market, have not made any appearances lately with their surefire tips.

I meant to come back to you weeks ago but you are probably correct. To have easy access to the funds and protection on the capital there doesn't seem to be many alternatives.

Nothing for me today. On 08 May the Irish Times were trying to find out how much was the spike in sales.

https://www.irishtimes.com/business/economy/prize-bond-sales-fall-as-fund-reaches-record-high-of-3-6bn-1.4248595

The company said it has seen an increase in sales “in recent weeks, which has since steadied to normal levels of purchasing”. The company declined to set out the extent of the increase in sales.

They could have worked it out from the newest winning numbers. Taking the numbers from the draws of 28 Feb and 29 May, the combined sales for the three months was €192 million (30,720,000 new bonds). This compares with March/April/May sales 2017 €146.33 million, 2018 €153.96 million, and 2019 €127.17 million.

Unclaimed Prizes (Annual Report 2019).
At the end of 2019, the number of unclaimed prizes, built up since the launch of the product in 1957,
amounted to €2.86 million. Unclaimed prizes are defined as not claimed after six months. It should be noted
that we communicate with every prize winner at the address we have for the customer. Unclaimed prizes
primarily arise due to customers not notifying us of their change of address. We encourage customers to
notify us of any changes as early as possible after the change.
The amount outstanding in these prizes is a very small part of the value of prizes awarded over the years
since the incorporation of the Prize Bond Scheme. All prizes are listed on the State Savings website, www.
StateSavings.ie. It is important to remember that prizes are held indefinitely until claimed by a bond holder.

People with a lot of money can get careless about it. The €2.86 million being held by Prize Bonds is dwarfed by the vast amounts in dormant accounts, those with no activity for 15 years. The State is taking €43 million of that money this year to spend on services. Loads of lottery prizes go uncashed. There are hundreds of millions of Punts still not converted to Euro. And some people put their valuables in bank vaults and abandoned them there.

https://www.irishtimes.com/news/ireland/irish-news/thousands-of-boxes-of-valuables-lie-unclaimed-in-bank-vaults-1.3815357

The €2.86 million is not part of the Dormant Accounts scheme, nor the bonds which won the prizes. Many other bonds would never have won a prize, and the only activity relating to them could be a IR£5 purchase decades ago. Nobody is going to look for the owners if they never win.