I quite like the idea that I could get 4.6% with a slim chance of winning £10,000 or even £1m. But unless I am quite a but luckier than average, I won't achieve 4.6%.
I'd also like to meet somebody, anybody, who has achieved the average rate of return without winning a large prize at long odds. It is obvious that the median return is going to be quite a bit less than 4.6%.
Ah...I've just found a calculator wot does it. premiumbondsprizes.com/#2000
The median return on £10,000 worth is 3.75%. This is mathematically determined by the prize distribution. The less you have in, the lower will be the median return for investors holding that amount.
If you have £10 worth, it is 99% certain you won't get a prize in a year. Your annual chance of winning the jackpot will be about 1 in 500,000,000.
OTOH, if you have £50,000 to invest, and whether you get 0% or the median return of 4.05% will essentially make no difference to your life, then maybe there is an argument for putting it into PBs with a 1 in 100,000 chance of winning the jackpot that could change your life?
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