On 11/05/2021 14:53, Robin wrote:
On 11/05/2021 14:07, Owain Lastname wrote:
On Tuesday, 11 May 2021 at 13:33:02 UTC+1, Andrew wrote:
You need to buy a block of at least £1000 then for two years you
should expect to get the equivalent of a 10-year gilt, which is
currently about 0.8%

"with average luck"

some people will get more, some less.


Or, as a pedant would put it, *everybody* will get more or less

The prizes are quantised; the minimum is £25; so the (compound) rate of
return on £1,000 over 2 years is either 0%, or 1.24%, or 2.47%, or.....
Â* Calculating the odds of each is beyond my pay grade.


There are two approaches to PBs.

If you're a gambler - good luck

If you're an investor then you should treat PBs as currently returning
up to 0.9% tax free. There's a fair chance you'll get pretty close to
0.9% if you hold tens of thousands. Below that holding you get
progressively less.

The rationale for that is that, though the total prize funds varies from
month to month - the split of the fund hasn't changed very often. There
are three categories - 5% goes to big prizes, 5% to mid prizes and 90%
to small prizes.

If you are a rational investor you treat big and mid prizes as "you die
before you win" So you really only have access to 90% of the prize fund
- and so you expect up to 0.9% when the declared prize fund rate is 1%.

As for the "professionally less", the technical term is granularity.
Imagine that Sainsbury's stated that we'll only refund cash purchasers
in rounded-down whole pounds. In both cases the un-refunded change is
typically 50p. That's a much better deal for someone spending, say,
£97.50 than it is for someone spending, say, £1.50

Not a perfect analogy. By the way, PBs are no different in this as
compared to other savings. It's just PB's granularity is £25, compared
to 1p for the others.

PA