Prize Bonds are looking attractive alternatives to deposits

Nothing for me on Friday from either of my batches.

As per CiaranT's post http://www.askaboutmoney.com/showthread.php?t=189473 the prize fund was cut this weekend from 1.6% to 1.25%.

At the same time the number of 1000 euro prizes has increased from 5 to 10 per week and the 20k prize is now 50k - I think this makes the cut worse again as it is still unrealistic to expect to win a 1k prize or a 50k prize.
 
The combination of the change to the prize fund percentage and the increase in the highest weekly prize, means that the number of €50 prizes weekly (the only ones you can reasonably expect to win) has dropped by over one third.

Here was the prize structure before the change on 05-Oct-2014

Total PB held (Sep 2014) | €2.1 b
Prize % | 1.6%
Total prize fund | €33,600,000 Prizes |
6 x €1 m | €6,000,000
46 x €20,000 | €920,000
52 x 5 x €1 k | €260,000
52 x 250 x €100 | €1,300,000
Total | €8,480,000
|
Total amt. in €50 prizes¹ | €25,120,000
Num. €50 prizes | 502,400
Num. €50 prizes/week | 9,662
Prize % €50 prizes only | 1.2%
Gross equivalent AER² | 2.2%

From November 2014:

Total PB held (Sep 2014) | €2.1 b
Prize % | 1.25%
Total prize fund | €26,250,000 Prizes |
6 x €1 m | €6,000,000
46 x €50,000 | €2,300,000
52 x 10 x €1 k | €520,000
52 x 250 x €100 | €1,300,000
Total | €10,120,000
|
Total amt. in €50 prizes¹ | €16,130,000
Num. €50 prizes | 322,600
Num. €50 prizes/week | 6,204
Prize % €50 prizes only | 0.77%
Gross equivalent AER² | 1.4%

Since the grossed up equivalent AER of 1.4% on €50 prizes under the new regime is now less than short term deposit rates (e.g. 1.75% on Rabo 30-day notice account), my opinion is that Prize Bonds are no longer a sensible investment.

1. Expected return based on number of €50 prizes, calculated by subtracting other prizes from total prize fund.
2. Gross AER calculated on assumption of 41% tax + 4% PRSI
 
Thanks dub_nerd I don't think you factored in the increase in the number of 1000 euro prizes from 5 to 10 each week. That would knock another 260,000 from the "50 euro prize fund". By my calcs that means 100 fewer 50 euro prizes per week.
 
Good spot, Ghoul. I updated the numbers in my previous post, and it's 100 fewer €50s/week as you say. The grossed up AER still rounds to 1.4%.

I never did get around to buying a large chunk of PBs, and won't be considering it now. What are your plans for your own two tranches? Your returns exceeded expectations for last year, but an average return would now be pretty lacklustre.
 
dub_nerd said:
Good spot, Ghoul. I updated the numbers in my previous post, and it's 100 fewer €50s/week as you say. The grossed up AER still rounds to 1.4%.

I never did get around to buying a large chunk of PBs, and won't be considering it now. What are your plans for your own two tranches? Your returns exceeded expectations for last year, but an average return would now be pretty lacklustre.
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Thanks for the clarification, dub_nerd. I have some thinking to do about my PBs, the 75k tranche is only recently purchased and has to stay in for another couple of months in any case. It is going to be used for a tax return in Oct 15 and I won't be investing it in risk assets.

I also have a good amount in savings certs and bonds (issues 17 and 12 :)) and in various issues of the 10 year solidarity bond, recently putting 150k into the latter (issue 4).

If I didn't have anything in other state savings products I might avoid PBs now - however I see PBs as a variable rate, 7 day notice account and I like to have a good spread of maturity dates so I might keep the PBs and (hopefully) continue to experience the Friday feeling!
 
Thanks theresa1 for recommending the freepost option I'm about to apply for repayment of >€40K of prize bonds but the form that I downloaded f only asks for my bank account sort code and account number. Is this sufficient for electronic transfer or will I need to include BIC and IBAN details? (SEPA requirement?).
Thanks in advance.
 
Your bank account sort code and account number should be fine. They can easily calculate the rest info if needed.
 
Thanks again for replying theresa1. So it looks like someone who is setting up a direct debit requires more stringent rules than someone who is looking to get their hard-earned cash invested returned?
 
Hi all - had my first win today of a massive 50 euro. On website it says I have to write to them at the address below, enclosing my bond certificate;

The Prize Bond Company Ltd.
FEXCO Centre
Killorglin
Co. Kerry

Is this the way everyone claims their €50 prizes?
 
No Inflation, You should receive your cheque Tuesday or Wednesday If you have opted for the cheque option,but i agree its a bit misleading on the website about claiming a prize etc.
 
50 from the 100k batch
50 from the 75k batch

Good :)

Over a very short period of 7 draws the 75k batch has won 100 euros which I calculate as a net AER of 0.99%. That will likely reduce now when the cuts to the prize fund take effect in November.
 
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