The odds of winning with prize bonds lengthen

The notion that big investors would ever look at humble prize bonds as a solid investment seems a bit ridiculous, right? But it happens. Or at least it has started to happen in recent times.

With interest rates so low, investor types with money to hand become prize- bond holders because they figure it is a better bet than leaving their mountains of cash languishing unloved in low-interest bank accounts.

Sure, buying lottery tickets might give them better – and more frequent – chances of winning, and the prizes on offer from the lottery are much higher than what is on the table with prize bonds. But people with lots of cash don’t tend to come by it by being stupid: they know that lotteries are for mugs and dreamers.

So, instead, they have begun steering their money into prize bonds because, come what may, they know their investment can always be cashed in. And in our low-inflation, zero-interest world, those who buy loads of prize bonds lose virtually nothing by taking a little punt.

Or even a big punt. Investing in prize bonds has become so common among the cash-rich that the National Treasury Management Agency, which looks after the system of prize bonds, imposed a limit on how many tickets can be bought by a single person and set the ceiling at €250,000 worth.

That is not the only change rolled out in recent times. Last weekend it was announced that from next month the NTMA will drop the variable rate used to calculate the monthly prize fund to 0.85 per cent from 1.25 per cent.

That might sound inconsequential, but it isn’t. Put simply, the interest change means your chances of winning anything substantial with the prize bond you hold or are considering buying will fall dramatically. And it is not like the chances of winning were particularly good in the first place.

Big windfall

Pricewatch has owned €100 worth of prize bonds for the past 30 years and, apart from one surprising windfall of €50 five or six years ago, we have had no joy. And we are not alone. We took to Twitter last week to find big winners and came up empty.

“My mum got some [bonds] in 1963 – that’s 53 years – and not one penny has she won,” said Maria O’Donohoe.

"I inherited some prize bonds from my grandfather, who died in 1985. Never won. Still have them, I think," said Sharon Flynn.

"I still have £5 worth of prize bonds, never won. They were bought for my communion, I think, 30 odd years ago," reported Owen Downey.

On and on came the responses. There were some people who won small amounts from time to time but they were outnumbered by the losers. None of this is surprising, as the odds of a prize bond winning the top prize of €1 million is about one in 300 million, which makes the Lotto, with its odds of one in eight million, seem tempting.

Cara Nig Fhearraigh from Dublin has about €300 worth of prize bonds stashed away in a Filofax.

“Yes, I know, a Filofax – it’s very old school,” she says. “I have had them since I was a teenager and am nearly 30 now and I have never won a thing. It’s even worse for my dad. He has some prize bonds and has never won anything either, and he’s in his 70s. I’m starting to think, now, that maybe I should just cash them in and buy scratch cards or something.”

Still, some people do win. In fact, the number of prizes won last year stood at almost 400,000. If that sounds like a lot, it is actually a decline of 18 per cent on 2014. When all the prizes won were totted up, winnings amounted to €29 million, a fall of 9 per cent year on year. The average winning was a hardly life-changing €72.50 per bond.

Nig Fhearraigh and Pricewatch’s chances of winning big bucks with our stash of bonds will be more remote than ever from next month, when the big jackpot will be up for grabs only four times each year instead of the current six.

The news gets even worse. From next month, about 5,800 prizes will be awarded each week, down from around 8,000 a week now.

The €1 million draw will take place on the last Friday of March, June, September and December. On the weeks when that draw is not taking place, €50,000 will be up for grabs. Each week 10 people will win €1,000, 10 will win €500, and the rest will get €50.

Growing appeal

Still, the allure of the bonds is growing even as the odds of winning are lengthening. According to the 2015 annual report from the prize bond people, more than €550 million was spent on them last year, an increase of 16 cent on 2014. The bounce in sales means there is currently very nearly €2.5 billion in the prize pot.

Since the beginning of 2014, 13 prize bond millionaires have been created, presuming the same person hasn't won twice. The capital has been the luckiest county (unsurprisingly, given its population), with Dubliners scooping the big prize five times. Sligo and Limerick have each won twice. Those with addresses in Cork, Westmeath, Wexford and Kerry have also won the top prize.

If you want to find out if the winner was you, you need to find out how the system works. The draws nearly always take place on a Friday, and the results are available on Statesavings.ie from 12.30pm that day.

All prize bonds are included in all draws until they are cashed in. And no matter how old a prize bond is, it still has the same odds of winning as all the rest. Even prize bonds that have won in the past are included in all future draws.

Unlike with the lottery, prize winners are contacted by mail. But that means An Post needs to have a correct address. There is no point in them having the address where you lived when you were seven, which happens a lot. And, right now, more than €2.5 million in unclaimed prizes is sitting in a bank somewhere.

The good news is that it will stay there forever, or at least until it is claimed. So if you have some prize bonds lying about, it might be worth checking them out. It could have been you.

It probably wasn’t, mind.