the richest man in atherstone

A short while ago I invested £500 in Premium Bonds, with the aim of increasing the stake to £1000. I bought another 500 bonds today (they cost £1 each).

Every Premium Bond gives the holder a 1 in 24'000 chance of winning a prize. As the owner of 1000 Premium Bonds, I calculate I should have a 1 in 24 chance of winning a prize every month. My mathematical probability is a little rusty, but I expect that statistically means I should win once every 2 years.

If I kept £1000 in a Savings Account for 2 years, I would earn around £80 of interest after tax (given that the best savings accounts pay around 5% Gross). By investing in Premium Bonds for the same period statistically, I should earn at least £50 but could win £1 million (although the chances are very low).

On top of this, my capital is safe (backed by HM Treasury), quick and easy to liquidate and all earnings are tax-free.

In my opinion, this constitues as both a worthwhile and enjoyable investment for my portfolio. My views of Premium Bonds may change over time (especially if I don't win!) so I have decided to re-asses this investment in 12 months time.

Fingers crossed...