There are three categories of prizes: first prize, second prize, and third prize. For the Rs bonds, the first prize is worth Rs , and is won by only one ticket in the entire series. This means that out of the , prize bonds that were bought, one of them will give a return of Rs , on the Rs prize bond.
The second prize is worth Rs , and only three out of the , prize bonds will have a prize of that amount. The third prize is far more common, with prize bonds being worth the Rs third prize. These are some of the fundamentals of how prize bonds work. Out of the , prize bonds issued in a single series, on each draw at least prize bonds will win a prize.
On the next draw, more will win prizes. Now, the way that the draw works is interesting and can theoretically produce some fantastical results. Remember, the , prize bonds we have been talking about are all in a single series. At this point, there are numerous series going around that the government has issued for different denominations of prize bonds. In our example, we had assumed a person had a Rs prize bond from series C that had the serial number In the lucky draw that takes place every three months, numbers are drawn out for each prize.
One number will be drawn out for first prize, three for second, and for the third prize. If the number , is drawn for first prize, it means that all of the bonds with the serial number , in all of the series for prize bonds of that value will get the first prize. Essentially, along with prize bond C, prize bonds A, and B will also win the Rs , first prize in their respective series.
Similarly, three numbers will be drawn for the second prize, and numbers will be drawn for the third prize. No matter which series you belong to, if you have a prize bond with the winning number on it, you will get the prize that quarter. If you win a prize on your bond, you can simply go to the State Bank and they will give you the money, stamp your prize bond, and give it back to you. While it is highly unlikely, if the same number is picked again in the next quarter, it means you will win a prize on the same prize bond again.
It is more likely for this to happen after a few years where the same number is drawn again. Conceptually, this means that no prize bond ever really goes to waste. If a person waits long enough, their number will eventually be drawn as per the laws of probability.
That could happen in a few draws or it could take years. The only downside is that it is possible the prize is so long in coming that when it does, money has lost its value to the extent that you end up making an overall loss because of inflation. This part is quite easy. All you have to do is submit an application form with a copy of your CNIC. The prize bond draw itself is conducted by a committee constituted by CDNS, and the event is open to the general public.
The winning prize bonds are drawn through hand operated draw machines, which are operated by special children in front of committee members and the general public. The machines can also be inspected by the general public before the draw to make sure there is no tampering. If you win a prize, you have to fill out a claim form, submit a copy of your CNIC, and the winning prize bond. After you win, the face value is credited into your account and the SBP keeps the bond.
Once you get your prize, you can get your bond back after it has been stamped. If the bond number is drawn again, you can win a prize on the same bond again.
In every series, there will be one first prize winner of Rs ,, three second prize winners of Rs , each, and third prize winners of Rs each. There are , bonds in a series. This means there is a 0.
Your chances improve based on the number of bonds in a series you hold. For instance, if you hold bonds worth Rs each in a series, your chances of winning any prize rise to 6.
Some people are trying to crack the code to determine which bonds may win the next draws. The authenticity of these methods and whether they actually work becomes questionable considering the nature of the draw. For a country like Pakistan that usually has a high interest rate, there are times when the cost of borrowing for prize bonds is less than the benchmark interest rates, or times like now when the cost of borrowing is higher.
On the 30th of May this year, the federal government announced that it had extended the last date for encashment, conversion and redemption of prize bonds of denomination of Rs25, and Rs40, until Sept 30, Currently, there are four denominations of prize bonds in circulation: Rs , Rs , Rs , and Rs 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. 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. 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. 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.
And we are not alone. We took to Twitter last week to find big winners and came up empty. Never won. 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. Still, some people do win. In fact, the number of prizes won last year stood at almost , If that sounds like a lot, it is actually a decline of 18 per cent on The news gets even worse.
From next month, about 5, prizes will be awarded each week, down from around 8, a week now. Still, the allure of the bonds is growing even as the odds of winning are lengthening. 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. It just means that you have a chance of doing so.
And how big this bet is can be difficult to determine. This might be true for people with small amounts saved. But the figures suggest some people may have six-figure sums in prize bonds; and financial advisers say this can be damaging to their financial health.
Inflation is one factor to consider. With deposit accounts, you will make a guaranteed return — even if it is low. And even though interest rates are very low at the moment, compounding will still have a snowball effect. As Barrett notes, the NTMA has other tax free savings products people can put their money into, such as the year solidarity bond.
For Scanlan, another big issue is when people already have more than enough cash in current and deposit accounts, and should be putting any extra cash into higher returning diversified asset classes. Savers who can afford to put money away over a four-year time horizon should be looking at the markets, and achieving a broader spread of asset classes, he says. Please update your payment details to keep enjoying your Irish Times subscription. Are you mad to keep your money in prize bonds?
Winning is a long shot and and the prize pool is shrinking, but popularity is undimmed Tue, May 21, , Fiona Reddan. Home energy upgrades are now more important than ever. Commenting on The Irish Times has changed.
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