In the year of 1986, I was presented with £100 worth of prize bonds from my father, which left me thrilled. Almost four decades have passed since then, with just one win to my name, bagging a €50 cheque via mail over 20 years back. Consequently, this ill luck made me lose sight of this specific investment somewhat. It wasn’t until this week that I truly realised the gravity of my ill fortune.
If my father had chosen to divert these funds into the S&P 500 located in New York rather than into prize bonds for his wayward son, the £100 would now boast a value surpassing €5,000. Moreover, with the foresight to procure €100 worth of company shares from a then-struggling tech giant, Apple — which had recently established an operation in Cork — I’d be comfortably sitting on a wealth pile exceeding €300,000.
Looking from this perspective, the invested £100 appears to have yielded poor returns, serving me heavily disadvantaged. Alas, it gets worse. If the same amount of cash had been put away in a bank account bearing even low interest rates in Ireland, its worth today would be approximately €350, not merely the same as it was when the bonds were purchased under Garret FitzGerald’s prime-ministerial reign, with Charlie Haughey leading the opposition and Ray Houghton still unfamiliar with the concept of an English goal.
Indeed, taking into account the influence of inflation, its present value falls to less than half of its original strength. With these realisations, it’s astonishing that prize bonds retain their popularity among Irish masses, something they have managed since initially being introduced in 1957.
However, signs of their popularity waning may be on the horizon. Relevant data from the Prize Bond Company indicates that their sales, despite being a substantial €489 million in 2023, were, in fact, down by 20.6% compared to the previous year’s sale of €615 million worth of bonds. Furthermore, repayments to individuals choosing to liquidate their prize bonds experienced a jump by a whopping 46% to €532 million, as revealed by the company’s newly published annual report.
According to the data, there’s been a net decline of nearly €43 million in the funds Irish consumers have put into prize bonds, marking the first time the total value of the prize bond fund has decreased in at least 10 years.
The question of whether prize bonds constitute a sound investment or a smart idea is subjective.
On the previous Friday, prizes totalling over three-quarters of a million euros were won, all of which were exempt from tax. Weekly and monthly top prizes of €50,000 and €500,000 respectively are available. However, the odds of an individual owning €25 in bonds winning the jackpot is over 100 million to one, almost identical to the probability of winning the Euromillions.
In comparison, the Lotto has odds of 10 million to one. More importantly, even at their lowest, the prizes for Euromillions and Lotto exponentially surpass the highest prize-bond winnings.
The likelihood of winning alters considerably based on your total prize bonds. A €10,000 investment leads to your odds of winning the main prize dropping to 350,000 to one. This is still far from guaranteed, and considering the effect inflation has on savings, you’d need to win at least €1,200 from your €10,000 worth of prize bonds just to stay ahead of rising costs.
Compared to the Lotto, prize bonds do have significant benefits when viewed as an investment. For one thing, you can never truly lose. Prize bonds, like An Post savings, are investments with a Government guarantee, making them among the safest investments available. Despite not earning interest on your money, you have the freedom to redeem your bonds anytime at their face value and they are always entered into the regular draws, even if they’ve already won a prize.
The National Treasury Management Agency (NTMA) determines the prize fund value, applying an interest rate to the value of outstanding prize bonds. A lower rate results in lower value prizes.
Currently, a 1% interest rate applies, meaning that 1% of the total sum is disbursed. Back in 2009, the relevant interest rate was 3% but just before the end of last year, it was a mere half a point. For those who choose to deposit their savings into a retail bank’s high-interest accounts, they can now achieve more than 2% return, although Duty at 33% must be deducted. It’s important to remember, though, that the average return on prize bonds is 1%, but this is not guaranteed – in some cases, no return may be achieved.
The effect of inflation on prize bonds should also be considered. When inflation was nominal or even in negative territory, it wasn’t of concern. However, inflation has definitely become an issue over the last couple of years. If you invested €100 into a prize bond a decade ago, the monetary value is still €100 today, but what that sum can purchase has become significantly less.
Prize bonds can be purchased primarily at An Post retail locations, while online sales through prizebonds.ie have been on the rise. Tracking the prizes can present an issue. Unclaimed prizes amounted to €3.3 million at the end of last year, down from €3.4 million at the conclusion of 2022.
The Prize Bond Company does attempt to notify winners of their luck, but should you relocate and forget to inform them, tracking down your winnings can become difficult. Current prizes from the last six months can be verified on prizebonds.ie or by dialling 0818 20 50 60 / 01 705 7200.
Fortunately, if you misplaced your prize bonds or suspect that you may have won in the past, you can contact them, provide essential details such as your name and the last registered address of the bond, and they’ll assist you. I had a personal experience this week, speaking with a lovely lady who is, as I write this, sending out forms for me to update my address, potentially bringing me a step closer to claiming a fortune.
Should my next correspondence to you come from a sandy beach in South America, it would suggest I’ve had a considerable stroke of fortune. Here’s hoping you find similar luck!