The UK Premium Bonds system is basically a lottery system that's a bit like an investment.
You can see how they work here: https://www.nsandi.com/products/premium-bonds
This project aims to answer the question of whether it's actually worth using!
If you're just interested in that, first follow the requirements, then head here.
First, premiumbonds.go can calculate the prize allocation for a given prize fund value. We can also tweak the odds and interest rate which are used to calculate the total fund size. These are currently set to the below:
- March Fund Value: £330,527,200
- Odds: 24,000
- Interest: 3.3%
Next, we need some ground truth that we can check our calculations against. So simulation.go runs a mock of the actual lottery! This means generating a lot of random numbers so it can a while. This is because we want to simulate many years ahead so the values converge.
However, rather than making compute intensive simulations we make use of probality distribution to estimate the overall results.
Hypergeometric works well in this instance because it's a random draw WITHOUT replacement.
https://en.wikipedia.org/wiki/Hypergeometric_distribution
There's a number of central tendencies we can use but median is best because the data is ordinal (number of prizes you can win is discrete) and highly skewed (highly likely to win nothing).
Applying this distribution to premium bonds is done by hypergeometric.go.
To compare the results of the simulation and the hypergeometric distribution you can head to compare.
As mentioned above to see your expected return for a given amount of money and time then see this.
- Go! https://go.dev/
Yep, that's it!
Just enter go run . from the command line in ./cmd/premiumbonds/ to get some results.
To be honest, I was inspired to tackle this because the MSE Premium Bonds calculator was broken.
https://www.moneysavingexpert.com/savings/premium-bonds/
This is completely unaffiliated to the official premium bonds people NS&I.