The new lottery game cuts odds from 1 in 14 million to 1 in 4 million. But National Savings may be a better bet. By Paul Slade
Tonight sees the first prize draw for Thunderball, a new National Lottery game offering what Camelot calls "better odds of winning smaller top prizes".

Instead of having a one in 14 million chance of winning a top prize of several million pounds - as a pounds 1 stake in the Lottery's main game gives you - players of Thunderball have a one in four million chance of winning a mere pounds 250,000.

Fourteen million people would fill Wembley Stadium 175 times over. Even Thunderball's relatively generous odds mean the game will have 50 Wembley Stadiums' worth of players for every one big winner.

Your chance of winning the maximum prize available from Premium Bonds is even more remote. The top prize on offer in Premium Bonds' monthly draw is pounds 1m, and the odds against winning that with a single pounds 1 stake are a staggering 12 billion to one. The population of China is about 1.3 billion.

But Premium Bonds enjoy one important advantage over the Lottery. When your Lottery ticket fails to register a single winning number, it immediately becomes worthless. But losing Premium Bonds are simply re-entered into every monthly draw until you choose to sell them at their original face value.

Even if you never win a single prize, all you can lose from holding Premium Bonds is the interest your money could have earned elsewhere. As Premium Bonds are essentially a safe bet, many indepen- dent financial advisers recommend clients hold some bonds as part of a much more diverse portfolio.

Graham Bates of Leeds IFA, Bates Investment Services, sees Premium Bonds as offering a good home for capital you may need to get your hands on quickly, but where the income from that capital is not something you rely on.

Bates says: "For a taxpayer - particularly a higher-rate taxpayer - the net returns from short-term deposits are going to be extremely low. If you put the money into Premium Bonds, you've got an eight-day turnaround if you want to get that money back out.

"The return isn't guaranteed, but then the client isn't relying on that return - and if they do get a share of the winnings, then it's tax-free."

Because gambling winnings are tax-free, Premium Bond owners can expect an average return of 5.42 per cent for higher-rate taxpayers or 4 per cent for those paying the basic rate of tax.

Even the best-paying instant access account listed in the latest issue of MoneyFacts - Bristol & West's Easy Access Plus - offers higher-rate taxpayers a net rate of only 3.72 per cent on the average Premium Bond purchase of pounds 1,300.

What Premium Bonds lack, of course, is predictability. Carys Jones, a National Savings spokeswoman, says: "Premium Bonds are unique, in that there will always be people who do incredibly well and others who don't. That's the way the product works. For somebody winning the pounds 1m, their interest would go right off the scale."

Premium Bonds had a record year in 1998/99, paying out nearly seven million prizes worth a total of about pounds 540m. The maximum amount you can hold in Premium Bonds is pounds 20,000. People with that holding win an average of 10 prizes a year. The average Premium Bond prize this month was pounds 65.

Mr Bates says: "I've held the maximum Premium Bonds for just over two years now, and in that time there's probably only been four months when I've never had a prize.

"I'm a higher-rate taxpayer and I'm definitely doing better out of it than I would be if I'd had that money on deposit."

The National Lottery's Thundeball draws will be held live on television every Saturday. Players must correctly match six numbers to win the pounds 250,000. Like all the Lottery's other games, Thunderball donates 28p of your ticket's pounds 1 price to the Lottery's good causes.