Monday, April 7, 2008

British and Canadian Premium Bonds

Premium bonds have become the most successful investment security in Great Britain. They offer opportunities to commoners to become a millionaire through lotteries with a starting investment of 50 pounds. Now many countries begin to adopt this investment strategy but not all of them are the same.

The British have more than 40 years of experience in this fund. Every month, two bondholders will win 1,000,000 pounds apart from the interest accrued from the bonds. Moreover, you are allowed to exchange your bonds for cash at any time without loss.

Following this model, the Canadian government has launched their own security which is very far different from the British one. They have added the compound interest into the bonds. Unlike the British premium bonds which offer no interest, the Canadian ones give their investors a guaranteed rate of return. This figure is higher than the interest offered by the common Canadian Savings bond. When you want to redeem your money, you can only do it once a year.

Although both bonds are distinctly differently, but they share a common attributes. Both of them are guaranteed by their governments. So, you can be almost certain that you will not lose your money unless the government collapses. These countries use the fund for the purpose to finance the public projects. Your investments help them to utilise the funds instead of the taxpayers' money. This can help to reduce taxation and save more money in the long term.

You don't have to pay any fee for both of these security notes. However, the Minister of Finance of Canada can stop the sale of bonds at any time. Presently, the UK government is still encouraging the public to buy more bonds. In fact, the growth of UK bonds continue to rise.

The only disadvantage of the British system is as more investors are involved, the chances of winning the cash the money diminish for each investor. That is to say, every investor will encounter a lower odd of winning when the market for the bonds flourishes. In addition, you are not guaranteed to win the prize but you will not lose your investment should you decide to withdraw it. For the investors in Canada, their return is secured

The UK premium bonds offer cash prizes through lotteries as return on investment while the premium bonds in Canada provide a fixed rate return of investment. Both of them are safe and secure investment. No doubt each of them is not perfect but they are excellent investment instruments that you can add into your portfolio. However, the portfolio in both of these bonds need to be diversified in order to satisfy the need of retirement planning. Certainly, they have proven to be an ideal opportunity outside the mainstream of certificate deposits or savings accounts which have been the mainstay of many financial institutions.