Monday, April 7, 2008

Premium Bonds

The premium bonds in UK is different from the US government bonds. When you buy a United Stated government bond, you will receive your principal investment and interest after 10 or 20 years later. In other words, you will only see the money after the period of 10 or 20 years has lapsed. On the contrast, the UK premium bonds allow you to redeem them at any time. The value that is returned to you will be equivalent to the amount you buy at that time.

A public fund is set up for the collection of the accrual of interest. Every month, participants will stand to win cash prizes using the interest earned from the fund. These prizes are given away in the lottery manner. Therefore, if you buy more bonds, your chances of winning the cash prize increase. Don't underestimated the value of the prize. The first prize can be easily over a million dollars.

Don't be despair if you are not the winner of the first prize. You also have your opportunity with smaller prizes. The values of these winnings are far higher than the small interest you can get from American bonds. That is why many people are attracted to premium bonds because they are filled with elements of surprise. In addition, you don't have to wait many years to see the yield or lose money.

Just imagine that you don't have to buy lottery tickets every week but you are automatically signed up in the draw. Your bond represents one lottery. You have two options. You can cash in and participate in the lottery should you need the money. Otherwise, you can just not get involved.

In the American government bond, you will not receive any monetary benefit or premiums if you withdraw the money before the stipulated period. With premium bonds, you have more flexibility with the funds. Apart from the savings, you can participate in the lottery for your whole life.

During the draw, the machine will produce the winning numbers. You can go to Internet and check if your number matches the winning number. You also check with the British newspaper to see if you have won the prize numbers. They will also contact you within 4 days after the announcement of the results.

Sometimes, the organizers offer two prizes with big amount of money in a month. The smallest prize money is 50 pounds. This amount is three times of the interest you earn in the US bond market.

If you buy more premium bonds, you increase the likelihood of winning the prized money. Should you have US treasury bonds or a bank saving account which only gives less than 3% of monthly interest rate, then it is about time to invest your hard earned money in UK or Canada premium bonds.