Premium Bonds Facts

Apart from savings, premium bonds also offer the opportunity of safe gambling. They are better than the traditional lotteries because you don't lose money if you don't win any prize. You can continue to try your luck every twice a month for as long as your bonds are still in your hands. You just invest once and you can play for a lifetime. Young or old can benefit from these bonds.

Every bond carries a unique number. A machine will collect all these numbers and then generate the winning numbers. Winners will receive cash prizes instead of interest. This is a secure investment because it is guaranteed by the government. You can also cash in whenever you want and you don't lose a single cent. You can only buy up to 30,000 pounds worth of bonds. The limit is to prevent large corporate bodies from buying in millions so that common people like you can stand a chance to win.

You can increase your chances of winning. If you have a lot of premium bonds, you can increase your odds of winning the grand prize which is worth one million pounds. With 30,000 bonds, your numbers will have a better odd which is 400,000 to 1. The more you save the better your future will be.

The selection of number is random. This means the more numbers you have in your hands, the higher your chances of winning the cash prize.

You can buy the bonds on the Internet or over the phone. Alternatively, you can visit your local post office to purchase them.

Three simple process: buy, save, and win. However, you are not guaranteed to win any cash prizes. These bonds are useful especially when you urgently need the money or you retire.

You need to be at least 16 years old before you can buy them. You can also buy for your children if you plan their education fund. It would be nice to have some money when you start your family provided you started saving at the early years.

The cash prizes are free of taxes. So, when you win 1,000,000 pounds, you get to keep all of them. You can use the money to pay for your college or settle debts. You can do anything with it. So, are you reading to invest in premium bonds? The smallest cash prize of 50 pounds is still something. Just look at the interest rate that your saving account is offering.

Premium Bonds Are Better Than Lottery

One of the uprising stars in the investment portfolio is premium bonds. Although many have place their money in these bonds, there are some quarters begin to doubt if they are a worthwhile investment. The first premium bond was brought into existence in 1956. The British government used this instrument to persuade the citizens to save money. Unlike any other security or treasury bond, it does not give any interest. Instead it offers cash prizes which are worth more than a million pounds. It provides opportunities to the lower income group to win one million pounds using a lottery. About 20 million people in UK hold at least one premium bond. This represents one third of the population. They can buy these bonds from the post office or the National Savings and Investment agencies.

When the interest rates drop, these bonds seem to be a secure avenue for investing. At the same time, investors will the excitement to win one million pounds in cash every twice a month. The top prizes are about 15% of the total prize money allocated. Another 15% is allocated for the mid range prizes while the remaining 70% goes into small prizes with the smallest that carries the value of 50 pounds.

A 50 pound prize is equivalent to a 500 percent return as each bond is one pound. Your chances of winning is 1 in 21,000 but as the bonds become more popular, the odds may turn against you.

You can start with 100 pounds but the cap is set at 30,000 pounds. The government guarantees your investment but not the odds of winning cash prizes. This guarantee allows you to sleep peacefully every night without worrying about losing your hard-earned saving.

The minimum age for an investor in premium bonds is 16. Many parents buy these monetary instruments for their children's education funds. If your children start investing early, they will appreciate the value of money. In addition, the possibilities of winning sufficient money in helping them to start life are great.

Using the same bond, you can continue to play the game as long as you like. It makes sense if you have more bonds, then your odds of winning get better. Since the prize money is tax-free, you can reinvest the money into the bonds again until you hit the limit of 30,000 pounds. However, during the last decade, the chance of winning has drop. This is due to the fact that the market has a lot of bonds which lower the probability of getting your number selected.

Nevertheless, you still have an upper hand compared to the American Lottery because you can use the same premium bonds over and over again. You can check online for the premium bond draw results. Should your numbers match the ones on the listing, then you contact them and claim your money. Till today more than 500,000 unclaimed prizes are sitting in the National Savings and Investment agency.

Invest In Premium Bonds

As far as investment is concerned, many people prefer to put their money in saving bonds, real estate or stock market. If you have never heard of premium bonds, perhaps this will be the best time to consider them in your portfolio. They offer investment in a fun way. Looking at most bank savings, you are given a fixed interest rate. You don't make much money this way provided you have large funds to place in the savings. The low interest rate on a money market or saving accounts offers very little return which is not justified to purchase a larger home or a brand new car. If you want to redeem it, you may have lose the interest.

Investing in the stock market can exhilarating because you may heard that people make tons of money during the peak of the share prices. As you know the market don't stay high all the times.
A premium bond like the UK one will not give you any interest. But you have something better instead. You can participate in the lottery where you can probably win a million dollars every month. The grand prize of one million dollars are drawn twice a month along with other cash prizes.

Supposing you have invested 10,000 pounds, then your odd of winning is 19%. This can be translated into numerical figures for some people who prefer that way. It means that 1 in 21,000 stands a chance to win the cash prize. This is what make the premium bonds exciting. Unlike the saving accounts where you already know how much you are getting at the end of the day, these bonds provide the element of surprise and excitement.

These bonds are favorites among the British people. More than one third of the population buy these bonds. As you are aware of, the saving accounts and government bonds are fixed. Once you have agreed with the interest rate that they offer, it will stay that way no matter how the economic climate turns out to be. You will not get anything extra when the bank or government makes more money on these debt instruments. The problem with these notes is that you will lose the interest if you decide to redeem early. Usually these investment will only mature after 10 or 20 years. Some may be even longer.

On the other hand, you can redeem your money any time without losing the face value because there is not interest to profit from. Remember there is no guarantee in winning the cash prizes. All you have are the chances or possibilities to win. The smallest payout is anytime better than the interest rate that the bank or government offers you.

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.