Premium bonds are the British answer to the need for savings and the fun of gambling. Each bond you buy will have a specific number. The number of the bond is put into a numbers generating machine and monthly thousands of numbers are chosen randomly to receive a cash prize in lieu of interest. The investment is completely safe and you can cash in your bonds at value when ever you wish. There is a thirty thousand pound cap on the investments so large corporations cannot buy millions of bonds to skew the chance for the common man to win.
There are ways to improve your odds. For example the more bonds that you buy and hold the more chance you will have in winning a cash prize that can equal as much as one million pounds. Statistically you have about 23,000 to one shot with a one pound premium bond. By buying more bonds, your odds of winning increase significantly. The system is designed to choose number randomly so the more numbers you have in the system the more money you will make as a cash prize. You can even sign up for a monthly fifty pound savings program where you can have the money automatically drawn from your regular checking account.
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The British have found a unique way to invest their money. By buying premium bonds the citizens of Britain can enter their bond numbers into a lottery each month and have a chance to win over a million pounds. There are millions of other cash prizes that awarded to the bond numbers drawn and this cash prize is seen to be better than interest generated from traditional savings program. The system is so popular more than a third of the country invests this way. The investor can pull out their money at any time and there is not penalty or cost to do so. The money invested is used by the government to fund projects and at the same time give their citizens a chance to be millionaires.
What would happen if this system was used in the United States? Premium bonds would be a welcome financial opportunity for American citizens. The current lottery system is taking in millions of dollars across the country but there are few winners. Once you buy a lottery ticket you don’t get your money back and you lose that dollar. This is gambling and not investing. The odds of winning an American lottery are astronomical. One person in Florida in 1999 bought ten thousand lottery tickets. After the numbers were pulled, the person only won eight hundred and sixty three dollars. The investor lost over nine thousand dollars in taking a huge chance of winning the twenty three million dollar prize.
This would not happen with premium bonds. Thought the prize money is not as huge as the American lottery, the British investor would have twelve chances to win a million pounds over the course of a year. The chances of winning less amounts are even greater. The British citizen is allowed to invest up to thirty thousand pounds into the system and if they don’t win they can take their money out anytime they want. They lose nothing for their investment. This way the premium bond market is not considered gambling and the investor can be assured that their nest egg will remain in place.
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There have been many success stories about premium bonds, but there are some pretty amazing failure stories also. Premium bonds, the British way to save money for no interest and a chance to win cash prizes have made several people millionaires and have given cash prizes that will exceed the interest that is given in banks or other bond programs. The odds are better than the American lottery and you can cash in your bonds at any time for the exact amount you purchased them for. For as many successes there are failures that are sometimes considered the worst luck in premium bond history.
A gentleman bought one hundred pounds worth of premium bonds in 1967. That was a lot of money to invest back then and the hope of becoming a million pound winner lingered with the man until this day. He has not won one single cash prize since he purchased the bonds and that luck still runs with him today. The average amount of winnings for the average investor is about three to four percent of the investment put in. This man has not made a single pound, but he refuses to cash in his bonds and look for another type of investment.
He does have some animosity toward the program but he expresses in a civil manner. He states that every time he sees an advertisement for premium bonds on the television he wants to smash the set in anger. Stating that one hundred pounds was then his monthly salary, he feels the National Savings and Investment agency has let him down. He does refuse to quit completely and will not cash in, but he screams he will not put another pound into the system until he sees a return on his investment. He has since invested into regular savings bonds where he is earning a meager interest.
His has made several pleas to the National Savings and Investments agency for an explanation of why he hasn’t won, but he has received no answers to his questions and that infuriates him further. The National Savings and Investments post their statistics on earnings on a monthly basis but this gentleman refuses to listen to the math. He just wants an apology and information how he could not have won in almost fifty years. The man believes that the agency is responsible for his bad luck and wishes he never became part of the program.
His further irritation is that he would have made an eight hundred percent profit on those hundred pounds if he had invested in a building society fund. There is a possibility that the man had been slighted in the early days of the premium bond because the bond numbers had to be matched by real people and not a computer and the human element could have missed over his numbers. The man stated that he just wanted to win once so that his title of the unluckiest man in Great Britain would go away.
Premium bonds are becoming more popular everyday. Millions of people are investing in these bonds and some are questioning if they are really worth it. Premium bonds were introduced in 1956 as a way to get the public to invest into the British Government. This was set up like a lottery so that the common man could save and at the same time have a chance to winning millions of pounds. Nearly twenty million people, a third of the population now owns at least one premium bond. Investors can buy these bonds directly from the post office or they can purchase from the National Savings and Investment firms.
Since interest rates are falling, premium bonds are seen as a safe way to invest and at the same time have the thrill of winning one of the over million and a half cash prizes awarded each month. Fifteen percent of the prize money is used for high cash prizes and another fifteen percent is used for medium cash prizes. The remaining seventy percent of the money was used to award lower prizes that are as high as fifty pounds. A fifty pound prize on a one bond is almost a 500 percent return. Right now you have a 1 in 21,000 chance to win, but with the bonds becoming more popular, those odds may be greater in the future.
You have to buy at least one hundred pounds to invest in premium bonds and you can only have thirty thousand pounds in an account. The bonds are backed and protected by the national treasury. Anyone who invests can be assured that when they decide to pull out their funds, the money will be there. Anyone can invest as long as you are sixteen. Many parents buy premium bonds as a way to pay for their children’s college. Young investors can learn the value of savings and at the same time get the chance to win enough money to set them up for life.
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Some people wonder about the randomness of the premium bonds lottery that is conducted each month. The randomness has been under scrutiny in the past and the National Savings and Interest agency, the people who conduct the lottery are scrutinized by an outside agency to provide security so that winners have an equal chance.
The Government Actuary Department was created for the sole purpose of checking the premium bond system and the randomness of the numbers. The Government Actuary Department is not associated with the National Savings and Interest agency and is does not receive any monetary funds. Just like the agency that checks the gauges and meters of gas pumps, the Government Actuary Department just regulates honesty for the good will of the citizens of Great Britain.
There are conspiracy theories that say that only regional areas of the British Isle win more than others. What these people do not take to mind is that the population differences as well as economic differences create statistical abnormalities that skew the awarding of cash prizes. The Government Actuary Department investigates these allocations and through statistical analysis most are proven only disparities in population and how many people in each region actually participates in the program.
The National Savings and Interest agency also takes these allocations very seriously and encourages investigation from outside agencies. If these false allocations are true, it could seriously affect the premium bond program and the agency that supports it. The scrutiny and honesty is the upmost priority of the National Savings and Investments, and scrupulous behavior is not tolerated.
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Premium bonds are a great way to invest for your future. Not only do you get the chance to store your money in a secure environment but you get a chance to win a million pounds. Some people doubt the system but there is a plethora of success stories that prove that premium bonds are a good investment and is a great way to have fun playing the monthly lottery. Each month bond numbers are randomly picked and if are the lucky investor, you could win a prize from fifty to a million pounds. The following are some testimonials about the success for premium bonds.
One lady had a one pound bond purchased for her by her grandparents. Even though the bond was purchased in 1965, this single bond has been picked twice for a fifty pound and a hundred pound cash prize. This has spurred the woman to invest heavily in the program and she encourages her children to invest also. These two wins have created a saving culture within the family and with other wise financial decisions; this woman will be set up in her retirement age. Her family also will be able to save for college and their retirement also.
Another lady in Liverpool stated that she had twenty thousand premium bonds and that she was disappointed that she didn’t win anything after a few months. She had only won one fifty pound prize after the purchase. She was so up set that she wrote the National Savings and Investment agency and complained. Not only did she get a reply and an explanation but she also was notified that she had won another fifty pound prize and ironically the same bond number she won on the first prize was the same bond number that was picked for the second time.
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Premium bonds are bonds that do not pay interest. They do something much better. You purchase premium bonds and let it sit just like in a savings account. Each month there is a lottery and if your bond number is picked, then you have a chance to win over a million dollars. Over one and a half million cash prizes are given away each month and if your bond number is picked, you win from fifty British pounds to well over a million pounds. The great thing is if you do not want to participate in the program anymore you can take back your money like it was never invested at all. This program is so popular that over a third of the population of Great Britain participates in it.
Unlike the American lottery system where numbers are picked randomly from ping pong balls, Great Britain uses ERNIE to generate numbers from premium bonds. ERNIE is a random number generator hardware system and has been around since 1957. ERNIE first generated the bond numbers by picking up on signal noise from a bank of neon tubes. It was the size of a mini van and could only generate about 2000 numbers an hour. The first number generator lasted almost seventeen years and was replaced by an updated version in 1972.
The computer age came to age in the eighties and in 1988 ERNIE 3 was invented. The generator was about the size of a personal computer but ran at no where near the speed personal computers run today. It took ERNIE 3 almost six hours to generate the numbers for the monthly lottery. ERNIE 4 is being used today and it came of age in 2004. Working at speeds five hundred times as fast as the original model, ERNIE 4 uses thermal noise instead of the noise from neon lights. It can compute over a million numbers and hour
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Bizarre Facts About Premium Bonds
Premium bonds marked their fiftieth anniversary in November 2006. They have been the most popular form of investment in British history. Premium bonds are bought and kept by over 40% of Great Britain’s populations. Where traditional investments yield a small return over time, premium bonds yield no return at all but give the investor a chance to win a monthly lottery. This popular investment strategy have made millionaires out many British citizens and at the same time provided the investors that didn’t win a secure place to save their money and help out the national treasury. They have the option of pulling out the money at any time without loss. Here are some bizarre facts that surround these popular bonds.
From its conception until the late eighties there was even a beauty contest to celebrate the premium bonds program. The National Saving and Investment agency, the department in charge of the bond program, held an annual Miss Premium Bond competition in which employees of the agency entered during the annual Civil Service Sports and Social Club Day held in Lytham St. Annes. Just like regular beauty pageants, the competitors would walk down the catwalk flaunting their looks and style. They would smile politely to the judges and then answer questions related to the pageant. No other investment company has ever sponsored such an event.
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