|Posted: December 9, 2005, 11:51 pm - IP Logged|
Premium Bonds were introduced in 1956, when the UK government tried to encourage ordinary wage earners to save by running a 'risk-free' lottery. Now 23 million people in the UK own at least one premium bond.
Investors buy bonds worth £1 from the Post Office or by post from National Savings & Investments (NS&I). The minimum stake is £100, and the maximum £30,000. Over the past few years sales have rocketed, as people look for a safe home for their investments in the face of turbulent stock markets and paltry interest rates.
The main attraction of National Savings is that they are a relatively safe investment and backed by the Treasury. Anyone aged 16 years or over can buy Premium Bonds for themselves. Premium Bonds can be bought for children under 16 by their parents, grandparents, great grandparents or guardians.
Every month Ernie (Electronic Random Number Indicator Equipment) - the computer which selects the winners - gives away around 600,000 prizes, including a £1 million jackpot - introduced in 1994 - and more than 550,000 other prizes ranging from £50 to £100,000.
The same bond can in theory win time and time again. Premium Bonds can be cashed in at any time, with the only loss being the potential interest that could have been earned in a building society or other type of investment - and winnings are tax-free.
While you can't guarantee you can win, part of the fun of investing in Premium Bonds is waiting for that letter to land on the doormat saying you have won.