Premium Bonds The Best Saving Practice for the British Citizen

There are many ways to save your money. Some people do not trust banks or the government to keep their money and keep it stored in a safe at home or even in a jar in the kitchen cabinet. The money just sits there with no interest and no chance of earning anything but a layer of dust. This is a sad way to save for a rainy day. The money could be in a savings account earning interest or it could be invested in the stock market where the money could earn a lot or maybe be lost if the market fluctuates negative. The smartest thing for the British investor to do with their money is to buy premium bonds.

With premium bonds the investor can save up to thirty thousand pounds. The investor buys premium bonds from their local post office or they can purchase them online from the National Savings and Investments agency. They will be issued a physical paper bond that has an distinct, individual number that identifies that particular one pound bond. The owner is also registered as the owner and no person can cash in the bond or collect a cash prize except the person registered to that bond. If that person dies, the bond numbers die with them. They can leave their premium bonds to their surviving spouse, but that spouse cannot cash them in or collect prizes those bond numbers have won. The spouse can turn the bonds in for new bonds with new numbers.

Each month the premium bond numbers will be apart of a national lottery. Their numbers may be picked to win up to two million pound prizes or one of the one and half million lesser cash prizes. The investor has about a 27,000 to 1 chance to win one of the prizes. If they win they will receive their prize in about a week after filling out a claim application. The premium bond may be kept in the system and the bond may win more than once. If your bonds do win a prize, even the fifty pound minimum prize, it will be more than the interest than you earn in a savings account or playing the stock market. The bond never loses value and can be cashed in at anytime for use or reinvestment. It is a fun way to save and your money will earn more than sitting in a jar or in the back of a safe.

With over a third of Great Britain saving this way, you can be apart of a national financial phenomenon that has been apart of the British way of life for over fifty years. Almost every citizen has heard of premium bonds and the National Savings and Investment agency is promoting the savings program more now than they ever have before. So unscrew that jar and break open that safe and put your money where it is safe and earns you a profit. You are also helping the government fund public projects, contribute to society, and give British citizens a chance for a better life and a secure retirement.

Conspiracy Theories About Premium Bonds

As with most things that are concerned with the government, conspiracy theories are generated to prove or disprove unfairness between two parties or plots to hurt the population. Premium bonds are not isolated from these kinds of attacks. Conspiracy theorists have accused the National Savings and Investments agency of defrauding the public and being bias in the way they hand out the prizes and pick out the numbers of the bonds. These conspiracy theories are meant to hurt the agency and they are being reported in blogs and other methods to bring the idea of premium bonds to a halt.

The National Savings and Investment agency has issued statements that debunk these theories and preserve their integrity. Their number generating machine, ERNIE, creates random numbers that correspond with the numbers on the bonds. Large drawings are held each month and some people believe that the number generating is fixed. One of the most bizarre theories is that some people believe that ERNIE is a super computer that knows how a person thinks. People have even sent ERNIE Christmas and Valentine Day cards to the computer in hopes that it will sway its picks. This is totally untrue; the machine is totally random and does not have the capacity to know anything.

Psychologists have made the assumption that even the employees of the National Savings and Invest agency does not even know how the numbers are picked by ERNIE. The people that make the theories have a intrinsic need to know how a process works and when they do not know, they will come up with ideas that make them feel more comforted. Ironically, most of the conspiracy theories come from people who have never won any of the cash prizes and they feel that they are not in control of the situation.

The maximum holding for premium bonds is thirty thousand pounds. A theory exists that only the maximum amount in the system will generate winners for those people only. If you do the statistics thirty thousand pounds has a better chance of winning than if you have just two or three thousand pounds invested in bonds. Again people with the lower amount of money invested are perpetrating the theory. With over a third of the population of Great Britain investing the premium bonds system, so people may never win a cash prize nor see their investment grow.

There is a theory that only new premium bonds are winning. This may be true. Though the program has been going on for decades, there has been a surge of new buying since the one million pound prize was introduced. Again the numbers come into play, the more that people play, the less chance you will win a cash prize. As with any lottery system, the more people that play and save, the more people will lose.

The good thing is larger prizes and more money can be put into the system where people who win will make a larger profit. By doing the simple math, most of these theories are debunking themselves.

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.

Similar to the American lottery there has been some weird stats derived from the program. Similarities from the statistics include that Hannah is the most frequent name that has won a premium bonds lottery and Sean was the most frequent male name. The ten top readers were all female except for one. Some winners don't even claim their prizes. There is an unclaimed prize for twenty five thousand pounds waiting patiently for the owner to claim. There are also more than five hundred thousand pounds stored at the agency just waiting for somebody to come and take it home.

There are even conspiracy theories that call the premium bonds program a scam. There are people who will cash in their bonds and then buy new them so that they will have modern numbers. The first bond ever bought is still in the system, but these people believe that only new numbers will be generated from ERNIE the famous number generating machine.

Other conspiracy theorists have come up with ideas that the machine is prejudiced to what region of Great Britain the winners will be chose from. One man in Wales even has said that the bonds were rigged because Wales had the fewest amount of winners. What he failed to realize was that fewer people in Wales bought premium bonds and that naturally the statistics would favor a larger buying population.

As there is winners there are also losers. You can't really loose because the bonds are cashed in at the same amount they were bought at. One gentleman reported that he had never won in twenty years. He states he has even stopped looking at the monthly numbers. He could be one of the people who has never claimed the over five hundred thousand pounds that have never claimed.

Premium Bonds and Islamic Law

Premium bonds have been debated for decades over their ability to actually beat out interest bearing savings plans and conventional banking practices. Premium bonds allow the bond buyer to participate in a monthly lottery that picks out individual bond numbers. If your bond number is picked you are awarded a cash prize that can range from fifty pounds to a million pounds. Your investment is safe and the government uses the money to fund public projects. There have been conspiracy theories and other grumblings about the premium bond system and now there are religious concerns.

A recent ruling in the Islamic world has made premium bonds ownership against Islamic law. Muhammad Adam al-Kawthari has interpreted the Koran in stating that contrary to shares, premium bonds are a loan instead of a partial owning of a company as in shares. The act of making money off of your own money in the form of interest is considered usury and takes away from the pillar of faith that represents being charitable. Islamic scholars have declared all bonds that produce interest as unlawful. Even a premium bond cash prize is considered apart of interest and cannot be allowed.

Is the Islamic religion is against premium bonds, imagine what the sales with be like if it was suddenly made lawful. The sale of bonds would go up and the odds would be skewed a little. The Moslem population in Britain might bring many millions of pounds into the government coffers. The funds generated could help Britain pay its war debt and at the same time finance British troops occupying Islamic countries. The Cleric might have made the decision to degree premium bonds unlawful for this very reason. It might be a good idea for the National Savings and Investments or the government to issue a statement that the funds will not be used for military or war funding.

The government is working on a way for the Islamic citizens to be able to participate in the premium bond programs. The Islamic financial systems work on investing on a fixed asset and even Pakistan has Islamic bonds issues to finance its roadways. If the British government figures out a way to do this then they will be able to be the first Europeans ever who are able to allow the Islamic world to participate in the premium bond market. This will boost sales and allow the British Islamic citizen to have fun and save their money in a secure way.

The National Savings and Investments are running against other investing firms that are trying to secure financial relationships with the Muslim communities. Lloyds TSB, one of the largest banks in the country, announced that they have structured Islamic accounts that will be offered to Muslim investors. The account will remain respectful to the Islamic law and at the same time give the investor a secure way to keep their money in a bank and earn money without the idea of interest. Premium bonds may not be the allowed in the Islamic world, but new plans are on the way.

If American Adopted the Premium Bonds Program

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.

The problem with premium bonds coming to America is that the government will have to restructure their thinking of how to save and distribute the funds. They are making millions now without having to do anything but have the weekly lottery and pay off the winners. They pocket out the cash without having the responsibility of letting people have the opportunity to save. Church groups and other anti-gambling groups will win a victory as they will look at the investment opportunity as a savings plan and not a gambling operation.

Unlike the British system where the investors purchase their bonds from the post office the postal service in the United States would probably be overwhelmed if they had to take responsibility for the program. The United States would probably benefit by selling premium bonds online and have an agency that deposits and awards the prizes. This would take a lot of planning but the American population would definitely embrace it.