Premium Bonds and the Difference Between NSI and Banks

When looking for investments such as premium bonds, you might be confused by the difference between a bank and the National Savings and Investments. Banks are usually private institutions. When you save you receive an interest on your money. The interest is determined and set by the bank which generates profit off of your money. The profit is then shared by the owners or if it is a credit union, the members share in the profit. The Savings and Investments is an agency of the British government. When you invest your money goes to pay for governmental expenditures and the government guarantees the safety of your money. You can't find that kind of guarantee at a bank.

The National Savings and Investments offer several different investment packages including the sale of premium bonds. You can either save your money in an easy access account where you can claim your cash at any time or you can go for a longer package where your money is invested for several years. These packages can be and most are tax free. A lot of people do not trust short term investments so they opt for a fixed rate savings bond. Here the bank will give you a certain interest, usually higher than a savings account, if you promise to keep your money with them for a certain length of time. You usually have a penalty fee if you take it out before it is matured.

If you want to save money and maybe even get a 500 percent interest or more you may choose the premium bonds program. Premium bonds can be bought at your local post office at that bond will be exactly worth what you paid for it when you cash it out. The good thing is that your bond number will be included in a monthly lottery where you could win as little as a million pounds and as much as a million pounds. Almost one and a half million winners will be picked out and paid each month. At 21,000 to 1 odds, you are better off saving with premium bonds then with the conventional savings account.

If you are buying for a child you can buy premium bonds for children under sixteen. If you have a thrifty teenager, then at the age of sixteen they can buy them themselves. Some people opt out of premium bonds and go for more secure, lower interest bonds that will make some money to help the child through school or to help them financially in the future.

So whether you choose a bank or National Savings and Investments, be sure to ask a financial advisor what saving program bests suits you. The investment strategy that you choose can determine happiness and prosperity in your later years or the type of education your child will be able to afford. Interest rates are variable and if there is a national financial crisis, you, your money and your future could be hung out to dry.

The Difference Between British and Canadian Premium Bonds

Premium bonds, the most successful savings program in British history, has given the common man a chance to win up to a million pounds in a lottery based drawing that draws the numbers from the bonds themselves. Other countries are starting premium bond programs but there are distinct differences between them. The forty plus years of the British system has made millionaires out of two people a month and has given several other millions cash prize in lieu of interest. The great thing about the British premium bond system is that you can withdraw your investment anytime without penalty or loss of money.

Based off of this model, the Canadian government now has started a similar program that has very distinct differences. The Canada Premium Bond is a safe and secure investment is a bond that has interest and even a compound interest. In comparison to the British system that offers no interest the Canadian system offers a guaranteed rate of return and offers a higher interest than the common Canadian Savings bond which is a completely different investment opportunity. They can be redeemed once a year; where as the British premium bond can be cashed in at any time.

Both premium bonds are backed by the governments so you can be assured that your money is safe. Both countries use the money to fund government projects. This money is used instead of tax money so the investments you make actually help keep tax increases from happening and saving you money in the long run. The British system relies more on giving back the money in the form of random cash prizes while the Canadian system assures their investors a solid interest rate.

Both premium bonds in both countries do not charge a fee of any kind but the Minister of Finance in Canada can stop the sale whenever his department chooses. The British National Savings and Investments have no plans to stop the sale of the bonds and actually the number of bonds being bought is growing rapidly. The only negative aspect to this is that the lottery payout system has to grow because without growth, the odds of winning a cash prize in the British system may grow wider than most of the investors would want to deal with.

A Canadian investor has the same promises as a British person trying to save money. The money is guaranteed and though the return is not guaranteed in the British premium bond plan. Both bond systems are an excellent addition to any investment portfolio but both countries need to diversify the portfolio especially if the portfolio is for a long term savings plan for the retirement. Whether you are a British or a Canadian citizen, both premium bond opportunities presents themselves as an excellent opportunity outside the mainstream savings plans that have been the backbone of most banking institutions. You may want to talk to a financial consultant to find out if either the British or the Canadian premium bonds are right for your portfolio.