Bonus Bonds
From Wikipedia, the free encyclopedia
Bonus Bonds is a New Zealand unit trust founded in 1970 with a cash prize based reward scheme. It was founded under the Unit Trusts Act 1960 by the New Zealand government through the now defunct Post Office Savings Bank with the goal of encouraging New Zealanders to save. It is the country's largest retail unit trust, with around one third of New Zealanders owning bonds.[1]
[edit] Current management and prizes
The trust is now managed by the ANZ, which acquired PostBank from the government in 1988. Trustees Executors Limited act as a trustee for bondholders. Bonds can be purchased from any ANZ branch or PostShop.
Bonds are invested in safe assets such as corporate securities, government bonds and securities issued by banks. NZ$7.9 million, consisting of 248,000 random tax-paid cash prizes are awarded monthly based on the amount invested, with a three top prizes of $1,000,000, $100,000 and $50,000. A minimum $20 is required to be eligible for the draw, and investors must have held bonds for a full calendar month.[1] As of 30 September 2005, Bonus Bonds have paid out NZ$1.4 billion in over 29 million tax-paid cash prizes.
The chances of winning are no greater than 1 in 9,600 per unit as required by the Finance Act (No 2) 1990. At present, the chance of each unit winning a prize ranges from 1 in 9,600 and 1 in 11,000.[1] A single bonus bond or unit translates to one dollar, and each unit owned has a chance of winning. According to[2] the average win is around $27.50, giving a tax free return of around 3.4% . Returns will vary based on security returns, and these are of course averaged figures which will vary greatly due to the random nature of the investment. Mary Holm of The New Zealand Herald describes Bonus Bonds thus[3]: "As I've said before, having a bit in bonus bonds is fine if you regard it as fun. But it is not the place for major savings".
Bonus Bonds has recently been promoted by comedian Leigh Hart ('That Guy') on a television advertisement. The advertisement markets the bonds as an exciting way to invest, with the catchphrase 'the money and the bag' (referring to It's in the Bag, a long-running New Zealand radio and television game show).
[edit] References
- ^ a b c Bonus Bonds - About. Retrieved on 2007-02-12.
- ^ Newsletter March04 - the Shape of Money. Retrieved on 2007-02-12.
- ^ Mary Holm. Bonus bond returns - 06 Apr 2002 - Money Matters. Retrieved on 2007-02-12.
