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March 28th, 2017



Why is It Smart to Invest in 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.