LESS BOND FOR YOUR BUCK
Prize bonds seem to be a substantial attraction for some people – but Jill Kerby in the Sunday Times is not one of them. People spent €370 million buying bonds last year, up 32 per cent on 2008. Out of a total prize fund that topped €1 billion, however, the company paid out just €28 million. Kerby says she has never understood why people would tie up their money in prize bonds in perpetuity.
“They are simply lottery tickets by another name. They pay no interest and inflation eats away relentlessly at the spending value of the capital – with the exception of the past two years in which there has been negative inflation,” Kerby comments. She says the Prize Bond Company claims it offers bond holders chances to win cash prizes every week; the company says that with €1,000 worth of bonds someone has a one in four chance of a win.
“Maybe, but a single bond holder has only a 5.85 million-to-one chance of winning the €1million prize, awarded just 12 times a year,” Kerby comments . “The only guaranteed way that anyone can make money from the prize bonds year in and year out is to become one of the 46 people who work for the Prize Bond Company
Tags: Personal finance