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What is a Premium Bond

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					What is a Premium Bond?

The United Kingdom has a unique way to insure bonds that is very
different than the government bonds you buy from the United States. In
the United States you buy a bond and after ten or twenty years the
government will pay back the original money invested and add interest.
For example a twenty year bond will be yield an interest after the time
has passed the bond can be returned for the promise payment. The premium
bond that the United Kingdom offers can be redeemable for the exact
amount it is purchased for at any time.

The interest accrued goes into a public fund in which is saved. The
interest is divided and monthly cash prizes are awarded in a lottery
style give away. So the more bonds you buy, the more chances you have to
win the cash prize. The cash prize is nothing to laugh about. Translated
to American money, the first prize on the bond lottery can be over a
million dollars.

There are smaller prizes awarded, so if you are lucky you will receive a
huge prize instead of the small percentage the American bond market gives
you. Premium bonds add excitement to investing. You don't have to worry
about losing your money or waiting a long time to collect the interest.
It's like being involved in a lottery without going to the connivance
store to buy your tickets each week. You bond is involved in each lottery
and you can cash it in and pull it out of the lottery if you need the
money or you do not want to be involved anymore.

Unlike the American government bond system where you will not get the
interest if you pull out the money before the stated agreed upon time,
the premium bond system allows you to have more freedom with your money.
You can have a nice savings account and at the same participate in a
lottery that can set you up for life. A machine generates the winners and
like the American lottery, you can check online for the results. The
results are even listed in British papers with the bond number, not the
person's name who wins it. It may not have the hype that the American
lottery has, but it still is more fun than waiting ten to twenty years
for an American bond to mature. When the lottery number is pulled the
winner is notified within four days of the lottery.

There are even two prizes in the millions, so there is a chance of
winning the big money twice a month. Even the smallest amount won is
fifty ponds which is about a hundred and ten dollars. That right there
is enough to triple the interest earned in the American bond market. The
more premium bonds you buy, the more chances you have to winning the
money. So if you have U.S. government bonds or an saving account that is
pulling in less than three percent monthly, you might want to look at
reinvesting the money into premium bonds and have so fun as well as
having a chance to win over a million dollars.

				
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posted:7/25/2012
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