This week, I learnt about Premium Bonds.
Premium (or lottery) bonds were introduced by Harold MacMillan in 1956 as part of the government's National Savings and Investment Scheme. This is how they work:
1. You pay some hard earned cashola for a bond. You can sell this back to the government, at your request, at the original price you paid. No more. No less.
2. The government pays a return on the bond but not to you. Instead it goes into a central prize fund.
3. A monthly lottery distributes premiums to those bond-holders whose numbers are selected randomly.
4. The machine that generates these random numbers is called ERNIE. I kid you not. It's acronym of Electronic Random Number Indicator Equipment.
5. Your chances of winning (according to the Premium Bond Probability Indicator on moneysavingexpert.com) are as follows:
Hold £100 over a year = 3.28% chance of winning anything
Hold £1,000 over a year = 28.3% chance of winning anything
Hold £10,000 over a year = 96.4% chance of winning anything
6. The anything you could win ranges from £25 to £1,000,000. But you should know that in November 2011, 99.75089525% of the prizes made available were £100 or less. Just to be precise. I wouldn't want any rounding up or down of the decimals to mis-represent the opportunity here.
After all, what could be a sounder investment choice than essentially putting a down payment on a whole lot of future lotto tickets?
But really, who am I to quibble about such things: apparently one in three Britons invest in them.