www.InvestmentGuide.co.uk
www.InvestmentGuide.co.ukNATIONAL SAVINGS
ERNIE (Electronic Random Number Indicator Equipment)
selects £1 bond numbers at random to win over a million prizes each month
(about half the number of prizes available just three years ago). In October
2009 there were two £1 million prizes each month, now there is just one.
Other prizes big prizes are £100,000 and nearly a million for lesser
amounts generally £50 and £100prizes. In October 2009, 89% of the
prizes by number were £50 or £100. Winning numbers of the big
prizes are published in the newspapers but you will also be notified
individually if you win.
In May 2007 there was around £28
million in
unclaimed prizes. Since November 2001 over £12 million
has been traced from 33,000 successful searches. The names of the winners are
never published.
The chances of 1 bond winning any prize are 24,000 to
1; in 1991 the odds were 11,000 to 1 reflecting the much higher interest rates
which used to apply to determine the prize money. The interest rate is 1.5% .
Someone with £30,000 invested can expect to win about 7 (small) prizes a
year. However the million pound winners tend to be those with large holdings;
for example the winner for January 2012 had a holding of £23,000 although
the four winners of £100,000 had holdings of between £1,000 and
£30,000.
Who can invest Anyone. Joint holdings not allowed. Parents, guardians, grandparents and great grandparents can buy bonds for children.
How worthwhile If you are lucky and enjoy a gamble you may win a prize, but you may not. Worth considering only if you are a higher rate taxpayer. £50 remains the most common prize.
Minimum £100; then in multiples of £10. Each unit is still £1, so £100 gives 100 chances of winning. Bonds become eligible to win one clear calendar month after the month of purchase. You can invest monthly, minimum £50 a month; no maximum but you must not exceed the individual maximum holding of £30,000 per person.
Maximum £30,000 per person.
Suitable Lump sums.
Money back About 2 weeks. Ask for a repayment form and post-paid envelope at a post office or on-line. A partial withdrawal of a multiple bond is allowed. By cheque or in cash at a post office.
Interest None. The amount of money used to determine the total amount of prizes is equivalent to 3.8% a year interest (June 2007).
Tax Prizes are free of income tax and capital gains tax. They need not be declared on a tax return.
Fees to pay None.
Passbook None. You are issued with a bond which is individually numbered for each £1 unit and a holder's number card - this number should be quoted if you withdraw or buy more bonds.
Children Under age 16: bonds must be bought by a parent, guardian or grandparent. Any prize money will normally be paid to the parent or guardian. After age 16 the child takes over the bond.
Risk None. Full value of original investment returned on withdrawal.
How to investOn-line. By phone. By post.
Where from National Savings.
Last updated 4
January 2012.