Bonus Bonds
Encyclopedia
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
unit trust
Unit trust
A unit trust is a form of collective investment constituted under a trust deed.Found in Australia, Ireland, the Isle of Man, Jersey, New Zealand, South Africa, Singapore, Malaysia and the UK, unit trusts offer access to a wide range of securities....
founded in 1970 with a cash prize based reward scheme. It was founded under the Unit Trusts Act 1960 by the New Zealand government
Politics of New Zealand
The politics of New Zealand take place in a framework of a parliamentary representative democratic monarchy. The basic system is closely patterned on that of the Westminster System, although a number of significant modifications have been made...
through the now defunct Post Office Savings Bank
PostBank
PostBank was the trading name of the Post Office Bank Limited, a bank owned by the New Zealand Government. PostBank was formed when the New Zealand Post Office was split up by the Postal Services Act 1987 into Post Office Bank Ltd , New Zealand Post Ltd and Telecom Corporation of New Zealand...
with the goal of encouraging New Zealanders to save
Saving (money)
Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan. Saving also includes reducing expenditures, such as recurring costs...
. It is the country's largest retail unit trust, with around one third of New Zealanders owning bonds.
Current management and prizes
The trust is now managed by the ANZ, which acquired PostBank from the government in 1988. Trustees Executors Limited act as a trustee for bondholders. Bonds can be purchased from any ANZ branch or PostShopNew Zealand Post
New Zealand Post, commonly referred by its acronym, NZPost is a State owned enterprise responsible for providing postal service in New Zealand.-History:...
.
Bonds are invested in safe assets such as corporate securities, government bond
Government bond
A government bond is a bond issued by a national government denominated in the country's own currency. Bonds are debt investments whereby an investor loans a certain amount of money, for a certain amount of time, with a certain interest rate, to a company or country...
s and securities issued by banks. A total of NZ$
New Zealand dollar
The New Zealand dollar is the currency of New Zealand. It also circulates in the Cook Islands , Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents....
7.9 million, consisting of 248,000 random
Random number generation
A random number generator ) is a computational or physical device designed to generate a sequence of numbers or symbols that lack any pattern, i.e. appear random....
tax-paid cash prizes is awarded monthly based on the amount invested, with three top prizes: 1x $1,000,000, 5x $100,000 and 5x $50,000. A minimum $20 is required to be eligible for the draw, and investors must have held bonds for a full calendar month. As of 30 September 2007, Bonus Bonds have paid out NZ$2,921,000,000 (almost $3 billion NZD) in more than 3 million tax-paid cash prizes.
The chances of winning are no greater than 1 in 9,600 per unit as required by the Finance Act (No 2) 1990. At present, the chance of each unit winning a prize ranges from 1 in 9,600 and 1 in 11,000. A single bonus bond or unit translates to one dollar, and each unit owned has a chance of winning. The average win is apparently around $27.50, giving a tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
free return of around 3.4% . Returns will vary based on security returns, and these are of course averaged figures which will vary greatly due to the random nature of the investment. Mary Holm of The New Zealand Herald
The New Zealand Herald
- External links :* * *...
describes Bonus Bonds thus: "As I've said before, having a bit in bonus bonds is fine if you regard it as fun. But it is not the place for major savings".
The draw is conducted by a random number generator called ELSIE (Electronic Selection Indicator Equipment), based in the Bonus Bonds Transaction Centre in central Dunedin.
Bonus Bonds has been promoted by comedian
Comedian
A comedian or comic is a person who seeks to entertain an audience, primarily by making them laugh. This might be through jokes or amusing situations, or acting a fool, as in slapstick, or employing prop comedy...
Leigh Hart ('That Guy
That Guy
Leigh Hart is a New Zealand performance artist who is better known by the pseudonym "That Guy". He has made various appearances on New Zealand television, including Sports Cafe and his own show, Moon TV....
') on a television advertisement. The advertisement marketed the bonds as an exciting way to invest, with the catchphrase 'the money and the bag' (referring to It's in the Bag
It's in the Bag (game show)
It's in the Bag was a long-running New Zealand radio and, later, television game show. The show began on radio in the 1950s and was hosted and directed by Selwyn Toogood. In the 1970s a television version of the show was developed which was also hosted by Toogood until his retirement in the 1980s....
, a long-running New Zealand radio and television game show
Game show
A game show is a type of radio or television program in which members of the public, television personalities or celebrities, sometimes as part of a team, play a game which involves answering questions or solving puzzles usually for money and/or prizes...
).