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WALES: Bonds at a premium when going is tough; your MONEY.

Byline: By JEREMY GATES

EVEN though Sir Alan Sugar has cut his TV advertising efforts lately, Premium Bonds make an attractive bolthole for cash when even the Chancellor of the Exchequer is looking hard at the lifeboats.

Have a gamble, and get your (Government-guaranteed) money back whenever you need it! The simplicity is appealing when so many other investments are going down the drain.

Savers stashed pounds 15.5bn into National Savings in 2007/08 and 43% of that - some pounds 6.6bn - bought Premium Bonds, by far its biggest seller.

According to National Savings and Investments (NS&I) last year alone, money invested in National Savings saved taxpayers pounds 375m by reducing the cost of Government borrowing. Nearly half that saving - around pounds 170m - presumably came from Premium Bonds.

In September's draw, ERNIE 4 is paying out over 1.6m prizes, worth more than pounds 104m. Some 36.8bn Premium Bonds are eligible for a prize.

It's been a remarkable boom and continues despite the promise of NS&I chief executive Jane Platt, in her 2007/08 report, to "shift the emphasis away from this product by bringing other key products to the fore."

In 1997, when Mr Brown began his Chancellorship, savers held pounds 8.6bn in Premium Bonds. Now it's nearly pounds 36.5bn.

In one month alone - October 2006 - we sank a record pounds 2.2bn into Premium Bonds when their 50th anniversary was marked by five pounds 1m monthly jackpots. Around 400,000 people hold the maximum investment allowed of pounds 30,000.

Nearly pounds 30m worth of Premium Bond prizes still wait to be collected. Long-forgotten winning numbers can be traced on the NS&I website.

The late-1990s surge in Premium Bond buying enabled NS&I to double its jackpot to two pounds 1m winners in August 2005.

Maybe the National Lottery - which means millions of people actually losing money every Saturday night - makes Premium Bonds more attractive, because the gambling chips are never lost.

Possibly we buy in the Titanic spirit: let's have a gamble to keep spirits up.

In my case, whenever a regular National Savings mailshot falls through the letter box, I check our current account to see if any spare cash is earning a derisory 0.10% interest at Lloyds TSB and bung another pounds 200 off to the Premium Bonds HQ.

I suppose my wife and I are too lazy to find a better, more accessible place for the cash. Four or five years ago, our Premium Bond winnings held steady around pounds 1,000 a year.

Since then our stake has steadily increased and winnings have shrunk.

But I still got a shock when I tallied up winnings for 2008 - a measly pounds 200.

If our Premium Bond stake was safely invested in a building society account paying around 6%, it would gross nearly pounds 1,300 per year. Are we really paying more than pounds 1,000 a year for the vain hope of becoming millionaires?
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Publication:Daily Post (Liverpool, England)
Date:Sep 15, 2008
Words:499
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