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Sunday, November 07, 2010

How To Make Money Investing In Premium Bonds

Premium bonds were innovated by Harold Macmillan in the year 1965. Premium bonds are government bonds and the prices of these bonds are more than their par value. According to the National Savings and Investments, these bonds are held by near about 23 million people. These bonds are well thought out to be the easiest and the safest means of saving money. These bonds ensure the bondholders that their investments are totally safe. However, premium bonds are broadly of two types, callable bonds and non callable bonds.

A person making an investment in Premium bonds essentially makes investments in the government. The government does not pay the bondholders interest; instead they pay the money into a fund known as the prize fund and also provide the bondholder a chance to win tax-free prizes. A person investing in these bonds should recall that these bonds cannot be held jointly by two people. Besides, these bonds cannot be transferred from one person to another. However, the main advantage of this kind of bond is that a person can cash it whenever he wants.

A person can acquire the Premium bonds either over the phone or by getting an application directly from the local post office. However, a person who wishes to buy Premium bonds can even download the application form from the Internet. The Premium bonds are by and large sold in multiples of £10. An inidvidual investing in this kind of bond has to make a minimum investment of £100. However, the investment of these bonds can go as high as £30,000. These bonds are only eligible for investing who is 16 years or more. However, in case of children and people below 16 years, Premium bonds are generally purchased by their guardians or parents.