What are Bonus Bonds?

Bonus-bonds-logoIn the current low interest rate environment, the return on savings accounts and term deposits is nothing to get excited about.

I know from experience (when I worked in banking) that a lot of customers would withdraw their savings and use them to buy Bonus Bonds when interest rates were low – as they are now.

What are Bonus Bonds?

I’m not going to rehash the FAQ of the official Bonus Bonds website, but will provide a brief overview of how they work, and why I have some of my own.

Basically I see Bonus Bonds as a way of playing the lottery without actually spending the money.  If you buy a Lotto ticket, you have spent that money and it is gone.  You might win, but more than likely you won’t.

When you buy Bonus Bonds, each $1 gets you a unique bond number which is entered into a monthly prize draw.  There is a minimum purchase of $20 (20 bond numbers).  Bonus Bonds have been around since 1970.  Each month there is at least 1 x $1,000,000 prize, 1 x $100,000 prize, and 1 x $50,000 prize. There are also plenty of smaller prizes of $5,000, $500, $100, $50, and $20. Prizes are tax-free.

Each unit you purchase has to have been held for a whole calendar month before it is entered into a prize draw.

You don’t earn any interest on your funds invested in Bonus Bonds, but you can withdraw your money and it will be back in your bank account 2 – 3 days after your request.

Why do I have Bonus Bonds?

I haven’t won any big prizes with Bonus Bonds, but I like having the chance to win.  I have won a couple of $20 prizes and one of those was won with my original 15 units purchased when the minimum investment was $5 in the 1980’s.

For years I only had $15 invested – that I’d had since I was a child.  A quick calculation shows that if that $15 had been put in the bank at 2-3% gross interest for 28 years it would have grown to the grand total of $29.74.  So, by winning $20 I am actually up on what I’d have had if I’d put that money in the bank.  In actual fact, I’d have probably spent the money if it had been in the bank.  Bonus Bonds are great for being ‘out of sight, out of mind’.  I think they are a fun investment for children and just a bit harder to withdraw for spending on lollies or toys.

Since I’ve won $40 (2 x $20) I’ve started buying a few more bonds whenever I have some spare spending money.  (Hubby and I get $20 spending money each week – to blow on coffee, or whatever).

Around the last day of each month (remember you have to hold the bond units for a whole calendar month before they are eligible for the prize draw), if I have a spare $20 (the minimum purchase) I’ll buy some more.  I think from memory I have about $430 now.  That’s 430 chances to win a prize each month.  You have to be in to win!





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