For those who like to combine a risk-free investment with a gamble, while also helping to reduce the national debt, the purchase of prize bonds offers a three-in-one solution. The capital sum invested in the scheme is secure, and is State guaranteed.
The prize bonds can be encashed at any time, and any cash winnings in the series of regular draws are tax-free. And the national debt is lightened, albeit fractionally. Prize bond prizes are, quite understandably, a good deal smaller than those of the national lottery, but from Friday next that position is set to change for the better. Yesterday, the Prize Bond company announced a new prize structure, increasing its top monthly prize to €500,000. This figure rises to €1 million in its December draw.
This welcome change coincides with the 50th anniversary of the prize bond scheme, which was set up in September 1957. Since then, the scheme has paid out more than €250 million to prize bond holders, in what is reputed to be Ireland's longest running prize draw. Certainly for the last half-century prize bonds have proved a popular investment choice with the public, as they combine security of capital with a chance to win major cash prizes. Nevertheless, given the increasingly strong competition offered by others, such as the national lottery, the Prize Bond company clearly needed to improve its offering by making its prizes more attractive, and also by making it easier for the public to buy its bonds. In recent years prize bond growth has stagnated, with sales showing little or no increase since 2003.
The Prize Bond company, by raising the prize money, and by also enabling the public to buy prize bonds online, has greatly enhanced their appeal. Last year, online sales reached €11.6 million, an increase of more than 90 per cent on 2005.
Perhaps the best feature of the prize bond scheme is its low minimum investment size, and its flexibility on withdrawals. A €25 minimum investment buys four bond units, which makes prize bonds affordable even for the less well off, with redemption on demand. In 2006, the average prize bond purchase was €646. By contrast, in Britain the minimum purchase for premium bonds, the prize bond equivalent, is some six times greater. Last year, on sales of €133 million, repayments (encashment by prize bond holders) were €104 million, which left net sales of €29 million. In 2006, the value of the prize bonds invested was €589 million. After 50 years, that amounts to an impressive sum. But with more imaginative marketing, such as the Prize Bond company has begun to show, that could also be a far larger sum.