In bondage to Post Office — at odds of 238 M to one

Press, 6 August 1981, Page 17

In bondage to Post Office — at odds of 238 M to one

GARRY ARTHUR

•.■• ' ' ■ t investigates Bonus Bonds and the chances of any number

winning the monthly $lOO,OOO first prize . .

Is it . really worthwhile, that eager, optimistic walk 2 , r°, t * ie letterbox, and the doleful trudge back — empty-handed except for the usual catch of junk-mail and Drown envelopes with windows in the front? There’s never a cheque from the Post Office, and, with only $lOO “invested” in Bonus Bonds, is there ever likely to be? Never mind your $25 minimum prize — is there ever gomg to be a big one? The $25,000 third prize would be nice, and the top monthlv prize of $lOO,OOO would be really welcome. Every month of the year someone’s letterbox yields up a Post Office letter congratulating them for having won $lOO,OOO. And every week someone gets the top prize of $ll,OOO from the weekly draw.

But do the big prizes ever go to the little chaps — the ones who have scraped together a few dollars for a permanent stake in the country’s biggest lottery? Or only to the moneybags with such vast holdings of bonds that their chances are spread over acres of numbers? The Post Office has one encouraging answer and one discouraging answer to that question. The bad news first: every dollar invested in Bonus Bonds has its own number, and that little number has to take its chances in the weekly and monthly draws with 238 million others. On the other hand — and this is the good news —- bonds in the $l, $2. and $5 range have won prizes as big as $15,000. and $lO and $2O blocks have won bigger ones, right up to the monthly second prize of $50,000. However, in the 11 years that Bonus Bonds have been going, the really big monthly prize has never gone to bonds in those smallish denominations.

It stands to reason, says the Post Office, because by far the greatest number of bonds are held in the maximum size blocks of $5OO At

the June draw. 77 per cent of the bonds were in $5OO lots, and 77 per cent of the prizes went to holders of $5OO blocks. Holders of $lOO blocks amounted to nearly 11 per cent of those taking part in the draw, and sure enough, nearly 11 per cent of the prizes went to them. s

It was the same relationship right down to those holding solitary $1 bonds — they made up 0.22 per cent of the bonds, and won 0.25 per cent of the prizes.

No-one at the Post. Office knows the size of the biggest individual holding. Mr R. J. M. Wallace, of the Savings Bank research section in Wellington, who supervises the whole thing, says that “any amount of people” have holdings of $lO,OOO worth of Bonus Bonds. Some have more, but he does not think anyone would have as much as'sloo,ooo worth.

Only individuals may buy Bonus Bonds, which cuts out companies, insurance firms, and syndicates which might be tempted to pop a million or two into Bonus Bonds for

the chance of earning a lot more interest than in other types of investment. Individuals are limited to buying $5OO blocks, but as there is no limit to the number of $5OO blocks they may buy — and the Post Office confirms that a clutch of such bonds bought at one time would have consecutive numbers — there would seem to be nothing to stop someone with enough money from buying a good “spread” of numbers.

So when the Post Office says that $5OO block holders win most prizes, that obviously includes many people with very big holdings. Mr Wallace says that some people put the money from the sale of a house into bonds, giving the money a chance in the lottery until it is needed again. They just might strike it rich.

Each number — that is. each $1 bond or $1 part of a bigger bond — has one chance in 10,730 of winning a prize of some kind. The chances obviously improve according to the size of the bond.

Sin ce Bonus Bonds were introduced in 1970, the amount invested has grown! at axi : .. average rate of $2l) million a year. i But} don’t lose heart, this does jjnpt make the odds worse — the pool of moii'iy used for prizes is a fixed proportion of the total amount held in Bonus Bonds. Whatevi t the size of the fund, 6 per cent must be paid out in prize-money — 0.25 per cent better than with the British htonus bonds.

as it is a lottery, not e, veryone is going to earn 6 per cent of the money invested, 4 not by any means — so whdi is the attraction? What makt?s New Zealanders invest $25 8 million in a scheme which may not pay any return?-

It must i>e our gambling spirit. The Office says the popularity of the scheme shows that: plenty of investors “preft ?r to forgo their individual entitlement to interest on their bonds in favour of a chai»ce to win taxfree cash priirJs from a pool of interest."

draws the winning numbers in Dunedin, and the results are announced on the second Tuesday of every month. The Post Office sends a cheque for prizes below' $5OO. Winners of bigger prizes are sent a congratulatory letter which asks how they want to receive the money. Their reply is a check on identification, to make sure the money goes to the genuine bond holder. • In spite of letters and public advertisements of the winning numbers some investors fail to claim their prizes. At the end of June there were 3201 unclaimed prizes W’orth a total of

$74,856. Unclaimed prize money is deposited in an account in the bond-holder’s name and earns interest until it is claimed. Lists are published regularly. As lotteries go, the odds may be rather long with Bonus Bonds, but at least you keep your stake. However. the Post Office goes a bit far -in its publicity. “It really is no-risk saving,” says its brochure. “Where else are you offered the opportunity of investing with positively no risk of losing what you have invested ...’’ This overlooks the pernicious effect of inflation — if

A computet'; called Elsie

you fail to w*in a prize, your bonds are losing value' by about 16 per cent a year at. present. On the other hand, their chance of winning a prize is not getting any less. On top of which, the investor has the knowledge that while his bonds -are doing their best to win him a prize, the money they represent is invested in - Government stock and is helping with big capital development programmes, such as the Clutha dam for example. That might give an investor a warm patriotic feeling — or it might not. as the case may be.