Inflation-proof bonds for retirement

Press, 3 June 1982, Page 20

Inflation-proof bonds for retirement

PA Wellington Most of the people who buy inflation-proof bonds are nearing retirement, or have retired.

Figures released by the Reserve Bank show that 72 per cent of all bonds are held by people over 55. A further breakdown shows that 59 per cent are held by people over 60, with 13 per cent by those between 55 and 60.

Even more telling is the fact that people over 55 account for 80 per cent in. value of the bonds issued. - x The enthusiasm of people nearing retirement and who have retired for the bonds, stems from the negotiability of the best-selling financial instruments.

People over 60 can cash in the bonds at any time. Tn - fact, it is known that many superannuitants cash in their bonds each year and simply reinvest the larger amount to gain an even bigger return in the following year. Others spend the interest, and reinvest the capital. The remaining bonds are held by younger people from, seven up. People under 6Q must invest in the bonds for a minimum of five years. Latest figures show that there are currently 112,000

bond holders with 244,000 different holdings.

There has also been a continued drop in the investment in the bonds, which are now running well under the $3 million a day average for much of the year. This could be because of tightening general liquidity — or simply lack of publicity recently about the issue'. It is expected that bond investments will start to pick up again later this month, with Inland Revenue due to start posting out income tax refunds. In the week to May 28, $l4 million was invested compared with $14,700,000 to May 21, $l6 million to'May 14, and $15,400,000 to May 7. Total subscriptions to in-flation-proof bonds now total $761 million, and redemptions are $2B million, leaving $733 million invested. Sales of premium stock, launched last November, now total $220 million, with redemptions $3 million. . Unlike inflation-proof bonds, where all the money has been invested by individuals, captive investors, such as insurance companies, have invested some $2OO million in the premium stock issue.