Bonus Bonds was a

New Zealand New Zealand () is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and List of islands of New Zealand, over 600 smaller islands. It is the List of isla ...

unit trust A unit trust is a form of collective investment constituted under a trust deed. A unit trust pools investors' money into a single fund, which is managed by a fund manager. Unit trusts offer access to a wide range of investments, and depending on ...

founded in 1970 with a reward scheme based on cash prizes. The

New Zealand government The New Zealand Government () is the central government through which political authority is exercised in New Zealand. As in most other parliamentary democracies, the term "Government" refers chiefly to the executive branch, and more specifica ...

launched Bonus Bonds under the Unit Trusts Act 1960 through the Post Office Savings Bank with the goal of encouraging New Zealanders to save money. It was the country's largest retail unit trust, with around one third of New Zealanders owning bonds.

Management

the ANZ managed the trust (ANZ acquired

PostBank Post Office Savings Bank, or very briefly PostBank (trading name of Post Office Bank Limited), was a bank owned by the New Zealand Government as the government's postal savings system. The bank was established in 1867. It became PostBank in ...

(Post Office Bank Ltd) from the government in 1988). Trustees Executors Limited acted as a

trustee Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, refers to anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility for the ...

for bondholders. Potential customers could purchase bonds from any ANZ branch or from any PostShop. Management invested trust funds in "safe" assets such as

corporate A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the state to act as a single entity (a legal entity recognized by private and public law as "born out of s ...

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

government bond A government bond or sovereign bond is a form of Bond (finance), bond issued by a government to support government spending, public spending. It generally includes a commitment to pay periodic interest, called Coupon (finance), coupon payments' ...

s and securities issued by banks.

Prizes

Each month the trust paid out a total of

NZ$ The New Zealand dollar (; currency sign, sign: $; ISO 4217, code: NZD) is the official currency and legal tender of New Zealand, the Cook Islands, Niue, the Ross Dependency, Tokelau, and a British territory, the Pitcairn Islands. Within New Zeal ...

7.9 million, consisting of 248,000

random In common usage, randomness is the apparent or actual lack of definite pattern or predictability in information. A random sequence of events, symbols or steps often has no order and does not follow an intelligible pattern or combination. ...

tax-paid cash prizes, based on the amount invested, with three top prizes: one of $1,000,000, one of $100,000 and one of $50,000. In order to participate in a draw, investors must purchase a minimum $20 in bonds, and must have held them for a full calendar month. The chances of winning did not exceed one in 9,600 per unit – as required by the Finance Act (No 2) 1990. the chance of each unit winning a prize ranged from one in 9,600 to one in 11,000. In 2015 the odds of winner per unit increased to range from between one in 14,000 to one in 20,000. A single bonus bond or unit translated to one dollar, and each unit owned had a chance of winning. The average win was apparently around $27.50, giving a

tax A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...

-free return of around 3.4% . Returns varied based on security returns, and these are of course averaged figures which varied greatly due to the random nature of the investment. Mary Holm in ''

The New Zealand Herald ''The New Zealand Herald'' is a daily newspaper published in Auckland, New Zealand, owned by New Zealand Media and Entertainment, and considered a newspaper of record for New Zealand. It has the largest newspaper circulation in New Zealand, ...

'' described Bonus Bonds thus: "As I've said before, having a bit in bonus bonds is fine if you regard it as fun. But it is not the place for major savings". New Zealand personal finance website '' moneyhub'' reported in a study that 99.996% of bonus bonds returned $0 to their owners in a typical monthly draw."Bonus Bonds – are they worth your money?"
moneyhub.co.nz, 30 November 2017 To conduct the draw the Bonus Bonds trust used a random number generator called ELSIE (Electronic Selection Indicator Equipment), based in the Bonus Bonds Transaction Centre in central

Dunedin Dunedin ( ; ) is the second-most populous city in the South Island of New Zealand (after Christchurch), and the principal city of the Otago region. Its name comes from ("fort of Edin"), the Scottish Gaelic name for Edinburgh, the capital of S ...

Marketing

Comedian A comedian (feminine comedienne) or comic is a person who seeks to entertainment, entertain an audience by making them laughter, laugh. This might be through jokes or amusing situations, or acting foolishly (as in slapstick), or employing prop c ...

Leigh Hart (' That Guy') promoted Bonus Bonds in a television advertisement, presenting the bonds as an exciting way to invest, with the catchphrase "the money ''and'' the bag" (referring to '' It's in the Bag'', a long-running New Zealand radio and television

game show A game show (or gameshow) is a genre of broadcast viewing entertainment where contestants compete in a game for rewards. The shows are typically directed by a game show host, host, who explains the rules of the program as well as commentating a ...

Winding up of scheme

In August 2020, ANZ announced that the Bonus Bonds scheme would be wound up in October 2020, stating that "low interest rates had reduced the investment returns of the scheme affecting the size of its prize pool".

References

External links