Innovations in Savings Schemes

The Bonus Bonds Trust in New Zealand

Authors

  • Jenny Ridge Department of Finance and Property Studies, Massey University, Private Bag 11222, Palmerston North, New Zealand; Phone: (06) 356 9099, Fax: (06) 350 5651.
  • Martin Young Department of Finance and Property Studies, Massey University, Private Bag 11222, Palmerston North, New Zealand; Phone: (06) 356 9099, Fax: (06) 350 5651.

DOI:

https://doi.org/10.1016/S1057-0810(99)80003-1

Abstract

Bonus Bonds were introduced into New Zealand in March 1970 based on the Premium Bond savings scheme operating in the United Kingdom. A Bonus Bond is a unit in the Bonus Bonds Trust with all incomefrom the trust's conservative investments being balloted for on a monthly basis by the bond homers. This paper looks at the history and operation of the Bonus Bonds savings scheme in New Zealand and examines why it has such wide appeal for New Zealanders. The paper also addresses the following aspects of the scheme. Performance of the bonds; their level of success as a savings vehicle; factors contributing to their relative success over time; the risk profile of the bond holders. The major findings of the paper are that investors in Bonus Bonds have little appreciation of real values and they view the bonds as an appropriate investment for risk averse investors.

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Published

1998-06-30

How to Cite

Ridge , J., & Young, M. (1998). Innovations in Savings Schemes: The Bonus Bonds Trust in New Zealand. Financial Services Review: The Journal of Individual Financial Management, 7(2), 73–81. https://doi.org/10.1016/S1057-0810(99)80003-1

Issue

Vol. 7 No. 2 (1998): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1998 JAI Press Inc.

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