Bonus Bonds still safe?

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Forums › Finance and wealth management › Bonus Bonds still safe?

Rikkitic

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#270058 21-Apr-2020 11:23

I have a fair number of Bonus Bonds. I have them for a reason and I know there are better things to do with my money. I don't really care about that but I also don't want to lose my principle. It occurs to me to wonder in this unusual time if changing economic circumstances might affect them. The site and ANZ always make a point of declaring that they are a speculative investment with no security guarantees. So my question is how secure is my principle? Could it disappear or be confiscated as the economy shrinks? Might ANZ refuse to pay them out if I want to withdraw from the scheme? What, if anything, is the increased risk factor here in the current situation?

Plesse igmore amd axxept applogies in adbance fir anu typos

michaelmurfy

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#2466980 21-Apr-2020 11:31

Short answer: They're as safe as leaving money in the bank. The product disclosure statement is here: http://www.bonusbonds.co.nz/pdfs/productDisclosureStatement.pdf

Michael Murphy | https://murfy.nz
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kotuku4

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#2466982 21-Apr-2020 11:33

Do you get any return on your bonus bonds? Or is it just putting money aside?

kenkeniff

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#2466986 21-Apr-2020 11:43

michaelmurfy:

Short answer: They're as safe as leaving money in the bank. The product disclosure statement is here: http://www.bonusbonds.co.nz/pdfs/productDisclosureStatement.pdf

I wouldn't say that, even though money in the bank is not as safe as people assume (the deposit guarantee put in place during the GFC only covered limited period of time so cash in the bank is not "underwritten by the government" as people assume).

A few years ago ANZ consulted about the idea of BonusBonds having a floating value; i.e. being worth less than $1. The idea obviously wasn't received well however quite possible they will implement this in future as it's obviously on their minds.

As spelt out in their disclosure BonusBonds are an "investment" subject to investment risk; and notwithstanding the above wouldn't be first in line for any bailouts.

Apart from that Bonds don't attract interest (apart from any potential winnings) so are directly subject to inflation which in the current climate will be increasing.

So in short;

Not as safe as cash in the bank short term, nor as "safe" (taking into account returns) as a typical passive index fund long term.

MikeB4

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#2466991 21-Apr-2020 11:50

Good grief I did not know those things were still around. My parents gave all of us a bunch of them years ago. I cashed in mine and gave the money back to them when I went to work.

wellygary

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#2466996 21-Apr-2020 12:01

Bonus Bonds are a great way for the ANZ to make money, given that they take the money and invest it is short term term ANZ deposits , then clip a fee on the total amount of interest earned, before then spinning the wheel to determine who gets a share of the interest payout..

The only thing going for the customer is that the return is a "game of chance" so is not taxable income

kenkeniff

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#2467013 21-Apr-2020 12:18

wellygary:

Bonus Bonds are a great way for the ANZ to make money, given that they take the money and invest it is short term term ANZ deposits , then clip a fee on the total amount of interest earned, before then spinning the wheel to determine who gets a share of the interest payout..

The only thing going for the customer is that the return is a "game of chance" so is not taxable income

Yeah also a relatively (and comparatively significantly) inexpensive way to scratch the itch of gambling if you're that way inclined; much better idea than lotto for the monthly feeling of "being in to win $1M"... where you can get most of your money back in the end.