By MARY HOLM
Q: A recent column included a reference to Bonus Bonds.
I made a small investment when I noticed an advertisement for Bonus Bonds.
Some time later I became aware of the qualification therein that Bonus Bonds are not guaranteed.
Is there any real risk?
Probably not.
In the small print at the bottom
of the ad you sent me, it says:
"The principal and returns of Bonus Bonds are not guaranteed and are subject to investment risk."
Despite this, I would be amazed to see people not getting back the money they put into Bonus Bonds, which are run by a subsidiary of the ANZ Banking Group.
The website - predictably www.bonusbonds.co.nz - says Bonus Bonds money is invested in "low-risk debt securities such as Government securities, selected local body securities, selected corporate bonds and securities issued by banks".
Returns on these will, of course, vary, depending on market interest rates and so on.
But the Bonus Bond people simply vary their prize payouts to match. When returns are low, less prize money is paid.
The website continues: "Stability and consistency are considered above all else when ANZ's experienced fund managers choose their Bonus Bond investment portfolio, and in particular the maintenance of the par value - a dollar in, a dollar out.
"If the fund managers have one philosophy, it is the absolute need for security of investment."
That sounds fairly comforting.
Bonus Bonds are not like money in the bank.
But ANZ would be deeply embarrassed if all those ordinary New Zealanders holding Bonus Bonds lost money.
Provided you haven't put much of your total savings in Bonus Bonds - which I wouldn't advise because the average return is rather low, and returns vary with your luck - I wouldn't lose sleep over it.
