A very subtle form of theft

A very subtle form of theft - Simon Black → sovereignman.com/expat/a-ver … -of-theft/

Erm, yeah, since 1957.

It’s nothing like the definition of a Ponzi scheme. I know a retired central banker who knows his numbers and who has money in prize bonds. The large number of small wins averages out to an interest rate of 1 to 2%, with the possibility of a bigger win at some stage. It’s basically like an average interest earning account with some of the returns spent on lottery tickets.

Is it me, or does Goodwin look a bit like our very own Enda ?

Coincidence I’m sure that the government of the day was running out of cash and needed to raise cheap money. What would happen to the scheme if even more people no longer trusted the government with their money?

Sure thing so. :angry:

Sorry BR, I didn’t mean to be glib on the substance. I was just trying to point out that the author of the piece is being wilfully slippery with language and is clearly trying to imply this is a new, semi-emergency measure.

I know someone who cashed out all their prize bonds recently.I don’t need to explain why do I ?

It’s sloppy ‘journalism’ like this gives bloggers a bad name. This is a complete misunderstanding or misrepresentation of how prize bonds work.

The Prize Bond Company, which operates the scheme, has a fund of €1.3bn which it has gotten from selling prize bonds. It loans this money to the Irish Government through the NTMA. The NTMA pays the Prize Bond Company interest on this loan, which is then paid out to prize bond holders in the form of prizes. Last year it paid out €35.9m in prizes, which equates to 2.7% of the €1.3bn fund (prizebonds.ie/downloads/AnnualReport2010.pdf). This is on the average equivalent to any other kind of fund that pays an interest rate of 2.7%, except you may get more or less depending on how many prizes you win (and could win €1m). Prize bonds have an added advantage of being income tax free - so for a person who pays 41% tax on interest, the equivalent before tax rate they would have to receive would be 4.6% (vs 3-4% for BoI Access Plus deposit account).

Up until Irish government bonds collapsed, prize bonds offered one of the highest investment returns for a ‘safe’ investment because of the tax benefit. Now, if you believe the Irish Government is a safe place to put your money, you should probably buy government bonds (for example 2020 bonds are yielding 9%) as they have the same credit risk but a higher return.

I had £5,000 in prize bonds at one stage (mid 1990’s)- and every few months I’d win a £100 - worked out about 3% return.

A few years later I happened to have £30,000 from a big deal that came in early in my tax year - thought I’d best stick it away somewhere I would not be tempted to spend it for a while until the tax came due so I bought £30,000 in PBs - for a year I got absolutely nothing, not a sausage, bugger-all. When I queried it I got a bland ‘we can’t tell you anything about how the system works’ response - so I told them to cash it in. In the 2 weeks between telling them to cash it in, and the final cheque arriving - I won 2 x £100’s. I’d regard that as suspicious - odds of maybe 100:1 against - but they absolutely refused to discuss it with me.
Call me paranoid but I wonder do they ever do positive vetting or check if suspiciously large numbers of multiple small wins go to particular addresses near Killorglin!
A solicitor told me that in his profession it was standard practice to stash floating client’s funds in PB’s - and that it was a good idea to cash them in and reinvest new ones at regular intervals - he didn’t say why - just did a nudge nudge, wink wink.

No it’s the fact that they are self-obsessed losers that gives tham a bad name…