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Economy

On this day in 1956: premium bond scheme debuts

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Fifty-eight years ago today, the premium bond scheme was presented to MPs by then-chancellor of the exchequer Harold Macmillan. Introduced as a means of controlling inflation as well as incentivising the general public to save money, it is now one of Britain’s most popular forms of savings account.

Despite being introduced in the late-50s, premium bonds were first proposed in 1916. Rejected at the time, it took 40 years for them to be accepted.

Initially offered to the public in April 1956, premium bonds didn’t officially go on sale until November 1 of that year. The tagline for their promotion was ‘saving with a thrill’, with the word ‘prize’ adopted to encourage investment. This appeared to work, as the first day of sales saw the bonds sell more than £5m.

Yet, it wasn’t until June 1957 that prizes were given out; six months after their launch. Using an Electronic Random Number Indicator Equipment, pictured, also known as ERNIE, winners were chosen by picking out a holder’s numbers that then corresponded to investors. The minimum eligible investment was £1, with potential winnings of £1,000.

How do they work?

Premium bonds differ from most other investments in that they offer ‘prizes’ and not interest. These financial rewards are also tax-free, and do run less risk due to the initial investment being secured by the government. The investor can take their money out of the bond whenever they wish without losing the initial investment.

National Savings and Investments (NS&I) issues the bonds, as well as determining the odds on how much can be won. Odds can vary, meaning that the chance of winning alters depending on when the bonds were purchased. Premium bonds have been available for online purchase since early 2005.

Those wishing to purchase the bonds must be over the age of 16. Guardians and parents can purchase bonds for children under-16 as long as the purchaser holds them until the child comes of age. The bonds are sold at various outlets, with post offices and supermarkets most popular. Each bond is then entered into the prize ballot two months after being purchased.

Each £1 buys one bond, meaning there is an equal chance to get the prize. It also means that the more that is invested, the greater the possibility of winning.

Where are they now? 

Since its inception, the premium bond has gone on to become the UK’s most popular form of savings account. Offering the chance for the general public to win large sums of money, the UK now has over £47 billion tied up in them.

The minimum investment is now £100, with a maximum of £30,000. According to the NS&I, as of 2006, a premium bond is bought every 10 seconds. Indeed, more bonds were purchased between 2001-2006 than in the entire 45-year period before that.

As with many saving accounts, a portion of investments has remained unclaimed. Roughly £30m is reportedly waiting to be given to ‘winning’ investors.

Nowadays, premium bonds divide opinion. To some, they are seen more as a lottery, where the chance of winning is idealised as being life-changing sums of money. Others – typically those who invest larger amounts – see premium bonds as a more risk-free form of investment, offering greater returns.

Moneysavingexpert critiques the relevancy of the bonds in the current market, arguing that they offer less than typical ISA accounts.

The value of prizes paid out is determined by an interest rate, which is currently 1.3%. It usually changes when the Bank of England base rate changes, but can also change depending on prevailing market savings rates – NS&I shouldn’t be a best buy”, it writes.

If you owned every premium bond in existence, the amount won over a year would be equal to 1.3% of what you put in. So very roughly, for every £100 put into premium bonds on average, you’d expect a £1.30 annual return.

Joseph Iddison is a master’s student at the University of Leicester. Having graduated from the same institution in July 2013 in BA English, he is currently studying environmental science.

Photo: Rob Brewer via Flickr

Further reading:

Consider sustainability and ethics when investing in ISAs this year

Budget 2014: Investment tax relief to boost social enterprises

2014 could be ‘perfect time’ to invest in an ISA

Poor ISA rates deter consumers – costing £191bn in tax-free savings

The Guide to Sustainable Investment 2014

Joseph Iddison is a master’s student at the University of Leicester. Having graduated from the same institution in July 2013 in English, Joseph will start the global environmental change course in September.

Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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