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Overview
This is an early example of a Bonus Bond, issued by the government as part of a unit trust saving and investment scheme. The Bonus Bonds scheme operated in Aotearoa New Zealand for fifty years, and at one time nearly a third of all New Zealanders held Bonus Bonds. This particular bond was purchased by Gillian Finnegan in 1970 for her daughter Jennifer Brown.
The Bonus Bonds scheme was launched by the government in 1970 and initially run through the Post Office Savings Bank (called Postbank from 1987). ANZ purchased Postbank in 1990 and operated the Bonus Bonds scheme until it wound down in 2020.
The scheme was an immediate success, and $10.9 million worth of bonds were purchased in its first month of operation. Money invested was used to finance infrastructure projects such as roads, airports and schools.
Bonus bonds were considered by many to be a low-risk savings option, but some critics instead saw the scheme as a low-risk form of gambling; a lottery first, and an investment scheme second (financial researcher Christopher Walsh quoted in Stock 2020). Bonus Bonds didn’t earn interest but every bond put bondholders in the draw for monthly cash prizes of up to $1 million.
The real return on Bonus Bonds was always poor but that did not diminish its popularity. When the closure of the scheme was announced in 2020 the fund held $3.2 billion, and many New Zealanders mourned its loss.
Jennifer’s mother Gillian worked while raising her three daughters in the 1960s and 1970s. Financial independence was important to Gillian and she encouraged her children to save and have a responsible view of money from a young age. She bought bonus bonds for each of her daughters as an investment in their futures. They found the bonds in Gillian’s home after she passed away in 2019.
References
ANZ Investment Services, n.d. ‘All about Bonus Bonds.’ Bonus bonds website, captured by the Web Archive in 2007. https://web.archive.org/web/20070128161449/http:/www.bonusbonds.co.nz/about.html
Ridge, Jenny and Martin Young. 1998. Innovations in Savings Schemes: The Bonus Bonds Trust in New Zealand. Financial Services Review 7 (2): 73-81.
Stock, Rob. 2020. Why nobody should mourn the end of Bonus Bonds. Stuff, 26 August. https://www.stuff.co.nz/business/money/122566018/why-nobody-should-mourn-the-end-of-bonus-bonds?rm=a
--- 2020. Bonus Bonds coming to an end after 50 years. Radio New Zealand, 26 August. https://www.rnz.co.nz/news/business/424467/bonus-bonds-coming-to-an-end-after-50-years
--- 2021. Indications Bonus Bonds final tally will be rosy. Radio New Zealand, 29 March. https://www.rnz.co.nz/news/business/439400/indications-bonus-bonds-final-tally-will-be-rosy