Bondage for beginners

Want to tie something up? How about some money in Premium Bonds?

Sean Connery or Roger Moore? Timothy Dalton or Pierce Brosnan? When it comes to the best Bond the debate lingers on. For millions of people, however, there's only one Bond - Premium Bond. Every month Premium Bond holders have a chance to win a cool pounds 1m - or one of hundreds of thousands of other prizes, from pounds 50 to pounds 100,000.

There's even a mystery figure involved - Ernie, the Government computer which picks the winning Premium Bond numbers.

Premium Bonds offer all the excitement with none of the risk. Any cash invested in a Bond is returned to you in full on demand, even if you win a prize. Compare that to the National Lottery or the Pools, the only similar mass-market prize competitions, where no cash is returned.

And Premium Bonds can even compare favourably with leaving cash on deposit in a building society account. While there's no guarantee of winning anything, an average Premium Bond holder should achieve returns of between 4 and 5 per cent, which you'd be hard pushed to better in many building society accounts.

To put it another way, if you invested the maximum pounds 20,000 allowed in a Premium Bond, you should anticipate winning, on average, 11 pounds 50 prizes and two pounds 100 prizes a year. Of course you could do worse - after all, these are average figures - or you could hit the guaranteed jackpot and become an instant millionaire. The further good news is that all payouts are free of income tax and capital gains tax.

Premium Bonds currently offer you fixed odds of a 19,000-1 chance of winning a prize for each Bond you hold. Of course, the beauty of this is that it's not just for one draw, but in perpetuity until you cash in your Bonds. So each month you have a set number of chances of winning one of the 425,000 prizes.

The minimum investment in Premium Bonds is pounds 100, which will give you 100 units, and the maximum holding is pounds 20,000. The minimum age limit is 16, although parents or grandparents can buy Bonds for their children.

Premium Bonds are similar to the Lottery in that the more Bonds sold, the greater the prize money. So while pounds 32m was paid out in June, this figure would rise for the July payout if many more people had bought Premium Bonds.

New Bonds aren't eligible for the draw right away but must wait for a calendar month following the month you buy them. So Bonds bought in July will be entered in the September draw. You will be informed if you have won a prize unless National Savings - the Government agency which runs Premium Bonds - can't track you down because you've moved home without informing them.

In any case you can check if your Bonds have won at main post offices, which have a complete list of winning numbers for every month's draw as well a complete list of unclaimed prizes, updated quarterly.

Unclaimed prizes are kept until the winner can claim them. There is no time limit for claims - once you've won a prize it will be kept for you until National Savings can hand it over. The pounds 1m jackpot is announced on the first working day of the month, followed by the other prizes in order of size. By the end of the month all the prize notifications for that month's draw should have arrived at their destinations. If you haven't heard anything by then, then it's likely you haven't won that monthn

You can buy Premium Bonds at post offices or order an application form by phoning 0645 645000