ERNIE 2 (1972-88)
No-one could mistake the following for financial advice, but I decided long ago that, if I ever won the lottery, I would buy Premium Bonds. (Always speak to your financial advisor.)
I also found myself saying this when talking about the “Bowie Bonds” issued by David Bowie to raise the money to buy his back catalogue [link]. Like the bonds issued by businesses and governments, these were issued for a limited period of time to raise funds, after which the investor would receive their money back with interest. Premium bonds, however, are an evolution of the “lottery bonds” occasionally issued for government projects dating back to the 18th Century, whereby the interest, currently running at one percent per annum, is issued as a monthly prize draw for prizes ranging from £25 to £1 million.
Operated by National Savings & Investments, Premium Bonds effectively act as a restricted, government-approved form of gambling, competing on its launch in 1956 with the similarly staid Football Pools, betting on the outcome of the coming week’s matches without visiting a betting shop. The National Lottery, launched in 1994, has bigger prizes and a higher profile, but like the Pools, your stake pays for the prize, operating costs, tax and charity donations. Premium Bonds allow you to retain your “stake” of up to a maximum of £50,000, each pound becoming an entry to the monthly interest draw, and withdraw any or all of your funds at any time, but the lack of guaranteed returns makes it less desirable than a regular savings account, unless you are just looking for somewhere to place your money.
But the other side of the initial appeal of Premium Bonds upon their launch was its insanely futuristic use of a computer, and the anthropomorphising of said computer. ERNIE, an acronym (and possibly a backronym) for “Electronic Random Number Indicator Equipment”, entered its fifth iteration in December 2019, having moved from using the signal noise generated by neon tubes, through the thermal noise in transistors, through to quantum computing - a concept I am still getting my head around, because it involves the computer holding the binary values "0" and "1" simultaneously - to generate winning codes that are verifiably random, instead of using an algorithm to generate codes that can be interpreted as “random”. Like the naming of National Lottery draw machines, “ERNIE” is a human name given to the effort to prove the transparency of the process, and what can be more random than the human ability to be irrational?
With my original statement implying I would not invest in Premium Bonds until I won the lottery, is there a reason for not applying now? I think I was unconsciously making a joke about moving from the high-stakes lottery to the comparative sensibility of Premium Bonds, before deciding it sounded like it may be a good idea. However, I think looking at how many things in my home town were paid for using money raised from the National Lottery has swayed towards waiting until the point when a lottery win provides the money to invest.