Premium Bonds Article Discussion Area

dkmax_2

born_free wrote: »

Technically premium bonds are not paying interest and your money is safe (not gambling like the lottery), which makes it ideal for muslims that are unwilling to accept interest from banks. That is one of the reasons that I stuck all my cash in here. I won in the first month but nothing in the second month. Happy to take all other freebies as long as not interest. If anyone else has any smart ideas like premium bonds I would happily invest my money in that.

Premium bonds earn interest just like any other bank account (currently at a published rate of 3.4%). The only difference is that it is paid out in a statistical fashion so every month someone is getting interest from your money, even if it isn't you.

http://shariahfinancewatch.wordpress.com/2008/01/24/the-uk-premium-bonds-and-islamic-law/

"A recent ruling in the Islamic world has made premium bonds ownership against Islamic law. Muhammad Adam al-Kawthari has interpreted the Koran in stating that contrary to shares, premium bonds are a loan instead of a partial owning of a company as in shares. The act of making money off of your own money in the form of interest is considered usury and takes away from the pillar of faith that represents being charitable. Islamic scholars have declared all bonds that produce interest as unlawful. Even a premium bond cash prize is considered apart of interest and cannot be allowed."

cvd

Actually this is not correct. Ernie is subject to the checks you mention and we can be fairly sure that the numbers it produces are random.

Checking a series of numbers is satisfactorily random is an extremely difficult task - the biggest and most famous computer of its generation, the IBM/360, had an extremely poor random number generator and this was not spotted for years.

The Government Actuaries Department is supposed to check that the numbers produced by Ernie are random. And we all know how competent that organisation is - remember Equitable Life.

isofa

Getting a computer to create truly random numbers and patterns is impossible. All are based on "random" pre-set calculations, usually keyed by dates, times, temperature, fluctuation on resistances, all sorts to give the impression of randomness.

Paul_Herring

isofa wrote: »

Getting a computer to create truly random numbers and patterns is impossible.

It most certainly is possible, but relies on external stimuli to do. ERNIE(4) uses thermal noise. (The first one used gas.)

http://www.lightstraw.co.uk/gpo/posb/ernie4.html

http://en.wikipedia.org/wiki/Johnson%E2%80%93Nyquist_noise

Nenen

Berkshire_Beancounter wrote: »

But then again I saw on a website today that my name, Helen, is not regarded by people as 'lucky' and so I guess my experience confirms that!

:eek::eek::eek::eek::eek: That's my name too! Where did you read that and is there any evidence?

nomadjb

I bought £30k of bonds in November I have won every month so far,including £1100 last month I have averaged so far £250 per month so far.....

Aegis

nomadjb wrote: »

I bought £30k of bonds in November I have won every month so far,including £1100 last month I have averaged so far £250 per month so far.....

All well and good, but remember that on average fewer than one in ten holders of £30k worth of bonds will manage to get more than £200 in a month.. The median value is under 100, so while you've done well so far, you've been lucky, and most people simply won't see such good fortune.

born_free_3

Yeah, if i buried the money in my garden instead and grew a money tree that would probably be considered some form of haram (prohibited) interest according to some other islamic learned scholar. What are you meant to do? Keep your savings in a current account with a very low/no interest policy. Where are you meant to keep your money? And please don't mention so-called islamic banks e.g. like Lloyds TSB or HSBC offer? They are hardly accesible unless you live in the south. The further north you live, the harder it is to open such accounts.

born_free_3

Yeah, if i buried the money in my garden instead and grew a money tree that would probably be considered some form of haram (prohibited) interest according to some other islamic learned scholar. What are you meant to do? Keep your savings in a current account with a very low/no interest policy. Where are you meant to keep your money? And please don't mention so-called islamic banks e.g. like Lloyds TSB or HSBC offer? They are hardly accesible unless you live in the south. The further north you live, the harder it is to open such accounts.

Paul_Herring

born_free wrote: »

haram (prohibited)

Minor nitpick, but I think you meant haraam (حرا, prohibited), not haram (حرم or حرام - sanctuary.)