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Last Updated: Wednesday, 1 November 2006, 05:12 GMT
Premium Bonds celebrate 50 years
Harold Macmillan
Premium Bonds were launched by Prime Minister Harold Macmillan
National Savings and Investments is marking the 50th anniversary of Premium Bonds - which pay no interest but are eligible for cash prizes of up to 1m.

When the bonds were introduced in 1956 - along with number selector Ernie - the top prize was 1,000. Since then, 9bn worth of prizes have been issued.

Today, an estimated 23 million Britons own Premium Bonds.

In the past five years, sales have reached record levels, boosted by a 1m jackpot and easier purchase methods.

The original Ernie (Electronic Random Number Indicator Equipment) took up 24 square feet of floor space.

February 1993: 11,000-1
May 1997: 23,066-1
Mar 2002 - Feb 2003: 28,500-1
Oct 2006 24,000-1
Odds for winning any amount. Source: National Savings & Investments.

Ernie 4, launched in 2004 and housed in Blackpool , is the size of a DVD player and can generate numbers at the rate of over one million per hour. This year it will award approximately 900m in prizes from 50 to 1m.

Ernie is not a computer; it uses thermal noise - changes in the voltage and heat given off by transistors - to choose random numbers.

According to NS&I figures, more bonds have been sold in the last five years than in the previous 45 put together.

The original Ernie from 1956
In 1956 the first Ernie took up 24 square feet of floor

"Five years ago you could only buy bonds by post or at the post office," National Savings and Investments spokesman Mark Brooks told BBC News.

"Today, you can buy them over the phone, by standing order - even at some supermarkets.

"Easier methods of purchase, combined with the 1m jackpot, mean the Premium Bonds system has been dragged into the 21st Century."

Justin Modray, investment adviser at Bestinvest, put the recent upward trend down to a number of factors.

He said: "The biggest reason is that, between 2000 and 2003/04, stock market volatility led investors to run for the hills and Premium Bonds were seen as attractive. There was still risk or gamble but the stakes were safe.

Ernie 4 (National Savings & Investments, Crown copyright)
The latest Ernie - the fourth - is the size of a DVD player

"Secondly, National Savings did a lot of marketing with Alan Sugar, creating more demand.

"Finally, we are a nation of gamblers and Premium Bonds appeal to people's gambling nature. It is a safe way to have a flutter."

Mark Brooks, spokesman for NS&I, said: "The recent growth has been fuelled by stock market fluctuations and the relatively low rate of interest available and bonuses boosting rates only for the short term, on mainstream savings accounts.

"It has meant that investors have been looking for a safe home for some of their money, and Premium Bonds still offer the same tagline of 'savings with a thrill' as they did in 1956."

A pensioner speaks about winning 1m

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