Investing in Government stock

BY MARY HOLM

Q: I have some savings that I would like to invest in Government stocks and Kiwi Bonds. Would you please tell me where and how to buy them?

A: I presume you were attracted to these because I said, in a recent column, that they are the lowest-risk investments around.

This means their returns will tend to be lower than on alternatives such as bank term deposits. But they're backed by the Government, so you certainly shouldn't lose any sleep over them.

And Government stock has one other big advantage: you can buy it for much longer terms than most similar alternatives.

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At the moment, there's Government stock maturing in 2003, 2004, 2005, 2006, 2009, 2011 and 2013.

So, if you wish, you can tie up your money for nine or 11 years. In most market conditions, you will be paid higher interest for choosing a longer term.

The minimum investment in Government stock is $10,000, and you can buy it from stockbrokers.

On Kiwi Bonds, the minimum is $1000, but you'll get higher interest if you invest $5000 or more. Terms are six months, or one, two or four years.

The easiest way to buy Kiwi Bonds is by phoning the Reserve Bank on 0800 655-494. They will mail you an investment statement and application form.

Some banks, investment advisers, solicitors, accountants and stockbrokers also have information on Kiwi Bonds, but they are not always up to date on interest rates.

One way to check on interest rates is to go to www.interest.co.nz, and click on 'Term Deposits 1-5 years'.

The website doesn't, though, include six-month bonds. Ask the Reserve Bank for that. On the same website, but under 'Money Market', is information on Government stock returns and maturity dates.