To Do: Buy Bread, Milk and Premium Bonds

It may be commonplace for today's shopping lists to read "bread, milk, eggs, insurance", but the weekly trip to the supermarket could soon see investments competing with Kit-Kats and Heat magazines for customer attention at the check-outs.

Retail giant Tesco is planning a partnership with National Savings and Investments, which will see Premium Bonds and Index-Linked Savings Certificates go on sale at stores across the country.

The plan, revealed to the Sunday Telegraph newspaper, by NS&I this weekend is expected to be in operation before the end of the year in around 50 branches, and if successful it will roll out to 500 stores nationwide in early 2006.

The move comes after two years of searching for a partner capable of expanding the distribution network for Premium Bonds by NS&I.

New results for NS&I's Premium Bonds business are due to be released this week, and are expected to show inflows of £6.5 billion since April 2003, and a growth of the funds invested from just £4 billion in 1994 to £26 billion in June.

Premium Bonds provide investors with the security of knowing that their principal can always be recovered, along with the prospect of winning up to £1 million.

23 million Brits hope that ERNIE (Electronic Random Number Indicator Equipment, to give the famous computer its full name) will come up with their numbers each month.

Launched in 1957, the Premium Bond scheme sees interest accruing on savings put into a prize fund.

In 1994, the year that saw the launch of the National Lottery, Premium Bonds introduced their first-ever £1 million jackpot.

On September 1 this year, a woman from County Armagh and a woman from Surrey became ERNIE's 139th and 140th millionaires, respectively in the scheme's first-ever double-jackpot draw.

Index-Linked Savings Certificates are a more conventional investment, with NS&I offering a fixed rate of return above the level of the Retail Price Index for an investment period of between three and five years.

Both products have the highly attractive merit of being tax-free, and the fact that NS&I's funds are government-backed has seen them become particularly appealing to small investors in recent years of stock market turmoil.

At a time when savings have been falling across the UK, NS&I has seen its coffers swell by more than £6 billion in the last two years, to around £69 billion in total.

No doubt rather pleased with its performance, the bank recently announced plans to publish monthly surveys of UK savings, similar to the housing market surveys produced by mortgage lenders.

NS&I plans to continue selling its products through the Post Office, following a successful venture into TV advertising.

The bank ran an advertising campaign fronted by "The Apprentice" star Sir Alan Sugar during August.

Furthermore, heavy hints have been dropped that NS&I plans to launch a new investment product in early 2006, which may also be advertised ? although there are no current plans to advertise the tie-up with Tesco.

Will the public take to investing in supermarkets? The staggering success of the various financial services already offered by the big stores, which many refused to believe would ever take off seems to bode well.

After all, the supermarkets are already urging their customers to save, save, save.