Anyone think investing in Gilts is worthwhile now?
Discussion
Is anyone considering investing in Gilts at the moment, with interest rates potentially at their peak, bond prices may start to increase over the next year and as I understand it any capital growth in Gilts is outside the scope of CGT.
I am not an expert in this area so interested in other views on this.
You've kind of missed the boat already by 2 months, as far as peak yield is concerned (it was around 5% across much of the curve - well done anyone who locked in at 5%). Although there could be more gains to come over the course of next year.
I still prefer buying individual gilts and holding them until maturity rather than funds, so it depends what your time horizon and purpose is.
I've bought a longer dated gilt in my SIPP (with higher coupon) and a short dated one with near zero coupon outside of any tax wrapper, as you say for purposes of avoiding income tax and CGT. Which has worked quite well - this was for parking money to buy a house for 6 months.
You need to go sub 2 year or 20 yr+ to beat a 4% yield now though.
I still prefer buying individual gilts and holding them until maturity rather than funds, so it depends what your time horizon and purpose is.
I've bought a longer dated gilt in my SIPP (with higher coupon) and a short dated one with near zero coupon outside of any tax wrapper, as you say for purposes of avoiding income tax and CGT. Which has worked quite well - this was for parking money to buy a house for 6 months.
You need to go sub 2 year or 20 yr+ to beat a 4% yield now though.
I wouldn't call buying gilts in the hope a short term gain an investment. It sounds more like speculation to me.
It didn't take much for US and UK interest rates to rise over the past 18 months and in who can say for sure what local or global events will happen to influence this in the near future?
Whilst current interest rates and gilt yields are high from the perspective of the past 15 years they are quite low compared to the 30 years before that. Do you feel lucky?
It didn't take much for US and UK interest rates to rise over the past 18 months and in who can say for sure what local or global events will happen to influence this in the near future?
Whilst current interest rates and gilt yields are high from the perspective of the past 15 years they are quite low compared to the 30 years before that. Do you feel lucky?
WayOutWest said:
You've kind of missed the boat already by 2 months, as far as peak yield is concerned (it was around 5% across much of the curve - well done anyone who locked in at 5%). Although there could be more gains to come over the course of next year.
I still prefer buying individual gilts and holding them until maturity rather than funds, so it depends what your time horizon and purpose is.
I've bought a longer dated gilt in my SIPP (with higher coupon) and a short dated one with near zero coupon outside of any tax wrapper, as you say for purposes of avoiding income tax and CGT. Which has worked quite well - this was for parking money to buy a house for 6 months.
You need to go sub 2 year or 20 yr+ to beat a 4% yield now though.
Agreed about 2 months ago being better but, as an example TG29 that I bought is now trading at around 87p. 0.5% interest until Jan 2029 and then your full 100p back. Fag packet is around 18% gain over 5 years. With no CGT and tax on interest minimal or nil that isn't too bad for a guaranteed return. As you say, less point in doing it in a tax wrapper.I still prefer buying individual gilts and holding them until maturity rather than funds, so it depends what your time horizon and purpose is.
I've bought a longer dated gilt in my SIPP (with higher coupon) and a short dated one with near zero coupon outside of any tax wrapper, as you say for purposes of avoiding income tax and CGT. Which has worked quite well - this was for parking money to buy a house for 6 months.
You need to go sub 2 year or 20 yr+ to beat a 4% yield now though.
Yields have come down heavily last couple months, as has already been said.
https://www.yieldgimp.com/gilt-yields
What time horizon you looking at? I’ve a bunch in tn24 & tn25, but wish I had weighted more in tn25 as it’s now only 4%….
That said. I still think 4% post-tax risk-free isn’t bad for a year. But it’s not stellar.
https://www.yieldgimp.com/gilt-yields
What time horizon you looking at? I’ve a bunch in tn24 & tn25, but wish I had weighted more in tn25 as it’s now only 4%….
That said. I still think 4% post-tax risk-free isn’t bad for a year. But it’s not stellar.
WayOutWest said:
You've kind of missed the boat already by 2 months
Yes, late to the party but that doesn't necessarily mean the party's over. Ask me in a couple of years' time and I'll tell you whether you made the right decision. Unfortunately investment decisions have to be made without the benefit of hindsight.sammyb349 said:
How do you guys buy individual bonds. I may have missed the boat but now have some cash to park and think it’s the bet place given pension and isa are maxed
iweb is the cheapest broker for them. Ive bought quite a lot of long date GILTS with my SIPP via AJ Bell too, holding to maturity. I'm not speculating on prices rising though, it's more of risk reduction / tax avoidance tool.
I am not looking for income more for capital appreciation from increased bond prices as interest rates drop.
Certainly if I was looking for income I know yields have dropped past their peak.
I know there is risk attached to this I think its modest as the interest rate trend appears to be downward although the speed they drop is uncertain.
Certainly if I was looking for income I know yields have dropped past their peak.
I know there is risk attached to this I think its modest as the interest rate trend appears to be downward although the speed they drop is uncertain.
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