War Bonds

Kate_1985

Hello,
I recently inherited some war bonds and was advised to keep them as I would be earning 3.5% interest on them. I have been reading over the last few weeks that the government are looking to clear their war debt next February and I wondered how this might affect me? Would I just get the original amount invested back or would I get anything on top? Any information would be greatly appreciated, thank you.

patientperson

Kate_1985 wrote: »

Hello,
I recently inherited some war bonds and was advised to keep them as I would be earning 3.5% interest on them. I have been reading over the last few weeks that the government are looking to clear their war debt next February and I wondered how this might affect me? Would I just get the original amount invested back or would I get anything on top? Any information would be greatly appreciated, thank you.

Story from Mail : http://www.dailymail.co.uk/wires/reuters/article-2815705/UK-says-pay-World-War-One-era-debt-year.html

Your 3.5% are mentioned : Extract : Most of that comprises the 1.9 billion-pound 3.5 percent War Loan, issued in 1932, which the Treasury might also decide to redeem at some point in the near future, said Islam.

Kate_1985

Thank you for that. I am not financially minded and have never paid any attention to the governments debt until I was told about my war stock. I am still a little confused though, a lot of the articles I have read have reported this as a good thing for those who currently own war stock, saying that they are due. 'Windfall'. However if they are just paying off the original debt then surely that's not good at all as we won't be getting the interest we currently receive. I don't understand how I will be paid off

kidmugsy

Kate_1985 wrote: »

Thank you for that. I am not financially minded and have never paid any attention to the governments debt until I was told about my war stock. I am still a little confused though, a lot of the articles I have read have reported this as a good thing for those who currently own war stock, saying that they are due. 'Windfall'. However if they are just paying off the original debt then surely that's not good at all as we won't be getting the interest we currently receive. I don't understand how I will be paid off

It's a minor loan, the 4% Consols, that is to be paid off. The question now is whether the much bigger 3.5 % War Loan will be paid off soon. As I type it trades at £92.065: if the govt redeems it, you'll get £100. Hurray! But you won't get the interest payment (the "coupon") thereafter. Boo! If you want income, you will have to save or invest your £100 in some other way.

There's nothing underhand about all this: the government's right to redeem the loan is part of the original terms and conditions. Some people have invested in these bonds in hopes of a redemption.

Kate_1985

Thank you. I appreciate your input. At the moment I own £15,000 of war stock so the yearly payment is quite nice. However it was started in the late 50's so all in all not a great investment.

le_loup

kidmugsy wrote: »

hopes of a redemption.

Don't we all have "hopes of redemption"?

kidmugsy

Kate_1985 wrote: »

Thank you. I appreciate your input. At the moment I own £15,000 of war stock so the yearly payment is quite nice. However it was started in the late 50's so all in all not a great investment.

£15k just happens to be the size of the annual NISA allowance. You could always shelter the capital from tax in there. Or if you are old enough (65+) you could buy some of the forthcoming ns&i codgerbonds.

planteria

i wouldn't worry about it. if they give you your money back, as advised above, you can just put it into a Savings Account or Investment of your choice:)

badger09

le_loup wrote: »

Don't we all have "hopes of redemption"?

No. I gave up on that many years ago

AliG123

I have just received a redemption of 3 1/2% War stock notice due 9th March 2015. I have no idea about the whys and wherefores of this. Is it a good or bad thing. Thanks in antisipation.

Masomnia

Whether it's good or bad depends on your circumstances, objectives etc. I suppose.

You'll get £100 plus 94p in interest per bond you own.