buying an individual gilt question

masonic

aroominyork said:

MarcoM said:

aroominyork said:

A_T said:

I guess it's like buying an annuity - but with the principle returned on a certain date.

Also, you can sell it before the 'certain date'. Not really like an annuity then - more like a fixed term savings account that lets you (perhaps with xx days' loss of interest) redeem it early.

On a wider point, I think individual gilts are looking a good alternative to cash or bond funds. I have held a short duration bond fund (mostly BBB or thereabouts) for a few years and it has served me well in limiting losses this year (though not as well as masonic who saw what was coming and got out of bonds) but a gilt which returns close to 5% over the coming few years feels like a better place to be than in a fund.

out of curiosity, what percentage loss is your portfolio showing at the moment?

My overall portfolio? the fixed interest element? the short duration fund? and over what period?

Overall would make sense, over YTD as this will be from the previous high.

For example, my portfolio is currently down 8.6%, which compares favourably to multi-asset with similar % equities (VLS60, HSBC GS Balanced, both -11%), down a little more in sterling terms than FTSE All world (-8%). Thanks in no small part to me using WP, cash and gold as bond proxies. I took a bit of a hit being overweight on small caps and EM.

bostonerimus

aroominyork said:

If you would have to pay income tax on the coupon payments, it's worth looking at gilts which pay low interest. They will be priced lower (eg TN30 maturing 22/10/2030 with a coupon of 0.375% is priced around £74) and the 'capital gain' of £26 is tax free.

bostonerimus said:

Yes you are right, of course that interest rate reflects the risk the market currently associates with UK Gilts, but is still way below inflation.

Do you have a solution to that issue?

Yes! and for a small fee I will tell you...I also have a bridge in New York that I'm trying to sell.

aroominyork

bostonerimus said:

aroominyork said:

If you would have to pay income tax on the coupon payments, it's worth looking at gilts which pay low interest. They will be priced lower (eg TN30 maturing 22/10/2030 with a coupon of 0.375% is priced around £74) and the 'capital gain' of £26 is tax free.

bostonerimus said:

Yes you are right, of course that interest rate reflects the risk the market currently associates with UK Gilts, but is still way below inflation.

Do you have a solution to that issue?

Yes! and for a small fee I will tell you...I also have a bridge in New York that I'm trying to sell.

I'll be in NY in a fortnight for my daughter's wedding. Bank transfers are awkward so would you consider taking cash?

bostonerimus

aroominyork said:

bostonerimus said:

aroominyork said:

If you would have to pay income tax on the coupon payments, it's worth looking at gilts which pay low interest. They will be priced lower (eg TN30 maturing 22/10/2030 with a coupon of 0.375% is priced around £74) and the 'capital gain' of £26 is tax free.

bostonerimus said:

Yes you are right, of course that interest rate reflects the risk the market currently associates with UK Gilts, but is still way below inflation.

Do you have a solution to that issue?

Yes! and for a small fee I will tell you...I also have a bridge in New York that I'm trying to sell.

I'll be in NY in a fortnight for my daughter's wedding. Bank transfers are awkward so would you consider taking cash?

Yes, but no Roubles.

aroominyork

bostonerimus said:

aroominyork said:

bostonerimus said:

aroominyork said:

If you would have to pay income tax on the coupon payments, it's worth looking at gilts which pay low interest. They will be priced lower (eg TN30 maturing 22/10/2030 with a coupon of 0.375% is priced around £74) and the 'capital gain' of £26 is tax free.

bostonerimus said:

Yes you are right, of course that interest rate reflects the risk the market currently associates with UK Gilts, but is still way below inflation.

Do you have a solution to that issue?

Yes! and for a small fee I will tell you...I also have a bridge in New York that I'm trying to sell.

I'll be in NY in a fortnight for my daughter's wedding. Bank transfers are awkward so would you consider taking cash?

Yes, but no Roubles.

Shame. I have some roubles from a trip there last November. I was working for a charity active in Russia on a contract which ended end of Feb this year, literally days after the invasion.

masonic said:

aroominyork said:

My overall portfolio? the fixed interest element? the short duration fund? and over what period?

Overall would make sense, over YTD as this will be from the previous high.

For example, my portfolio is currently down 8.6%, which compares favourably to multi-asset with similar % equities (VLS60, HSBC GS Balanced, both -11%), down a little more in sterling terms than FTSE All world (-8%). Thanks in no small part to me using WP, cash and gold as bond proxies. I took a bit of a hit being overweight on small caps and EM.

OK, so for what it's worth I checked at close of Tuesday (two days back) and was down 8.5% YTD. I am 70% equities/30% fixed interest. I am also overweight small caps - UK took a hit, Europe I sold a couple of months back, US has been fine. Also overweight EM but my proxy EM fund is Stewart Investors Asia Pacific Sustainability which has outperformed a global tracker.

Ciprico

Great thread. Is it true that all gilts are mathematically similar so you can pick one based on your own timescales. I appreciate you can sell earlier, but I am looking to use these to replace cash buffer for cash held in sipp so don't want any risk so would assume to hold to maturity. 

masonic

aroominyork said:

masonic said:

aroominyork said:

My overall portfolio? the fixed interest element? the short duration fund? and over what period?

Overall would make sense, over YTD as this will be from the previous high.

For example, my portfolio is currently down 8.6%, which compares favourably to multi-asset with similar % equities (VLS60, HSBC GS Balanced, both -11%), down a little more in sterling terms than FTSE All world (-8%). Thanks in no small part to me using WP, cash and gold as bond proxies. I took a bit of a hit being overweight on small caps and EM.

OK, so for what it's worth I checked at close of Tuesday (two days back) and was down 8.5% YTD. I am 70% equities/30% fixed interest. I am also overweight small caps - UK took a hit, Europe I sold a couple of months back, US has been fine. Also overweight EM but my proxy EM fund is Stewart Investors Asia Pacific Sustainability which has outperformed a global tracker.

Oh yes, my worst small-cap performance is from UK small caps. My small holdings in THRG and HSL approaching -50% and -40% respectively, some of that of course attributable to a widening discount. Having pretty much all of my active exposure coming from ITs (and mostly growth orientated) does make the ride quite a bit wilder, but lower dips present better buying opportunities. Actively managed equities only make up about 20% of my overall portfolio, but boy have they been a drag on it this year!

wmb194

Ciprico said:

Great thread. Is it true that all gilts are mathematically similar so you can pick one based on your own timescales. I appreciate you can sell earlier, but I am looking to use these to replace cash buffer for cash held in sipp so don't want any risk so would assume to hold to maturity. 

As long as you understand the basics of investing in bonds conventional gilts are straightforward but you need to be very careful with the index linked versions.

aroominyork

Ciprico said:

Great thread. Is it true that all gilts are mathematically similar so you can pick one based on your own timescales. I appreciate you can sell earlier, but I am looking to use these to replace cash buffer for cash held in sipp so don't want any risk so would assume to hold to maturity. 

I think longer dated gilts have higher returns, but I'm happy to be corrected.

masonic

aroominyork said:

Ciprico said:

Great thread. Is it true that all gilts are mathematically similar so you can pick one based on your own timescales. I appreciate you can sell earlier, but I am looking to use these to replace cash buffer for cash held in sipp so don't want any risk so would assume to hold to maturity. 

I think longer dated gilts have higher returns, but I'm happy to be corrected.

https://www.bankofengland.co.uk/statistics/yield-curves