buying an individual gilt question

A_T

I may have got this all wrong :-)

the gilt Treasury 4.75% 07/12/2030 (TR30) is selling at £104.62

if I buy £10462 worth of these (100 of them) I will get approximately £475 per year until 2030 at which point I will get £10000 back

am I right?

HappyHarry

Yes
(Too short)

wmb194

Be aware that some of these trade in units of £1 (one) so don't be surprised when your stockbroker's quote looks far too low. Obviously, you just buy more units to arrive at the amount you want.

bostonerimus

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.

k6chris

https://www.hl.co.uk/shares/shares-search-results/t/treasury-4.75-07122030-gilt

Great question, I was going to ask it too!

A_T

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

I'm not sure what platforms allow investors to buy individual gilts - I know HL do but not Fidelity.

aroominyork

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?

masonic

A_T said:

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

I'm not sure what platforms allow investors to buy individual gilts - I know HL do but not Fidelity.

Interactive Investor do. I believe iWeb/Halifax do, but it may be telephone only.

aroominyork

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.

MarcoM

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?

aroominyork

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?