Thinking about investing in a Money Market Fund

Ciprico

It's not a very clear question but you don't pay cgt on gilts so nothing to inform HMRC about

Qyburn

dllive said:

Interesting about gilts. I know very little about them (other theyre government bonds) and have never bought them. Perhaps Ill dip a toe in and buy and buy some as a learning experience.
- Do I get an email when in 6 months to say its paid back or something?
- How do you know what the return will be? If I buy at £97.66 and sell at £100, isnt that only a 2.34% gain?
(Sorry, more stupid questions! This is new territory for me)

On the other thread someone said about that specific gilt ..

"£97.85 is the clean price, you will actually pay the dirty price which is about £151.30"

Doctor_Who

Qyburn said:

dllive said:

Interesting about gilts. I know very little about them (other theyre government bonds) and have never bought them. Perhaps Ill dip a toe in and buy and buy some as a learning experience.
- Do I get an email when in 6 months to say its paid back or something?
- How do you know what the return will be? If I buy at £97.66 and sell at £100, isnt that only a 2.34% gain?
(Sorry, more stupid questions! This is new territory for me)

On the other thread someone said about that specific gilt ..

"£97.85 is the clean price, you will actually pay the dirty price which is about £151.30"

That's not the gilt (TN24) mentioned earlier in this thread. I've bought TN24 and the clean/dirty prices are very similar given the very low coupon. I think those prices are referring to an index linked gilt. 

https://www.ii.co.uk/bonds/united-kingdom-0125-31012024/LSE:TN24

Qyburn

Doctor_Who said:

That's not the gilt (TN24) mentioned earlier in this thread. I've bought TN24 and the clean/dirty prices are very similar given the very low coupon. I think those prices are referring to an index linked gilt. 

https://www.ii.co.uk/bonds/united-kingdom-0125-31012024/LSE:TN24

Cheers,my mistake the other thread referred to gilt maturing Mar 2024, not January. Couple of questions .. How do you see of find out the dirty price? Looking on HL the prices show for the two are almost the same - yet apparently the March will actually cost 50% more.

Second question is really getting into the theory .. why or in what circumstances would you not choose index linked?

flopsy1973

flopsy1973 said:

Would I need to fill in tax return if max to my cgt allowance 

Sp as basic rate tax payer maxed out PSA am I better going for maximum up to my cgt allowance in gilts or using mmf or normal interest account

plantation_2

flopsy1973 said:

flopsy1973 said:

Would I need to fill in tax return if max to my cgt allowance 

Sp as basic rate tax payer maxed out PSA am I better going for maximum up to my cgt allowance in gilts or using mmf or normal interest account

As Ciprico said in post 482, any gains on gilts are not subject to CGT so no need to worry about your CGT allowance

Doctor_Who

Qyburn said:

Doctor_Who said:

That's not the gilt (TN24) mentioned earlier in this thread. I've bought TN24 and the clean/dirty prices are very similar given the very low coupon. I think those prices are referring to an index linked gilt. 

https://www.ii.co.uk/bonds/united-kingdom-0125-31012024/LSE:TN24

Cheers,my mistake the other thread referred to gilt maturing Mar 2024, not January. Couple of questions .. How do you see of find out the dirty price? Looking on HL the prices show for the two are almost the same - yet apparently the March will actually cost 50% more.

Second question is really getting into the theory .. why or in what circumstances would you not choose index linked?

The dirty price of nominal gilts is the clean price plus accrued interest. You can calculate accrued interest manually (see the DMO website link below) or use this link and click on the '+' at the end of the appropriate row. TN24 has just paid a coupon, so the accrued interest is zero making the dirty and clean price the same.

As to your second question - I stuck to nominal gilts since their maturity dates fitted with my requirements, hence I didn't investigate IL gilts. Maybe someone else can answer that question. 

https://www.dmo.gov.uk/responsibilities/gilt-market/about-gilts/

masonic

Qyburn said:
Second question is really getting into the theory .. why or in what circumstances would you not choose index linked?

You can estimate the expected rate of inflation over the duration of the bond by comparing YTM for nominal and index linked securities of similar duration. If you want to hedge against inflation being higher than this, then you would opt for index linked. If inflation turns out to be lower than this, then that would reduce your nominal returns from index linked. You might choose to avoid index linked if you believed future inflation was being overestimated in the nominal bond market, leading to higher yields.

flopsy1973

plantation_2 said:

flopsy1973 said:

flopsy1973 said:

Would I need to fill in tax return if max to my cgt allowance 

Sp as basic rate tax payer maxed out PSA am I better going for maximum up to my cgt allowance in gilts or using mmf or normal interest account

As Ciprico said in post 482, any gains on gilts are not subject to CGT so no need to worry about your CGT allowance

So due to my tax position it is better to go for the gilts 

masonic

qbadger said:

Which platform are you guys using to buy nominal gilts on?

Interactive Investor and iWeb are the main ones people have been using. Hargreaves Lansdown is also an option.