Explain Gilts/Bonds to me like I am 5 years old please?

coyrls

Alexland said:

coyrls said:

Note that where a telephone trade is necessary because the trade can't be made online, my experience with both ii and Halifax Share Trading is that they charge the online trading fee not the telephone fee.  Since my first IL Gilt trades, both II and Halifax Share Trading (and iWeb where I subsequently moved) now offer online IL Gilt trades.  Although lengthy, I actually preferred telephone trading, as you knew the price you were buying at, with online trading you don't get to see the price before you buy.

I knew that iWeb honoured the normal price (they are not accepting new SIPPs) but looking at the full charges PDF at interactive investor I expected to pay both the £49 telephone fee and perhaps their £40 fee for trades over £100k.

When accessing TR50 on the below II page logged out it shows a trade button that goes to the login screen but after logging in then the same page says "This instrument can only be traded via phone"
https://www.ii.co.uk/bonds/0-index-linked-treasury-gilt-2050/LSE:TR50

Originally I was thinking of just dumping it all in TR50 as it has the best YTM and is hopefully a mid point in my retirement but it would be more sensible to spread the money in maybe 5 year intervals during my retirement using an amortisation based withdrawal pattern. However it might not be worth being too precise as if stock markets ever crashed enough and/or IL gilt prices rose enough then I might be tempted to cash them all in again as it wouldn't be attractive to hold them with with low or negative YTM.

I thought you could trade IL Gilts online with II now but at least with this one, it appears not.  I have traded IL Gilts with II via the phone and can confirm that I was charged the online trading fee rather than the phone fee because they couldn't be traded online.  I didn't run up against the over £100K fee but you could just split the transactions into (presumably a few!) transactions below £100K.

Alexland

coyrls said:

I thought you could trade IL Gilts online with II now but at least with this one, it appears not.  I have traded IL Gilts with II via the phone and can confirm that I was charged the online trading fee rather than the phone fee because they couldn't be traded online.  I didn't run up against the over £100K fee but you could just split the transactions into (presumably a few!) transactions below £100K.

I've decided to buy ILGs in 5 year maturity intervals across my likely retirement period so unless I get unlucky AJ Bell should hopefully on average get a fair price when dealing even if it's not quoted. The ongoing savings on not paying the ILG fund management in my workplace scheme should cover any market spread. I've also bought some INXG in my main SIPP to get to overall 40% ILGs in my pensions. Those ILGs should roughly cover my current rate of spending from age 55 onwards which is pretty awesome so I'm keen to lock that in regardless of if equities keep going up or yields keep improving. I always wanted some DB pension and this is as close as I'll get.

GenX0212

I lost more transferring from my previous schemes than the spread costs and transaction charges from AJ Bell combined. Simple bad luck that there was a small market dip immediately after I requested the transfers to when the instructions were actioned. It only took a week or two but in that moment my investments had dropped by about £1500. 

Oh well.

Alexland

GenX0212 said:

I lost more transferring from my previous schemes than the spread costs and transaction charges from AJ Bell combined. Simple bad luck that there was a small market dip immediately after I requested the transfers to when the instructions were actioned. It only took a week or two but in that moment my investments had dropped by about £1500. 

I much preferer in-specie transfers which sadly are not possible when transferring out of proprietary funds. Sill it's worth the random pain/gain in the long term to get lower ongoing fees and more control of the assets to better align to financial plans.

I'm still a bit shocked and coming to terms with how much more retirement income I might get with both recent stock market gains and from recently switching 40% into IL gilts - it's beyond anything I ever expected.

It is tempting to switch more into IL gilts to lock in the future income but I hesitate on how much I trust the government on their long term commitments especially when I see the Chancellor crying, the change from RPI, the MPs voting against spend control and mess that France etc are in with their debt pile perhaps a few years ahead of us.

But there are so many DB and Annuity schemes already dependant on IL gilts, there is no chance of going to the IMF again as the national debt is now in sterling, surely the government have to honour them even if it means printing money, inflation and devaluation of cash and conventional gilts?

RogerPensionGuy

Just a slight question as I'm about to buy some more gilts with low coupons trying to further navigate a pathway. 

Is there any advantage of using a "fill or kill order" in hoping the gilt price will just sink a bit enabling it to be purchased a bit cheaper? 

Or just keep getting 15 second quotes during the day and trying to buy in a dipp? 

Any information most welcome. 

***

I was looking around on my GIA today and came across "UK Treasury Strips" paying zero coupon and I had always read I needed/wanted low coupons due CGT advantages. 

So I googled UK Treasury Strips and found a link here on MSE, these are certainly what I don't want. 

Cheers Roger. 

SVaz

God, life’s too short for that unless you’re talking hundreds of thousands.   Is it really going to make that much difference?  

RogerPensionGuy

SVaz said:

God, life’s too short for that unless you’re talking hundreds of thousands.   Is it really going to make that much difference?  

My research suggests during high volitilty like in 2022 or doing long dated gilts, prices can cycle up & down and as mentioned, trading big amounts any little difference can be helpful.

I'm also surprised to see not so many 0.125% gilts as I was hoping for and picking bigger coupons isn't what I want. 

I'll plod on with my buying of gilts anyways. 

SimonSeys

Ironically I was looking for something else and found this:

https://www.moneysavingexpert.com/savings/uk-gilts-lower-tax-savings/

it’s a bit out of date.  I think HL now have a monthly charge to hold gilts, not free as per the article. 

My research is showing AJ Bell is currently the cheapest. 

Alexland

SimonSeys said:

I think HL now have a monthly charge to hold gilts, not free as per the article. 

The article says "If you have a general investment account, there's no charge to hold gilts"

https://www.hl.co.uk/investment-services/fund-and-share-account
"Free to hold shares, ETFs, investment trusts, VCTs, gilts and bonds."

HL will charge you to hold gilts in an ISA or SIPP.

SimonSeys

Alexland said:

SimonSeys said:

I think HL now have a monthly charge to hold gilts, not free as per the article. 

The article says "If you have a general investment account, there's no charge to hold gilts"

https://www.hl.co.uk/investment-services/fund-and-share-account
"Free to hold shares, ETFs, investment trusts, VCTs, gilts and bonds."

HL will charge you to hold gilts in an ISA or SIPP.

You’re quite right.  My mistake. When I clicked on the link it to me to the charges for share dealing, not gilts.