AI Gilt Ladder from Microsoft CoPilot

MetaPhysical

I just punched in "I have £50000 to invest in a 5 year ladder of UK gilts please build".  It looks pretty impressive to me.  The coupon is not much to shout about but the capital gain looks quite impressive and this is for money I have to invest outside a pension or ISA because it's from pension tax free cash and I can't get it all into an ISA this year or next so I am thinking of a bond ladder since I have enough equities elsewhere.

I don't pretend for a second I'd invest as such without further research but what's the collective thoughts?

Any other bond ladder ideas out of UK gilts?

nonolerigolo

I wonder if the AI is able to do a annuities using gilts during retirement 

poseidon1

MetaPhysical said:

I just punched in "I have £50000 to invest in a 5 year ladder of UK gilts please build".  It looks pretty impressive to me.  The coupon is not much to shout about but the capital gain looks quite impressive and this is for money I have to invest outside a pension or ISA because it's from pension tax free cash and I can't get it all into an ISA this year or next so I am thinking of a bond ladder since I have enough equities elsewhere.

I don't pretend for a second I'd invest as such without further research but what's the collective thoughts?

Any other bond ladder ideas out of UK gilts?

Closing buy prices on the following gilts today per HL and similarly  ii (give or take a basis point) :

T26  £98.40 , TN28 £91.65,  TG29 £89.35.   
All somewhat adrift from the co pilot  numbers assuming they were meant to be today's estimates.

Lowtrawler

It looks a very simplistic ladder - an equal £10k per year?

Much better to use https://lategenxer.streamlit.app/Gilt_Ladder

It will allow you to vary the amount of income you want each year and choose between conventional's / Index-Linked.

michaels

Lowtrawler said:

It looks a very simplistic ladder - an equal £10k per year?

Much better to use https://lategenxer.streamlit.app/Gilt_Ladder

It will allow you to vary the amount of income you want each year and choose between conventional's / Index-Linked.

With a bit of effort I got copilot to do a linkers ladder too!

MetaPhysical

Lowtrawler said:

It looks a very simplistic ladder - an equal £10k per year?

Much better to use https://lategenxer.streamlit.app/Gilt_Ladder

It will allow you to vary the amount of income you want each year and choose between conventional's / Index-Linked.

Thanks for that link, very interesting.  Actually, I have 100k to put into this in a five year ladder. As each rung matures I will put it into my SnS ISA.

I am taking my TFC from my pensions in advance of "our Rach" limiting TFC which I am sure she is going to do.  Even if she doesn't do it this year, she will do in due course because the public finances are wrecked and will remain so for several years. The 268K TFC is low hanging fruit.  I am not being political by the way, just explaining my rationale for doing the bond ladder and me researching it.

MetaPhysical

michaels said:

Lowtrawler said:

It looks a very simplistic ladder - an equal £10k per year?

Much better to use https://lategenxer.streamlit.app/Gilt_Ladder

It will allow you to vary the amount of income you want each year and choose between conventional's / Index-Linked.

With a bit of effort I got copilot to do a linkers ladder too!

What's a linkers ladder?

Lowtrawler

MetaPhysical said:

michaels said:

Lowtrawler said:

It looks a very simplistic ladder - an equal £10k per year?

Much better to use https://lategenxer.streamlit.app/Gilt_Ladder

It will allow you to vary the amount of income you want each year and choose between conventional's / Index-Linked.

With a bit of effort I got copilot to do a linkers ladder too!

What's a linkers ladder?

Using Index-Linked Gilts - Linkers

zagfles

Surely the only point of a gilts ladder is to provide an income over the period of the ladder. Otherwise, why a ladder? If you just want to invest in gilts for the longer term, eg for 10 years. then you could just buy a single gilt which matures when you want the money. 

So a gilts ladder shouldn't consist of nice neat £10k chunks when the maturity intervals are all over the place. It should be based on the income required and worked out such that each maturity plus coupons releases the income required by the time required. 

MetaPhysical

zagfles said:

Surely the only point of a gilts ladder is to provide an income over the period of the ladder. Otherwise, why a ladder? If you just want to invest in gilts for the longer term, eg for 10 years. then you could just buy a single gilt which matures when you want the money. 

So a gilts ladder shouldn't consist of nice neat £10k chunks when the maturity intervals are all over the place. It should be based on the income required and worked out such that each maturity plus coupons releases the income required by the time required. 

Because I want regular "drops" of £20k annually so I can then put the money from each drop into that year's ISA.  I need the money not [yet] in the ISA - i.e. a general investment account- to be doing something in the meantime and not kept as cash hence me thinking a gilt ladder could be the solution.  I am exposed to equities elsewhere so I want to keep this money in gilts/bonds to diversify.  My other option of course is to just bung it all in a MM funds and pay tax on the growth.  With the gilts I wont have to pay tax on the growth, only the coupons.

zagfles

MetaPhysical said:

zagfles said:

Surely the only point of a gilts ladder is to provide an income over the period of the ladder. Otherwise, why a ladder? If you just want to invest in gilts for the longer term, eg for 10 years. then you could just buy a single gilt which matures when you want the money. 

So a gilts ladder shouldn't consist of nice neat £10k chunks when the maturity intervals are all over the place. It should be based on the income required and worked out such that each maturity plus coupons releases the income required by the time required. 

Because I want regular "drops" of £20k annually so I can then put the money from each drop into that year's ISA.  I need the money not in an ISA - i.e. a general investment account- to be doing something in the meantime and not kept as cash.  I am exposed to equities elsewhere so I want to keep this money in gilts/bonds to diversify.

Which is basically the same thing - you want a £20k income per year (whether to spend or invest in an ISA isn't relevant), so you need a ladder to provide you with £20k per tax year, your ladder isn't doing that, there's no income in the 26/27 tax year, nor the 29/30 year, and the income is £10k in most of the other years. The ladder is built on the wrong premise, not on the income requirement.