AI Gilt Ladder from Microsoft CoPilot

QrizB

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.

But that's not what Copilot has provided.

Let's just look at the first gilt, T26. Copilot has priced it at £96.10. If you spend £20k on that you'll get 208.12 gilts, each with a face value of £100. When they mature you'll receive £20812. That's not £20k.

It's worse with the longer gilts as the current price is a smaller fraction of the face value.

For your ladder, you want to buy 200 of those nominal £100 gilts, so you get a guaranteed £20k every year. This will cost somewhat less than your £100k budget, and doesn't need a fancy calculator to work out.

The LateGenXer site works this out for you including coupons, so you need fewer gilts (and it costs even less overall).