Too late to start gilt ladder? Opinions please.

SVaz

I found it easier just to buy a round number value of each year I wanted,  all but one of my Gilts were under par so that took care of the buying fees with a bit of capital gain on top.
I over estimated by 20% to account for inflation a bit and found that way cheaper than IL Gilts but I appreciate that higher values/longer terms need more precision,  mine aren’t particularly needed for income, more as a derisking feature. 

phlebas192

watt66 said:

Dead_keen said:

It's not too late to start one.  lategenxer is great as helping you but beware that (i) it doesn't take account of fees (e.g. nearly £12 to buy each gilt with HL), and (ii) the price shown is not the "live" bid price of the gilts that you will pay.  This means that your cost (or the number of gilts bought) will be a bit different.  So you need to decide how you will manage that. 

I don't know how platforms other than HL work, but with HL it can be a bit daunting the first time you buy some gilts as you might be expecting to buy, say 180,197 units of 0.375% 2026-10-22 T26A at 97.23p with a total cost of £18,400.62.  That's a lot of different numbers!  You press the buttons only to be told that the price you are able to accept in the next ten seconds is 97.33p.  Is that right? Is it too much?  Did you type in T26A and £18,400 correctly or should it have been TG27 and £18,083 of them?  Don't be afraid to let the ten seconds go by, double check your numbers and try again.

I am confused by your numbers.  I assume you want seven years at £28k and 8 years at £7.5k (plus whatever inflation you choose).  But I'm not clear.  I've not tried lategenxer that way but I guess you are just uploading a CSV file to it.

Whether this is a good strategy or not, I am not sure.  It works well for me but I am comfortable with the cash I want each month and my optimum tax strategy.  My ladder is in my SIPP and the amount I receive each month is fully taxable.  But if you have the potential to take a tax-free lump sum, have ISA capacity, cash outisde of a SIPP, and didn't use your full personal allowance each year, there might be less simple ways of structuring things that improve your tax position and so make things cheaper to get the same net of tax amount.

For those who want to understand a gilt ladder, I'd suggest playing with: https://lategenxer.streamlit.app/Gilt_Ladder and experiment.  For example, choose a ladder of £10,000 per year for three years and see what it suggests you buy.  Some numbers will appear by magic and that doesn't help me understand a gilt ladder.  To get to grips with it better, export the Excel file and look at the cashflows to see what is happening.  Once that becomes clear, experiment and make things more real-life for you.

It is 7 years from age 60, then 15, taking me to 82 years of age when chat GPT says I am likley to expire!. 

And what if you don't? Are you happy to live what might be 10 years or more in relative poverty? Many people continue to live very active lives well into their 80s and a sudden drop in income would be felt badly by them.

A gilt ladder can be a good idea to meet a specific purpose such as bridging the gap between retirement and pensions starting. But it's not a sensible option for providing for the remainder of your life.

zagfles

SVaz said:

I found it easier just to buy a round number value of each year I wanted,  all but one of my Gilts were under par so that took care of the buying fees with a bit of capital gain on top.
I over estimated by 20% to account for inflation a bit and found that way cheaper than IL Gilts but I appreciate that higher values/longer terms need more precision,  mine aren’t particularly needed for income, more as a derisking feature. 

20% was 2 years' inflation a few years ago. 

SVaz

Yes, and?
I’m only pointing out my own circumstances,  that high inflation won’t really affect my Gilt ladder,  even if we turn into the Weimar Republic.  

If it turns out my £14k ( might be more if interest on the coupons cash is over 2%)  is worth the equivalent of 2 Bob then so be it,  it only cost me just over £9k. 

As I stated upthread,   if Gilts are for a needed income and long term,  then obviously you would be crazy to not use Index linked.  

zagfles

SVaz said:

Yes, and?
I’m only pointing out my own circumstances,  that high inflation won’t really affect my Gilt ladder,  even if we turn into the Weimar Republic.  

If it turns out my £14k ( might be more if interest on the coupons cash is over 2%)  is worth the equivalent of 2 Bob then so be it,  it only cost me just over £9k. 

As I stated upthread,   if Gilts are for a needed income and long term,  then obviously you would be crazy to not use Index linked.  

Fair enough - you're taking a gamble on interest rates and inflation and recognise it. Most people use gilts to avoid gambling.