Regular saver , what's the point?

Eco_Miser

https://forums.moneysavingexpert.com/discussion/comment/81930532#Comment_81930532

Good point, but what if I need to sell it to pay for a care home, and it's still got 20+ years to maturity, and it's 2022 all over again?

I don't really understand how the price of a gilt varies over its lifetime, apart from tending to par. I've been investing in equities since the Thatcher privatisations, but my only experience with gilts is as part of Vanguard LifeStrategy.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81931520#Comment_81931520

Those who invested 20 years ago would have missed an opportunity to sell at substantial profit in the 2010s, but would now be in a fairly neutral position if they did not.

From here, with interest rate expectations in line with historical norms, it would take a "new normal" of persistent double digit rates to create a loss scenario like the one recent gilt investors saw in 2022. Not impossible, but pretty unlikely. But it still makes sense to reduce duration if you don't have the investment horizon. Ideally matching your liabilities.

PixelPound

https://forums.moneysavingexpert.com/discussion/comment/81931520#Comment_81931520

All to do with the coupon rate and time left.

If something is paying £2 for £100 (i.e. 2%), you might not want to pay the full £100, but if you paid £80 for it and got £2 (you are then getting 2.5% as the £ per year is fixed.

Then you also need to factor in that you get £100 back at the end, so for the above that's an additional +£20, lets say 10 years left.

So at the end for your £80, you get £120, so 50% increase (annualised return of 4.14% i.e. what would produce same as sticking £800 in savings (excluding tax))

fuzzzzy

What happens with gilts if you die? Does your executor have to sell or can they be inherited?

wmb194

https://forums.moneysavingexpert.com/discussion/comment/81932067#Comment_81932067

You hold them via a stockbroker so they could be sold or transferred to the beneficiaries.

Eco_Miser

https://forums.moneysavingexpert.com/discussion/comment/81931950#Comment_81931950

Thanks, but does the value rise in a straight line, or logarithmically, or does it go all over the place?

But I'm aware this is way off topic now.

Catplan

https://forums.moneysavingexpert.com/discussion/comment/81930422#Comment_81930422

A dedicated thread exists, as that’s off topic here, but yes I had exist Club Lloyds current account which I downgraded to the standard account. Then opened new club Lloyds for the switch.

kimwp

https://forums.moneysavingexpert.com/discussion/comment/81934085#Comment_81934085

Cheers Catplan, that's what I'm doing now 🤞

PixelPound

https://forums.moneysavingexpert.com/discussion/comment/81932536#Comment_81932536

If we are talking about standard bonds rather than inflation linked which are different beast altogether, then it's market value. If current interest rate is higher so new bonds offer a higher coupon, the price falls to make it pay roughly pay the same for your £ outlay. Similarly if rates fall, older bonds that pay higher are worth more.