Looking for best 1 year fixed rate bond/ gilt

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82151628#Comment_82151628

Too late to buy it today.

And saying I won't be buying tomorrow was to comfort you that there won't be a sharp decline in price just because of anything I did (but maybe you were hoping for that sharp decline to give you a buying point?)

gascar

I've been thrashing the pros and cons of different gilts and when to buy them.

I bought 100k of TN28 a month ago and I'm down 25quid. I'm blaming the fed's hike and leanings towards higher rates. I grilled AI and forced it to extrapolate for the effect of a couple more hikes. If you wait, you do of course get an extra 1% or so at CSH2 rate, and yo0u end up better off. But there's sufficient unpredictability that it's not a cert. So I'll be splitting my next lump.

Also worth looking at are the short term index linked gilts. They base off the current RPI, and add a bit.
Again, use AI to analyse the current situation when you read this. Bottom line, if you think inflation will pop up a bit, a couple of the shorter term ones come out well if on higher rate tax. Same deal, no tax on the inflation part.

It's fun to split the hairs, but altogether more compelling for me to watch the news.
Iran offers a 7 day truce - (well they would wouldn't they, because they want to get their ships out.)
So the oil price dips.
But we all know Trump would be wise to that, and say no
So the oil price goes back up. Easy to predict, easy money, 2% in a day or so.
I ask myself why I bother with the gilts!

slinger2

The reality is that anyone who's bought gilts in recent times has done badly. Some worse than others.

TN28 was sold in 2020 at 94.63 (according to AI), pretty much exactly todays price. So 1/8% p.a.retuirn over the 6 years. Mind you TG61 was sold for about 100 and now sells for 22, so you could have done a lot worse.

I was looking at TG30. The price now is pretty much the same as a year ago. Then you could get 4% a year for 5 years. Now it's 5% a year over 4 years (ballpark wise).

I've recently sold my CSH2 (reporting dates, ERI and all that stuff) and waded into gilts for the first time. Is it a good move? Who knows? but at least I've missed the last few years of terrible returns.

NoMore

For gilts, I don't care about the past price or the future price, as I hold to maturity. I just care about the price when I buy and am I happy with that yield at that moment. Once bought, doesn't matter if the price goes up or down, I am getting exactly what I was happy with.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82151494#Comment_82151494

TN28 will be redeemed on 31/01/28 so it's just 16 months to go. It isn't all or nothing, you could nibble and even if the market moves against you if you hold to maturity it isn't very long to wait.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82151854#Comment_82151854

No need to rely on AI, https://www.londonstockexchange.com/stock/TN28/united-kingdom/company-page

Traded above par in July 2020. Imagine taking out a 0.12% fix for 8 years.

But gilts have the opportunity to break the fix early for a penalty, so could have sold for a 20% loss just over 2 years later after interest rates shot up.

A bank would be in deep doo doo if they offered a savings account with those characteristics, so one needs to understand what they are getting into and be capable of holding to maturity.

itsme999

Update:

I just purchased 85K worth of TN28.

My next bank fixed rate bond matures in 90 days, will call you then.

Thank you all for the inputs, much appreciated.

slinger2

If the alternative is paying tax on a 1-year fixed rate bond, then buying the TN28 makes a lot of sense. Even for a basic rate taxpayer the best 1-year savings deal gives 4% (net) and TN28 gives more like 4,25% (per annum, over 16 months) even ignoring the small coupon. I suppose the only real risk is the government changing all the tax rules, but that seems highly unlikely given the state of the gilt market. As noted above, there's also the advantage of being able to bail out early if needs be.

Personally, I'm putting less in but taking a bigger risk. I've gone for £10k in TG32 and £10k in some long dated gilts. Just a bit of fun for me. Nothing I can't afford to lose but seems a reasonable choice to me, given how overpriced many asset classes are. Perhaps Tesla shares and Bitcoin will turn out to be better but we'll see.

itsme999

https://forums.moneysavingexpert.com/discussion/comment/82153697#Comment_82153697

I have 100k worth in TG35 giving equivalant to 6% per annum, we shall see if I've done the right thing.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/82154003#Comment_82154003

Well it's far from a 1-year gilt!!