Rising bond yields

Veloflyer

Sense check if I may. I have IL gilts in a ladder, the last of which will mature in 2032. I intend to hold all until each matures. Given the current rising bond yields, do I need to be concerned?

Nebulous2

No - price movements are only random noise, what, ifs and maybes - if you hold until maturity.

Mine don't mature until 2045/46 and I'm not bothering…..

Linton

https://forums.moneysavingexpert.com/discussion/6684353/rising-bond-yields

The whole point of using gilts is that both the ongoing interest and capital value at maturity (in £ or £+CPI) are guaranteed at the point you buy them. These guarantees are not affected by varying capital values in the mean time.

The down side is that if you sell before maturity there is no guarantee. So it would rather defeat the object of the exercise should you plan on selling early.

SVaz

I just wish I was buying them now, not a year ago. The price has dropped 5% so in effect I’d be getting a better deal.

I am topping them up though, I’ve added £2k so far this year to T35 by reinvesting the coupons from my 4 Gilts.

leosayer

No concern at all.

If anything it should reinforce your decision to buy IL gilts because the market seems to be pricing higher inflation which you have protected yourself from.

Veloflyer

Chaps

Thanks for the soothing of the fettered brow. Indeed I did buy ILGs to protect against a perceived rise in inflation. I did read up extensively ref gilts and simply wondered if I had overlooked anything in my philosophy ref rising yields etc, apart from HMG going bankrupt - which to me at least seems more likely than when I bought them, albeit still (hopefully!) vanishingly small.

leosayer

The Bank of England creates money for government expenditure such as making interest and maturity payments on gilts.

So it can't go bankrupt.