Government Bonds Pro's and Con's

tradetime

As an asset class I have little knowledge of yet, I often hear talk of "the flight to quality" "seeking safety in bonds" could someone throw me a quick "typical sales pitch" on these products and the pro's and con's. I'd much appreciate any knowledge, even just a link to a non complicated article answering this would suffice.
Thanx.

cheerfulcat

Hi, tradetime,

There is an excellent short course ( free ) on gilts and bonds on Incademy.

IMO - pros are safety, a known return if held to maturity, no tax on any capital gains (these are likely to be minimal though and if you pay over face value you will suffer a capital loss if held to maturity ) and the ability to get a better rate of interest when held in an ISA than most providers offer on uninvested cash.

Cons - the biggest one is the low rate of interest compared to a deposit account. EDIT: there is also the problem with longer-dated gilts of inflation and to my mind index-linked gilts don't really get round this.

This is all when considering gilts - corporate bonds are a whole different animal.

HTH

tradetime

Thanx a lot cheerfulcat, that looks like great info, will read up on that this weekend.