Great video as always Ramin. It’s thanks to you and your peers that I am so much more educated than I used to be. I am actually in the process of building a bond ladder - which is something I don’t even know existed last year! Your videos are helping normal people like me take control of our finances and therefore our lives. You offer a wonderful service to us all. Thank you. Re the fee comparisons, it’s good that you show the different trading and holding fees for each platform in an ISA and SIPP. However, given the tax advantages on capital gains, it would be nice to see the same comparison for a GIA, to get the full picture - as I assume at least some people would go down that route for gilts. For example, whilst HL charges £11.95 to purchase a gilt, it is completely free of charge to hold it in a GIA until maturity. So that’s a one off fee which could be a very low % indeed - and this isn’t shown in this video
Governments spend more than they receive in taxes. To fund the extra spend, governments borrow money by creating bonds and theb sells them to investors. The government will then pay you for the bonds when they expire and also annual interest specified on the bond. You can buy 3month up to 50 year long bonds. If you buy bonds that pay 5% yearly interest and central banks have lowered interest rates to 3%, then the value of your bond will go up and you can choose to sell the bond before it expires. If central banks don’t control inflation and lets say inflation is at 10%. Even if your bonds pay 5% interest, your real interest rate would be 5% - 10% = -5%. So you would be losing real purchasing power by 5% each year and the value of your bonds would be lower because the return is not great when compared to inflation. I personally think real inflation is a lot higher than the official figures and believe bonds are a terrible long term investment.
@@bobdigi500 It is all very confusing which they don’t teach you at school. It took me years to understand how it works and even then I don’t think I have a complete understanding.
@@dsfgkasguyrebfv Are you trading/investing in anything yourself? Or just interested in this topic like me? :) I opened my first brokerage account this week, but I'm just holding some cash in it for now.
Very clearly explained. It wasn't in scope of this video but I'm confused about the yield to maturity calculation as I'm mainly interested in the capital gain - if I make a 4% gain between purchases price and coupon, why is this considered an annual gain rather than one off at maturity?
Given the hold-to-maturity, low-risk approach you might want to compare your gilt yields to savings account rates from banks. At the moment there are UK savings accounts that offer better rates than the UK gilt yields, ranging from a few months to 5 years.
Yes, but for some fortunate people the interest earned will be taxed due to the savings allowance being relatively low now. For a higher rate tax payer in particular, gilts are far more attractive because you’re making most of your profit through capital gains (see TN25) rather than interest earned - gilts are CGT free so they’re way better than a standard savings account in that respect.
There is a tax use-case for gilts when you have used up all your savings, ISA, SIPP...etc allowances. But with a Labour government incoming, aren't you worried that they might change gilt exemption from capital gains tax. Gilts used to be subject to capital gains tax in the UK.
Great video. I was just wondering why does the government even need to issue gilts if they have the ability to print money? Seems strange that they would want to pay interest on debt they could make themselves interest free.
@@daves6213 Borrowing £1million at 5% creates an additional £50,000 of national debt vs borrowing £1million at 0%. The greater our national debt the closer we get to Germany 1921-23.
I'm new to all this, so take the required pinch of salt. But at a guess, is it anything to do with allowing wealthy people and companies to grow their wealth (at the expense of public spending into infrastructure, etc )? I do seem to recall the topic being discussed in MMT circles, so maybe worth a look there?
Hi @youtubing448 you pay no capital gains tax but the (relatively tiny) coupon payments are taxed as "Tax on savings interest", more here www.gov.uk/apply-tax-free-interest-on-savings That's why in a general investment account you choose bonds with low coupons to minimize the tax you have to pay. Thanks, Ramin
@@MatoloEdi. If you buy at a discount to the par/face value, which you often do, when the bond matures and you receive the par, you realise a capital gain on the difference. In the UK, this capital gain is tax free (unlike most other things)
Thanks for this, very helpful. Seems to me that unless you're investing a lot in single gilts then fees are gonna be a problem. Also what is the point of bond funds? it seems that bond funds don't actually have any of the benefits of bonds and you're just hoping interest rates don't blow your capital gain?
Thanks for your great videos. They are invaluable. One thing I cannot understand with gilts traded in secondary market is what price you get at maturity. For example TR25 is maturing next year and now trades at around £100.2. If I put £5000 now when it matures how much money will I get back(excluding coupons) ? Will I get the initial £5000?
Yes I am also confused how to see the maturation value for your capital gain to see if its worth investing in this bond if the dividend yield is low or less than inflation so you are relying on the capital gain to protect you from inflation over the time held.
Maybe i missed it, but does anyone know how to actually find bonds that are due to be issued, with their codes and how to "pre-buy" them on ii on float so you get the discount. This detail seemed to be missing from the video?
Another great video with lots to bear in mind. If you had a SIPP with a provider that didn't sell bonds, would it be worth moving the SIPP to one that did (maybe with a slightly higher platform fee) or open a separate SIPP just to hold the single bonds (if it was say £2k to start with the intention of learning to build a bond ladder) or is it just not worth it for the little guy (with a relatively small SIPP under £100k) to do as most of the SIPP providers who also sell single bonds seem to be more expensive until a SIPP is over £150k. Wondered if the ii monthly cost £5.99 (for a SIPP under £50k) was worth using as a good place to hold just bonds as their dealing fees were also lower.
Pensioncraft videos on gilts have been great. I actually own a small bond ladder for years 26,27,29 to cover some known expenses. I would like to extend to 30,31,32 but this is right in that valley in the yield curve. I wonder if i would be better buying into the shorter term gilts like 1 year and then see what happens on maturity
I know this is an old video but I have a question. Can I buy any amount of gilts I want to buy? I’ve found one in particular and I would like to put around 250k in but I’m a bit nervous as it’s quite new to me! Thanks
Why is capital gain more important than coupon? Isnt the cg going to be the same as what invested at maturity date? I dont understand much but I thought that the coupon % is more important then capital gain. Please explain
Capital gain > coupon for those holding outside of a tax wrapper like an ISA or SIPP. Low coupon Gilts trade at a lower price. More of the yield comes from the move in price (cg) as they drag to maturity. They are more susceptible to changes in interest rates than gilts with coupons and long dated / low coupon Gilts are particularly attractive in an interest cutting environment due to convexity
Hi @rvmajor that introduces currency risk. You do get yield curve diversification but amongst developed markets yield curves tend to be highly correlated so this is not particularly useful. In the case of government bonds (if you live in DM) then I don't think there's much point in looking outside your domestic market unless the yields are very low. Thanks, Ramin
Ramin. Do you know how gains are handled within a Ltd company structure (so, not held personally)? Does the cgt exemption when held personally extend to corporation tax exemption?
Hi @m0jon on short-term UK Treasury bills there's no capital gains tax exemption e.g. see this www.ii.co.uk/analysis-commentary/gilts-or-uk-treasury-bills-which-should-you-choose-ii531451 which says "For tax purposes, UK T-Bills are considered “deeply discounted securities” and therefore have different tax rules to gilts." "This means that any gains from UK Treasury Bills are taxed as income, rather than capital gains. This differs to gilts, where capital gains are tax-free but coupons are taxed as income" Thanks, Ramin
You're referring to Index Linked Savings Certificates which are no longer available. Index Linked UK Government Bonds i.e. Gilts are available but they aren't a retail savings product like NS&I savings bonds or certificates.
@@blumouseyExactly what I was going to say lol. And exactly what I am in the process of doing, having just sold an investment property, already maxed out my ISA and Pension, and being 2-3 years off retirement
I don't understand whether my portfolio should be heavily weighted towards bonds when interest rates go down or up. Recently I changed to a balanced portfolio of stocks and fixed income bonds. Previously, I was heavily weighted towards bonds. Now I just want steady growth for the next few years.
I had index linked '24 gilts in my ISA (bought 11/2023). Maturity date was 22/03/2024, should I expect last coupon payment to be on the day (did not get anything)? Can I sell it now, or it will be sold automatically? It feels like lot of hassle, all of it could be done for me by Money Market fund (in short timescale at least).
Corporate bonds and experienced wealrhy investors are the targets. Gilts are uk governments bonds though. Focus here us on intermediate investors eh wealth an experience
They changed name from UK Government Bonds to World Governance Bonds on 1st August 2023, believe me, I cashed mine in because I don't support the WEF. I can show you the official letter if you like.
Ramin, how certain can we be that the CGT rules will not be changed? I buy index linked gilts and over say 20 years the CGT bill would be enormous if the rules ever changed. Is the CGT free status somehow contractual or just current over policy?
I looked at II for more details and noticed that information seems quite minimal as related to each Gilt. It would seem that they expect one to source the information elsewhere - perhaps it is fairly new?. What information would you expect to see? Different platforms display different identifiers for what must be the same gilt? Long vs short TR25. I was just comparing II and HL Price, maturity date (full not just 2034?), return on maturity , dates coupon paid etc
Looking at the FAQ section for Treasury UK Bills and the returns are not even worth it really. You wouldn't be too far off just putting the money in a high yield savings account instead of borrowing the money to the government. I need to do more research into the longer term ones though
Lols. I got out of UK gilts when Brexit happened. One of the best decisions i made. It was obvious that there'd be a declin,e and a Truss-like event was going to happen. I probably wont get back in until a change of regime and stability is returned.
@@anthonyferris8912 I've run the back dated analysis, my portfolio is up more than any run up in gilts. Run ups are irrelevant unless you can predict the future and know exactly when to get out. Which you can't.
For the Treasuries via Freetrade they haven’t been very clear on the tax implications. My understanding is that the yield is taxed as interest. Would you agree?
It isn’t the broker’s place to advise on tax implications, that’s for you to determine for yourself (partly because the broker doesn’t know the details of your situation). But yes, coupons on UK Gilts will be treated as savings income unless held in a tax efficient account like an ISA or SIPP.
@@stephenbrook65 I agree with your comments but I have seen other brokers work with HMRC to provide an outline of the facts where there is a new product they are trying to sell.
Why is it only the governments with taxpayers money and how does labour get this cash to buy without telling the voters, foriegn investers and bank of england seem to buy the gilts/bonds and the taxpayer foots the bill with higher taxes,
Pff..monzo offers 4.60% interes rate if you just keep your money in a savings account which you can take out at any time. So 4.2% over 7 years makes it not worth it.
The is no difference if you hold your bond to maturity at the lower interest rate or sell it at a lower price and reinvest a higher interest rate. You will end in the same position. Holding to maturity exposes you to inflation risk. C'mon man, that is just dumb.
You don't have to buy a 30 yrs bond. 1-12 month bills and 1 yr-2yr you may make more money than a regular savings account especially so if the stock market is crashing. 5% return guaranteed per year ain't bad for 10yrs. Imagine inflation moved higher again. Stocks sell off, bond yields move higher, 6-7% yield for 5-10yrs starting to look a lot more attractive especially when one considers markets like the Nikkei 225 which didn't reach new highs for 35 yrs.
I agree. But if this is bond funds it is (I’m sorry) bollocks. UK fund bonds have dropped 30% in the last 4 years. You could not have made a worse investment. I know, I did cos it was ‘safe’. 🙄🙄😂😂
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Would be great to get a similar video on buying index linked gilts
This is awesome. Thank you Ramin for making this accessible to us!
Glad you like it! @LD-vn3zu
Thank you Ramin. I've been waiting for this for a while!
My pleasure! @kostaskolotouros4345
Thanks Ramin. Great video. Could you do one on indexed linked bonds please to include clean and dirty yields etc? Thanks
Great video as always Ramin. It’s thanks to you and your peers that I am so much more educated than I used to be. I am actually in the process of building a bond ladder - which is something I don’t even know existed last year!
Your videos are helping normal people like me take control of our finances and therefore our lives. You offer a wonderful service to us all. Thank you.
Re the fee comparisons, it’s good that you show the different trading and holding fees for each platform in an ISA and SIPP.
However, given the tax advantages on capital gains, it would be nice to see the same comparison for a GIA, to get the full picture - as I assume at least some people would go down that route for gilts.
For example, whilst HL charges £11.95 to purchase a gilt, it is completely free of charge to hold it in a GIA until maturity. So that’s a one off fee which could be a very low % indeed - and this isn’t shown in this video
This channel is very useful
That's an understatement!
Glad you think so! @cb8608
Very skilled and engaging Presenter….
Thanks @charleshutchinson7012
Would be good if you can talk next time about the clean and dirty costs when buying please.
This is what I've been waiting for. I'll be honest I really don't understand bonds.
Don’t worry, neither do the people creating them
Governments spend more than they receive in taxes. To fund the extra spend, governments borrow money by creating bonds and theb sells them to investors.
The government will then pay you for the bonds when they expire and also annual interest specified on the bond. You can buy 3month up to 50 year long bonds.
If you buy bonds that pay 5% yearly interest and central banks have lowered interest rates to 3%, then the value of your bond will go up and you can choose to sell the bond before it expires.
If central banks don’t control inflation and lets say inflation is at 10%. Even if your bonds pay 5% interest, your real interest rate would be 5% - 10% = -5%. So you would be losing real purchasing power by 5% each year and the value of your bonds would be lower because the return is not great when compared to inflation.
I personally think real inflation is a lot higher than the official figures and believe bonds are a terrible long term investment.
@dsfgkasguyrebfv ok thank you so much for that. I had to read it a few times but I get it. Thank you!
@@bobdigi500 It is all very confusing which they don’t teach you at school. It took me years to understand how it works and even then I don’t think I have a complete understanding.
@@dsfgkasguyrebfv Are you trading/investing in anything yourself? Or just interested in this topic like me? :) I opened my first brokerage account this week, but I'm just holding some cash in it for now.
So you still have to pay tax on interest but not on capital gains, correct?
I’d like to hear more about how to take advantage of the tax relief on bond capital gains rather than paying tax on savings outside of an ISA
My concern is that they change the rules and you end up paying capital gains tax. Especially concerning for index linked gilts
Non-UK investors can access UK gilts on Saxo, though the fees aren't the best. I'm looking for other options.
Very clearly explained. It wasn't in scope of this video but I'm confused about the yield to maturity calculation as I'm mainly interested in the capital gain - if I make a 4% gain between purchases price and coupon, why is this considered an annual gain rather than one off at maturity?
Given the hold-to-maturity, low-risk approach you might want to compare your gilt yields to savings account rates from banks. At the moment there are UK savings accounts that offer better rates than the UK gilt yields, ranging from a few months to 5 years.
Yes, but for some fortunate people the interest earned will be taxed due to the savings allowance being relatively low now. For a higher rate tax payer in particular, gilts are far more attractive because you’re making most of your profit through capital gains (see TN25) rather than interest earned - gilts are CGT free so they’re way better than a standard savings account in that respect.
There is a tax use-case for gilts when you have used up all your savings, ISA, SIPP...etc allowances. But with a Labour government incoming, aren't you worried that they might change gilt exemption from capital gains tax. Gilts used to be subject to capital gains tax in the UK.
Was waiting for this. Thank you
Enjoy @RajaseelanGaneswaran
Another great video Ramin. I'm holding T42 in HL ISA for a steady 4.5% income over next 18yrs till maturity or emergency sale. What's not to like?
Seems like a very poor investment to me ….
@@martinaston1715 horses for courses! 99% predicability for 18 years for 1% risk/volatility as a counter to other, equity, investments...
Hello Ramin, how to invest in gilts as a non UK citizen ?
GREAT CONTENT THANK YOU SO MUCH
Thank you @oceansstories4885
Ok but now.. how do we choose the right gilt to buy ?
Thanks for this - very well explained
So pleased you enjoyed it @mooremoneymakin
What about UK Treasury Strxps? Are they worth considering, since the tax treatment is different?
Great video. I was just wondering why does the government even need to issue gilts if they have the ability to print money? Seems strange that they would want to pay interest on debt they could make themselves interest free.
Good question.
Germany 1921-23
@@daves6213 Borrowing £1million at 5% creates an additional £50,000 of national debt vs borrowing £1million at 0%. The greater our national debt the closer we get to Germany 1921-23.
I'm new to all this, so take the required pinch of salt. But at a guess, is it anything to do with allowing wealthy people and companies to grow their wealth (at the expense of public spending into infrastructure, etc )?
I do seem to recall the topic being discussed in MMT circles, so maybe worth a look there?
Are capital gains on gilts guaranteed to be free of tax in the future or could the government change the rules?
What tax is payable if gilts are held within a General Investment Account?
Hi @youtubing448 you pay no capital gains tax but the (relatively tiny) coupon payments are taxed as "Tax on savings interest", more here www.gov.uk/apply-tax-free-interest-on-savings That's why in a general investment account you choose bonds with low coupons to minimize the tax you have to pay. Thanks, Ramin
Love your updates. Thanks.
Glad you like them! @barkingdadprofessionaldogw2371
Excellent video
Thank you very much! @alancameron9593
Can you do something on buying and selling gold via Brittania's (ie. legal tender) and the CGT implications please Ramin? =D
It would be a short video - there’s no CGT
Its still complicated for a normal index investor.
Bond ladder makes sense but for a normal investor its not easy language bonds gilts 6:27 etc
I don't understand your reference to "capital gain". You said you don't sell the bond... so there is no capital gain?
+ please someone explain
@@MatoloEdiThe bond matures so the government pays the bond holder the agreed value. Therefore the holder has made a capital gain.
@@CB-fz3li On the secondary market how do we see the agreed maturation value?
@@TheSmallRabbitmaturation value is always £100
@@MatoloEdi. If you buy at a discount to the par/face value, which you often do, when the bond matures and you receive the par, you realise a capital gain on the difference. In the UK, this capital gain is tax free (unlike most other things)
still dont know where to buy in from without a charge just checked today
Thanks for this, very helpful. Seems to me that unless you're investing a lot in single gilts then fees are gonna be a problem. Also what is the point of bond funds? it seems that bond funds don't actually have any of the benefits of bonds and you're just hoping interest rates don't blow your capital gain?
Would like a comparison with Money Market Funds
Great informative video, thank you
Thank you! Some great information
You're welcome @fullstack5461
Thanks for your great videos. They are invaluable. One thing I cannot understand with gilts traded in secondary market is what price you get at maturity. For example TR25 is maturing next year and now trades at around £100.2. If I put £5000 now when it matures how much money will I get back(excluding coupons) ? Will I get the initial £5000?
Yes I am also confused how to see the maturation value for your capital gain to see if its worth investing in this bond if the dividend yield is low or less than inflation so you are relying on the capital gain to protect you from inflation over the time held.
Thank you for this video. Can non-citizens who reside in the uk buy treasury bills?
Very skillful
Thank you @AR-fy2qo
Maybe i missed it, but does anyone know how to actually find bonds that are due to be issued, with their codes and how to "pre-buy" them on ii on float so you get the discount. This detail seemed to be missing from the video?
Another great video with lots to bear in mind. If you had a SIPP with a provider that didn't sell bonds, would it be worth moving the SIPP to one that did (maybe with a slightly higher platform fee) or open a separate SIPP just to hold the single bonds (if it was say £2k to start with the intention of learning to build a bond ladder) or is it just not worth it for the little guy (with a relatively small SIPP under £100k) to do as most of the SIPP providers who also sell single bonds seem to be more expensive until a SIPP is over £150k. Wondered if the ii monthly cost £5.99 (for a SIPP under £50k) was worth using as a good place to hold just bonds as their dealing fees were also lower.
Pensioncraft videos on gilts have been great. I actually own a small bond ladder for years 26,27,29 to cover some known expenses. I would like to extend to 30,31,32 but this is right in that valley in the yield curve. I wonder if i would be better buying into the shorter term gilts like 1 year and then see what happens on maturity
I know this is an old video but I have a question. Can I buy any amount of gilts I want to buy? I’ve found one in particular and I would like to put around 250k in but I’m a bit nervous as it’s quite new to me! Thanks
Why is capital gain more important than coupon?
Isnt the cg going to be the same as what invested at maturity date?
I dont understand much but I thought that the coupon % is more important then capital gain.
Please explain
Capital gain > coupon for those holding outside of a tax wrapper like an ISA or SIPP. Low coupon Gilts trade at a lower price. More of the yield comes from the move in price (cg) as they drag to maturity. They are more susceptible to changes in interest rates than gilts with coupons and long dated / low coupon Gilts are particularly attractive in an interest cutting environment due to convexity
What about foreign government bonds?
Hi @rvmajor that introduces currency risk. You do get yield curve diversification but amongst developed markets yield curves tend to be highly correlated so this is not particularly useful. In the case of government bonds (if you live in DM) then I don't think there's much point in looking outside your domestic market unless the yields are very low. Thanks, Ramin
Ramin. Do you know how gains are handled within a Ltd company structure (so, not held personally)? Does the cgt exemption when held personally extend to corporation tax exemption?
And could the government change the rules?
do you have to be a uk citizen to buy in the primary or secondary market?
Is there any tax to pay when investing in UK Treasury Bill's ?
Hi @m0jon on short-term UK Treasury bills there's no capital gains tax exemption e.g. see this www.ii.co.uk/analysis-commentary/gilts-or-uk-treasury-bills-which-should-you-choose-ii531451 which says
"For tax purposes, UK T-Bills are considered “deeply discounted securities” and therefore have different tax rules to gilts."
"This means that any gains from UK Treasury Bills are taxed as income, rather than capital gains. This differs to gilts, where capital gains are tax-free but coupons are taxed as income"
Thanks, Ramin
What’s the maximum one can purchase gilts in uk let’s say somebody wanted to invest £20 million or so can there or restricted
Are there still index linked bonds ? I was looking through 1990s adverts in the Newspaper archive and NS&I had an advert for index linked bonds.
You're referring to Index Linked Savings Certificates which are no longer available. Index Linked UK Government Bonds i.e. Gilts are available but they aren't a retail savings product like NS&I savings bonds or certificates.
Hi Ramin, Can you do video on best ETF/Funds for AI stock?
What options are there available to EU citizens, living in the EU?
Where can I buy a 1000 pound 1 month old bond
Would a single gilt strategy be useful to mitigate sequencing risk?
Not single gilt but you can set up a bond ladder to have 2-3 years of cash flow set up.
@@blumouseyExactly what I was going to say lol.
And exactly what I am in the process of doing, having just sold an investment property, already maxed out my ISA and Pension, and being 2-3 years off retirement
What’s a good reit fund?
I don't understand whether my portfolio should be heavily weighted towards bonds when interest rates go down or up. Recently I changed to a balanced portfolio of stocks and fixed income bonds. Previously, I was heavily weighted towards bonds. Now I just want steady growth for the next few years.
I had index linked '24 gilts in my ISA (bought 11/2023). Maturity date was 22/03/2024, should I expect last coupon payment to be on the day (did not get anything)? Can I sell it now, or it will be sold automatically? It feels like lot of hassle, all of it could be done for me by Money Market fund (in short timescale at least).
Check with your broker on Monday. It may be paid by then.
Is WiseAlpha also an option to buy gilts?
Corporate bonds and experienced wealrhy investors are the targets. Gilts are uk governments bonds though. Focus here us on intermediate investors eh wealth an experience
Gosh it's complicated. I'll stick to shares and ETFs
My question is : the bonds are still relatively small, why people are still buying them ? Why?
and why no transparency
update video?
Can they be bought from India ?
They changed name from UK Government Bonds to World Governance Bonds on 1st August 2023, believe me, I cashed mine in because I don't support the WEF. I can show you the official letter if you like.
Ramin, how certain can we be that the CGT rules will not be changed? I buy index linked gilts and over say 20 years the CGT bill would be enormous if the rules ever changed. Is the CGT free status somehow contractual or just current over policy?
I looked at II for more details and noticed that information seems quite minimal as related to each Gilt. It would seem that they expect one to source the information elsewhere - perhaps it is fairly new?. What information would you expect to see? Different platforms display different identifiers for what must be the same gilt? Long vs short TR25. I was just comparing II and HL
Price, maturity date (full not just 2034?), return on maturity , dates coupon paid etc
What aobut buying gilts - not etfs - by foreigners? From the EU?
Looking at the FAQ section for Treasury UK Bills and the returns are not even worth it really. You wouldn't be too far off just putting the money in a high yield savings account instead of borrowing the money to the government. I need to do more research into the longer term ones though
Should have talked about the spread.
Lols. I got out of UK gilts when Brexit happened. One of the best decisions i made. It was obvious that there'd be a declin,e and a Truss-like event was going to happen. I probably wont get back in until a change of regime and stability is returned.
Then you missed out on the 2020 run up in prices because of the vivid lockdown.
@@anthonyferris8912 I've run the back dated analysis, my portfolio is up more than any run up in gilts. Run ups are irrelevant unless you can predict the future and know exactly when to get out. Which you can't.
For the Treasuries via Freetrade they haven’t been very clear on the tax implications. My understanding is that the yield is taxed as interest. Would you agree?
Why not just ask Freetrade?
There is a fabulous forum too ❤
Coupon is income tax, gains are free of CGT.
It isn’t the broker’s place to advise on tax implications, that’s for you to determine for yourself (partly because the broker doesn’t know the details of your situation). But yes, coupons on UK Gilts will be treated as savings income unless held in a tax efficient account like an ISA or SIPP.
@@stephenbrook65 I agree with your comments but I have seen other brokers work with HMRC to provide an outline of the facts where there is a new product they are trying to sell.
Why is it only the governments with taxpayers money and how does labour get this cash to buy without telling the voters, foriegn investers and bank of england seem to buy the gilts/bonds and the taxpayer foots the bill with higher taxes,
Pff..monzo offers 4.60% interes rate if you just keep your money in a savings account which you can take out at any time. So 4.2% over 7 years makes it not worth it.
That rate will be tracked to the boe rate and will go down when interested is reduced by them, bond is fixed.
not impressed with 4.2% on a 7 year bond to be honest
🎉
and why dont UK schools not teach about this hidden secret currency
most of the public i meet dont even know anything about this hidden currency
The government has made it easier to lend them money... hmmm? What does this say about the economy?
The is no difference if you hold your bond to maturity at the lower interest rate or sell it at a lower price and reinvest a higher interest rate. You will end in the same position. Holding to maturity exposes you to inflation risk. C'mon man, that is just dumb.
You don't have to buy a 30 yrs bond. 1-12 month bills and 1 yr-2yr you may make more money than a regular savings account especially so if the stock market is crashing. 5% return guaranteed per year ain't bad for 10yrs. Imagine inflation moved higher again. Stocks sell off, bond yields move higher, 6-7% yield for 5-10yrs starting to look a lot more attractive especially when one considers markets like the Nikkei 225 which didn't reach new highs for 35 yrs.
I agree. But if this is bond funds it is (I’m sorry) bollocks. UK fund bonds have dropped 30% in the last 4 years. You could not have made a worse investment. I know, I did cos it was ‘safe’. 🙄🙄😂😂