A reader has asked: I’m looking to invest in UK government gilts.
As savings account now offer almost non-existent interest rates, people cannot be blamed for wanting to take on a little more risk in the hopes of better returns.
However, whereas savings accounts are generally safe (although there is never a 100% guaranteed other than the FSCS protection) there is a big difference between a savings account and investing in bonds.
Unlike savings accounts, the price of a bond can go down as well as up so it is possible that you will get less than you put into the investment.
UK Government Gilts are issued by the UK Government to finance public spending and are therefore relatively safe, generally rated AAA by the major credit agencies. For more information about UK Government Gilts and how they compare to other types of bond investing read our guide on how to invest in bonds. In it, we cover the pros and cons of most types of bonds as well as have a video discussion about the risks and rewards.
You can buy UK Government bonds either directly from the DMO or through various bond brokers and investment platforms like Hargreaves Lansdown for example. Hargreaves have an excellent free to view market data portal where you can view bond prices.
Another great resource for information on specific UK Gilts there is an website called Fixecincomeinvestor.co.uk dedicated to fixed income investing with a forum where you can discuss the bond market with other investors and compare Gilt coupons, maturity, price, and yield.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.