Gilts UK

Gilts, or Gilt Edged Securities, are bonds issued by the UK Government which offer the investor a fixed interested rate for a predetermined, set time.

Investment in Gilts is best suited to people who desire a fixed, predictable income with a return of capital guaranteed.

While their value, like shares, are prone to fluctuation, Gilts are well-known for their security and are viewed as the safest of investments, hence their original name Gilt Edged Securities.

While stock has a redemption date, typically between five and twenty five years, it can be sold at any time for the present market price. Investors are not tied down and there are no penalties for selling the stock. By the time the redemption date is reached, the government will pay the investor the face value of the stock, which could be more or less that the original price, providing a capital gain (or loss).

Buying Gilts and Selling Stock

One can buy Gilts and sell Gilts on the stock market or by using the Bank of England’s postal dealing service. Gilt value is influenced by many factors, including inflation, other competing forms of investment and the time left until maturity.

Buying Gilts is, arguably, best done when interest rates and high and look likely to fall. When general interest rates fall, the value of the stock will rise and can be sold profitably. On the other hand, if market interest rates are low, then Gilt prices will be high and a loss could be anticipated if the stock is possessed to redemption.

There are many types of UK Gilts on offer. As with all types of investment, it’s best to look around before purchasing any stock.