Hi,
Reading in regards of Capital Gains tax, it is mentioned:
You do not pay Capital Gains Tax on certain assets, including any gains you make from: UK government gilts and Premium Bonds
Does Trading 212 Invest have any go these ? How to identify them ?
Thanks
T212 does not have these. Premium Bonds can be easily bought from the NS&I website.
How does one buy a 10-year Gilt ?
I understand that the yield on the benchmark 10-year Gilt was climbing nine basis points to 4.585% and just a shade below its 52-week highs.
You can buy gilts through some traditional brokers like Hargreaves Lansdown. I think you may be able to do it through the UK’s Debt Management Office too but I’ve never really looked into it.
Investing in UK (and probably US) bonds/gilts is going to become a theme over the coming weeks and months.
If my crystal ball is correct (which is often isn’t) I would imagine every broker will shortly be advertising “get 4.9% yield on Gilt XYZ” or “be the first to easily invest in US T-Bills at 5.3% on your idle cash with minimal risk” and so on and so on.
In this interest rate environment parking some funds in government backed gilts/bonds/bills with short durations and reasonably high yields is not an entirely stupid play. Unless, of course, you believe the government in question is going to actually default on debt obligations and the whole world implodes. Not an entirely illogical position but perhaps unlikely.
I’ve personally bought a good chunk of gilts and bonds over the last months.
It just feels like a good defensive position in weird times like these.
Which Gilts have you bought so far or anyone for that matter?
Specifically Gilts : GB0030880693 TR25 is reasonable as it is close to par (£1) but with a moderately short duration of under 2 years yielding 5%
Yes, you can do better on even shorter duration, but a lot of UK Gilts have terrible liquidity and finding a broker who trades them is hard. Going direct to the DMO is not something I fancy doing either.
I bought some longer 2040, T40 GB00B6460505 as the buy price was only about 92p and that hikes the Yield to Maturity (I’ll never likely hold to 2040 !) but 4.25% ongoing is pretty reasonable if – and only if – you think rates will start to slowly come down and 4.25% on cash will be a decent rate going forward.
The US T Bills are easier to buy and have much shorter durations. I’m able to pick up Bills yielding about 5 to 5.5% on US Treasuries via Interactive Brokers.
https://www.moneysavingexpert.com/savings/premium-bonds/
^Is a fairly decent resource to estimate an average expected return depending how many PB’s you hold.
Gilt wise, have you considered ETFs for more diversity? Not sure if they still have the same tax perks, and potentially don’t hold gilts up to maturity though.
