Anybody on the DMO approved list?

[NeilW]

Anybody here joined the DMO approved list so you can buy Gilts direct from the DMO when they are issued?

Any trouble getting approved?

[dealtn]

Anybody here joined the DMO approved list so you can buy Gilts direct from the DMO when they are issued?

Any trouble getting approved?

You won't.

DMO only issue gilts to GEMMs.

If you want to try that route (and you need proper money to be considered) you need to go via a GEMM, and from experience that won't be easy either.

Why would you want to deal in the primary market, and not the secondary anyway?

[1nvest]

Not done this myself, but looks straight forward enough

https://www.investing.co.uk/gilts

Until the relatively recent past buying gilts was difficult for retail investors. However, that is no longer the case and gilts can now be easily bought either directly from the government’s Debt Management Office at the initial auction or via a stockbroker.

Buying gilts directly without a stockbroking account means registering at Computershare, the government’s outsourced gilt agent. The Debt Management Office’s website (http://www.dmo.gov.uk) publishes information on upcoming gilt auctions.

Before being able to buy UK government debt, would-be-investors must register with the Approved Group of Investors. This is a simple process that verifies identity and the source of funds. If you already have a stockbroking account you will have already been through a similar process with your stockbroker and this won’t need to be repeated.

Computershare downloadable forms https://www.computershare.com/uk/gilts/ ... able-forms

Form for individual to register as Approved https://www.computershare.com/uk/GILTdo ... n_Form.pdf

Check out the DMO upcoming auctions https://dmo.gov.uk/data/pdfdatareport?r ... =D5D#/2233

Buy https://www.computershare.com/uk/GILTdo ... e_Form.pdf

See also https://www.dmo.gov.uk/responsibilities ... le_Service

[1nvest]

Bear in mind that it looks like around 0.25% purchase cost for larger (£100K) amounts, 0.55% for smaller (£10K) amounts. Held to redemption and I guess there's no further cost, but if you sell some/all of a holding its another 0.25%/0.55% type amount.

Also the Gilts are being held outside of ISA, so all interest would be taxable.

Compare that to buying say IGLT (or IGLS) with a 0.07% yearly expense ratio, that might be held inside a ISA.

[GeoffF100]

Bear in mind that it looks like around 0.25% purchase cost for larger (£100K) amounts, 0.55% for smaller (£10K) amounts. Held to redemption and I guess there's no further cost, but if you sell some/all of a holding its another 0.25%/0.55% type amount.

Also the Gilts are being held outside of ISA, so all interest would be taxable.

Compare that to buying say IGLT (or IGLS) with a 0.07% yearly expense ratio, that might be held inside a ISA.

You can probably do better than that through a broker. An ISA does not help much if the coupon is only 0.125%, as it is for many new style linkers and for some conventional gilts.

[scrumpyjack]

Not easy to understand why anyone would want to buy gilts when inflation is 7% and interest negligible. I see in today's Investors Chronicle, Chris Dillow reviewing a readers portfolio says he would rather hold cash!

[GeoffF100]

Not easy to understand why anyone would want to buy gilts when inflation is 7% and interest negligible. I see in today's Investors Chronicle, Chris Dillow reviewing a readers portfolio says he would rather hold cash!

You pay almost no tax on the gilts with a coupon of 0.125%. You are not restricted to £85K. If you sell them, you can reinvest the money without the trouble and delay of moving money from multiple cash accounts. The linkers return about inflation -3% currently. That does not sound good, but cash could turn out to be a lot worse. Most packaged funds have some linkers without the advantages of holding them directly. I have got about 6% of my portfolio invested in them. Not great, but neither are the alternatives.

[scrumpyjack]

I have about 10% in cash and don't worry about the 85k but stick to reputable institutions.

[1nvest]

linkers return about inflation -3% currently. That does not sound good, but cash could turn out to be a lot worse.

As could stocks. Inflation 6%, linkers +3% nominal (-3% real), stocks -30% nominal (-33% real), and linkers relatively outperformed stocks by +47%. Maybe more as unexpected inflation might see linker prices relatively rise.

Like paying a small/modest insurance premium, that if stocks do encounter such a dip/dive, you'll have 'dry powder' to deploy and buy stocks at relatively low prices that might subsequently go on to yield above average rewards.

[GeoffF100]

I have about 10% in cash and don't worry about the 85k but stick to reputable institutions.

What interest rate are you getting? The best rate from a small bank is 2.2% for a 5 year fix. I have got a ladder of 5 year accounts. I am still getting 0.6% from Marcus for instant access. There are better rates, but so far I have not thought it worthwhile to move. The linkers add a bit of heavy lifting if I need it.

[scrumpyjack]

I have about 10% in cash and don't worry about the 85k but stick to reputable institutions.

What interest rate are you getting? The best rate from a small bank is 2.2% for a 5 year fix. I have got a ladder of 5 year accounts. I am still getting 0.6% from Marcus for instant access. There are better rates, but so far I have not thought it worthwhile to move. The linkers add a bit of heavy lifting if I need it.

0.6% but then that gets taxed at 45% so the interest is negligible wherever I put it and I do not want to tie it up. Probably I would do better considering what currency to put it in. But I can't be bothered! I certainly have an inbuilt aversion to bonds, gilts and fixed interest and as it now looks like interest rates are only going one way - up, it really isn't, IMO, worth putting it in any of those.

[stevensfo]

I have about 10% in cash and don't worry about the 85k but stick to reputable institutions.

What interest rate are you getting? The best rate from a small bank is 2.2% for a 5 year fix. I have got a ladder of 5 year accounts. I am still getting 0.6% from Marcus for instant access. There are better rates, but so far I have not thought it worthwhile to move. The linkers add a bit of heavy lifting if I need it.

Wow! You're braver than me. I stick with 1 year fixed rates but once went for 18 months via AJBell, which was a very stupid mistake.

e.g. If RPI stays close to 7.5% for 5 years (approx 38%)and you're fixed at 2.2% (approx 12%), you're losing approx 25% on your currency.

Absolutely no criticism intended. We are living in strange times and do what we can according to our circumstances.

Maybe tangible goods? Gold sovereigns, collectables, mink coat for your wife, a new Ferrari?

Steve

[GeoffF100]

I have about 10% in cash and don't worry about the 85k but stick to reputable institutions.

What interest rate are you getting? The best rate from a small bank is 2.2% for a 5 year fix. I have got a ladder of 5 year accounts. I am still getting 0.6% from Marcus for instant access. There are better rates, but so far I have not thought it worthwhile to move. The linkers add a bit of heavy lifting if I need it.

Wow! You're braver than me. I stick with 1 year fixed rates but once went for 18 months via AJBell, which was a very stupid mistake.

e.g. If RPI stays close to 7.5% for 5 years (approx 38%)and you're fixed at 2.2% (approx 12%), you're losing approx 25% on your currency.

Absolutely no criticism intended. We are living in strange times and do what we can according to our circumstances.

Maybe tangible goods? Gold sovereigns, collectables, mink coat for your wife, a new Ferrari?

My five year ladder (plus cash on the ground) has a duration of 2.5 years. The interest rate risk is the same as a single 2.5 year account. That is very short in comparison with the bonds in the multi-asset funds that widows and orphans are directed towards. The best 1 year account pays 1.4%. The best 5 year account pays 2.2%, an extra 0.8%. That is 2% extra over a 2.5 year duration.

https://www.moneysavingexpert.com/savin ... -interest/

2.2% is much better than I would get on Gilts. I have got 10 five year accounts. That is manageable. I just have to reinvest one every six months. 10 one year bonds would be a nightmare.

Interest rate rises are already priced into the Gilts market. The market could be wrong in either direction. Interest rates could rise more than the market expects, or less than the market expects. Tangible goods that last are all horribly over priced, as are all other financial assets, and now we are being hit with inflation. No matter, the problems of being poor are worse.

[1nvest]

I have about 10% in cash and don't worry about the 85k but stick to reputable institutions.

What interest rate are you getting? The best rate from a small bank is 2.2% for a 5 year fix. I have got a ladder of 5 year accounts. I am still getting 0.6% from Marcus for instant access. There are better rates, but so far I have not thought it worthwhile to move. The linkers add a bit of heavy lifting if I need it.

0.6% but then that gets taxed at 45% so the interest is negligible wherever I put it and I do not want to tie it up. Probably I would do better considering what currency to put it in. But I can't be bothered! I certainly have an inbuilt aversion to bonds, gilts and fixed interest and as it now looks like interest rates are only going one way - up, it really isn't, IMO, worth putting it in any of those.

Depends upon your investment objectives. For instance if newly retired with £10K/year of occupational pension, £10K of state pension, spending of £30K/year and life expectancy of 20 years, £10K x 20 years into linkers at par (0% real) = £200K. But with negative real yields that might be increased to a 1.25x loading requirement, £250K of todays money to buy £200K of later spending in inflation adjusted terms. With the potential prospect that high unexpected inflation could occur where the price of index linked gilts could soar. Someone with £300K in such situation might be content to secure their inflation adjusted spending cover via pensions and £250K into index linked gilts, perhaps investing the remainder £50K into stocks. The circumstances that led to them having £300K (declining yields etc.) under other circumstances might have them retiring with just £200K, but where linkers were priced to 0% real yields.