What are Gilts or Government Bonds?

 

Gilts are government bonds used to make loans to companies, the government and local authorities, the bonds carry a twice annually fixed rate of interest and the capital is paid back at the end of an agreed, stated period.

Gilts refers to gilt edged stocks or bonds that are issued by the UK Government. Because gilt edged stocks are only issued by the government, companies and local authorities regard gilts as a safe way of investing their money as it is unlikely that the government will not make the interest payments nor have the investments go bust.

Although the deal is that the investor gets their capital back at the end of a stated period, there is no guarantee that companies and local authorities will get back all of the money that they invested.

Gilt edged bonds, like any other corporate bonds are bought and sold on the stock market, which means that the price can go either up or down.

If the government decides to sell at the wrong time, then you will not receive back the whole of your investment, Gilts can be bought from individual brokers,or high street banks.
You can also buy gilts from the governments Debt Management Offices and through that office you can also get a guide to buying gilts.