Gilts
What are gilts?
Gilts are bonds (loans that pay interest) issued by the UK government. When you buy a gilt, you’re lending money to the government. In return, they pay you interest and eventually repay the original amount.
Why are gilts considered safe?
The UK government has never failed to pay back a gilt. That makes them one of the lowest-risk investments you can hold. The trade-off is that returns are usually lower than shares.
How do gilts work?
A gilt has a fixed term (like 5, 10, or 30 years) and usually a fixed interest rate. You receive interest payments twice a year, then get your money back when the gilt matures.
You can also sell a gilt before it matures. The price may be higher or lower than what you paid, depending on interest rates at the time.
How do you buy gilts?
Through an investment platform (a company that holds your investments) that offers them. Not all platforms do. You can also buy gilt funds or ETFs that hold many gilts in one package.
Key points about gilts
- UK government debt. You’re lending to the government
- Very low risk. The government has never defaulted
- Lower returns than shares. The trade-off for safety
More information
Scrimpr links to official sources so you can verify what you’ve learned.