UK war loan 3.5% undated bonds

[uknick]

Do I have to buy these through a broker?

Can I add them to a stocks and shares ISA?


Thanks.

[Newc]

They are eligible for an ISA. You would normally buy them through a broker, though you can apply to be a direct client of the Bank of England if you want to. The BoE doesn't offer ISAs though.

[BoRED S2upid]

What is it?

[uknick]

BoRED S2upid said:

What is it?

A 3.5% war loan?

(Apologies to any financial advisors if the following is not 100% correct. I'm sure you will correct me)

It is an undated UK government gilt giving 3.5% "interest" each year.

They have a nominal value of 100, but are currently trading at about 90. Therefore, if you you buy £90 worth, you get £3.5 income each year, about 3.9% return.

As they are commodities you can also trade to make gains, or losses, on the purchase price. Over the last year the purchase price has ranged from about 80 to 102. If you bought at 80, the nominal 3.5% is actually about 4.5%.

Finally, whilst the income is taxable, any capital gain on sale is not. Although, as said they can be put into an ISA to avoid all tax.

I'm looking at them because high street interest rates are so appalling at the moment. I thought getting roundabout a 3.5% return not that bad.

But, I'm not going to buy now as the current price is quite high.

[BoRED S2upid]

uknick said:

BoRED S2upid said:

What is it?

A 3.5% war loan?

(Apologies to any financial advisors if the following is not 100% correct. I'm sure you will correct me)

It is an undated UK government gilt giving 3.5% "interest" each year.

They have a nominal value of 100, but are currently trading at about 90. Therefore, if you you buy £90 worth, you get £3.5 income each year, about 3.9% return.

As they are commodities you can also trade to make gains, or losses, on the purchase price. Over the last year the purchase price has ranged from about 80 to 102. If you bought at 80, the nominal 3.5% is actually about 4.5%.

Finally, whilst the income is taxable, any capital gain on sale is not. Although, as said they can be put into an ISA to avoid all tax.

I'm looking at them because high street interest rates are so appalling at the moment. I thought getting roundabout a 3.5% return not that bad.

But, I'm not going to buy now as the current price is quite high.

Interesting to know.

Do they have anything to do with war?

Do they ever mature or will they just continue to pay 3.5% forever?

[ringram]

There are a few perpetual bonds around with no maturity date. They will be expensive now though due to QE and ZIRP.

Check out Consol's too http://en.wikipedia.org/wiki/Consol_(bond)

I dont see the point in buying any. Maybe in the 80's when rates maxed out. But not now.

[afrochicken]

BoRED S2upid said:

Interesting to know.

Do they have anything to do with war?

Do they ever mature or will they just continue to pay 3.5% forever?

They were issued in 1932, and are callable (redeemable) at any time by the government.