While you may have received some income, you might find that a capital loss wipes out any gains

How to build income and wealth for retirement 3b: Getting the best from different investment classes through quoted bonds and gilts


A diversified and well constructed portfolio is critical to income flow at retirement. And, having a good understanding of each principal investment class is important to achieving this. In this part of the blog series on building income and wealth for retirement, we examine quoted bonds and gilts.

Quoted Bonds and Gilts

At the time of writing, the yield (annual interest) on a 10 year Government Gilt is 0.29% with talk of negative returns on the horizon. At the moment the returns average less than 1% annually at a time when inflation is in the region of 2% to 3% annually.

Corporate bonds are potentially more interesting. They are, in theory, liquid. i.e. you can buy and sell on the stock market daily. However, the average corporate bond yield is currently 1.61% (quoted by www.fixedincomeinvestor.com). Not enough to make a defined change to your income level.

There are several other complications with quoted bonds that investors should also consider. While the bonds are tradeable, the price will be fixed by the market. If the feeling of the market is that a lower interest rate is acceptable, the capital value of the bond will increase and vice-versa. Therefore, it’s unclear what price you will achieve in the future if you choose to sell.

While you may have received some income, you might find that a capital loss wipes out any gains you have benefited from.

Other articles in this series


How to build income and wealth for retirement: 1. Identify the obstacles

How to build income and wealth for retirement: 2. How to create more retirement income

How to build income and wealth for retirement 3a: Getting the best from different investment classes -Through Shares

How to build income and wealth for retirement 3b: Getting the best from different investment classes -Through quoted Bonds and Gilts

How to build income and wealth for retirement 3c: Getting the best from different investment classes - Through day trading

How to build income and wealth for retirement 3d: Getting the best from different investment classes - Through unquoted bonds and loan notes

How to build income and wealth for retirement 3e: Getting the best from different investment classes - Through savings and cash

How to build income and wealth for retirement 4a: Ways to boost your retirement income - By investing in property

How to build income and wealth for retirement 4b: Ways to boost your retirement income - By starting a business

How to build income and wealth for retirement 4c: Ways to boost your retirement income - By reducing costs and outgoings

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