How and Where to Buy Government Bonds (Gilts) in 2024

Ruby Layram 17th Sep 2024 No Comments

Reading Time: 5 minutes

One of the most stable types of investment that you can put your money into in the UK is Gilts, also known as Government bonds. These investments are known for their steady returns, low volatility and beginner-friendliness which makes them a great option for our lovely readers!

But, what are government bonds and how can you invest in them?

In this guide, we will take a deep dive into how to buy government bonds, the best brokers that currently offer gilts and top tips for investing like a pro.

• What are Government Bonds?
• Reasons to Invest in Gilts
• Where to Buy Government Bonds in 2024
• How to Buy Government Bonds from eToro

What are Government Bonds?

Government Bonds, or Gilts, are a type of ‘IOU’ from the government. You lend your money to the government for a set period of time, and in return, they pay you regular interest until the bond reaches its maturity. At that point, you get your original investment back.

Bonds are backed directly by the government, which is why they are considered to be one of the safest investments that you can make.

Bonds are issued by the UK government to support public spending – have you ever wondered how the government pays for everything?

When you invest in a government bond, you essentially enter into an agreement through which the government promises to pay you regular interest for a set period of time. The interest rate is usually determined when the bond is issued.

Reasons to Invest in Gilts

Government bonds come with a few benefits that make them especially appealing, particularly if you’re looking for low-risk investments.

Let’s take a look at some of the top reasons people invest in these trusty securities.

Guaranteed income
One of the biggest perks of government bonds is the regular interest you’ll receive. No matter what’s happening in the stock market, you’ll continue to get that interest payment, providing a steady and predictable income stream.

The interest payments on government bonds are usually higher than the interest that you would receive from a regular savings account. At the time of writing, interest on a 15-year Gilt is around 4.30%.

Low-risk
Government bonds are about as safe as it gets when it comes to investing. You won’t see huge returns like you might in stocks or property, but you also won’t see huge losses.

It’s a classic trade-off: you sacrifice some potential upside for more security.

Tax benefits
In the UK, some government bonds, particularly Premium Bonds, can come with attractive tax advantages.

For example, any winnings from Premium Bonds are tax-free. This is a lovely little bonus, especially if you’re a higher-rate taxpayer.

Where to Buy Government Bonds in 2024

The first step to investing in Government Bonds (or any investment for that matter!), is to find a reputable brokerage that offers the asset you are looking for.

We recently published a complete list of our best brokers in 2024 that you can check out to find a platform.

Alternatively, here is an overview of 4 places that you can buy Government Bonds in 2024.

Hargreaves Lansdown

Hargreaves Lansdown is one of the UK’s most well-known and trusted providers for all things investing.

They offer a straightforward process for buying government bonds, as well as providing helpful research tools and insight.

Plus, they have a user-friendly mobile app, so you can manage your investments on the go.

eToro

eToro is known for its social trading features which allow you to copy the strategies of experts. eToro also allows you to buy government bonds.

We like the platform because it offers a very broad range of assets, including cryptocurrencies. This makes it easy to build a diverse portfolio.

AJ Bell

AJ Bell is another solid option if you’re looking to invest in government bonds in 2024. Known for its low-cost platform, AJ Bell offers access to a wide variety of bonds and provides plenty of educational resources for investing newbies.

The UK DMO

If you don’t fancy using a stock broker, you can also buy Gilts directly from the government using the UK DMO (Debt Management Office) Purchase and Sale service.

To do this, you must be a member of a select group of investors. Anyone can join the group. To do so you must reside in the UK, comply with the platform’s anti-money laundering policies and complete the relevant identity checks.

How to Buy Government Bonds

If you’re new to investing, here’s a quick guide to help you get started. The exact process of investing in government bonds will vary depending on which brokerage you choose to use. However, most platforms will follow the process below.

Step 1: Create an account

First things first, you’ll need to sign up for an investing account if you don’t already have one. Just head over to the brokerage website, click “create an account,” (or similar) and fill in your personal details.

This part of the process is pretty quick. However, you will also need to verify your account with proof of ID which can take up to 48 hours.

Step 2: Fund your account

Once you’ve set up your account, the next step is to fund it.

Most UK brokerages allow you to deposit money via bank transfer or debit card. It is a good idea to start with the minimum deposit

Be ware of fees that may be charged by your banking provider for depositing funds.

Step 3: Search for bonds

Now, its time to search for bonds that you might want to invest in.

You can find the names of different government bonds with a simple Google Search. Then, use the brokerage’s explore tab to find the bond that you would like to invest in.

Step 4: Fill out the order form

Once you’ve found the bond you want to invest in, you’ll need to complete the order form.

You’ll specify how much you want to invest and whether you’d like to set any additional parameters. After you’ve filled out the form, double-check everything and hit “Buy.”

Investing in government bonds is one of the safest ways to grow your money over time. However, all investments come with risk and it is important to do your own research before making any decisions.

Bonds are great for stability. But, they might provide the kind of huge returns that you could see from stocks and shares. The key is to diversify by investing in a basket of different assets so that you can take advantage of the perks that are offered by each of them.

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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.