“If you’re going to burn a bridge, make sure you’ve crossed it first.” Whoever said that might well have been referring to the bridge between the current investment landscape and your comfortable retirement. How might you burn this bridge and jeopardise your goal? By buying Gilts. They are horribly expensive and almost certain to lose you real capital. So, bung ‘em on the fire. The problem is, Gilts are still perceived by many not only as low risk investments but also a good form of portfolio insurance. This indeed is what they have been for most of the last 35 years. Today, however, they are neither. With real yields close to -2%, they are poor investments. As for providing insurance, think not only about the pay-out but also about the cost. In today’s world, there are much cheaper ways to protect that comfortable retirement. The challenge we face? Convincing people that Gilts no longer provide the safety they did in the past.
Published in Citywire
The views expressed in this communication are those of Peter Elston at the time of writing and are subject to change without notice. They do not constitute investment advice and whilst all reasonable efforts have been used to ensure the accuracy of the information contained in this communication, the reliability, completeness or accuracy of the content cannot be guaranteed. This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.
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