How Do Gilts Work?

Gilts are a loan from the bondholder to the government. The issuing government pays a fixed interest rate to the investor until the bond reaches its maturity date. When the maturity date is reached, the government pays the bondholder the face value of the bond.

Can you lose money on gilts?

There's also more room for yields to rise and prices to fall. ... It also increases the potential for losses – any increase in bond yields could put investors' capital at risk. Unlike the security of cash, investments and income could fall and you could get back less than you invest.

How are gilts paid?

Gilts are UK Government bonds. In return they pay you a regular income in the form of interest for a set period of time, after which they must repay your loan.