Government Bonds or Guilts are loans to the government. Generally they pay a fixed rate of interest annually and return the capital to you at the end of a stated period. As Government bonds are traded on the stockmarket their value can go up and down.

Gilts, or gilt-edged stocks as they are sometimes called, are bonds issued by the government that pay a fixed rate of interest every 6 months. They are regarded as safe investments because they are backed by the government. (The government is not likely to go bust!)

Gilts are traded on the stock market where their price can rise and fall. They can be bought and sold through brokers, major banks or via the government’s Debt Management Office (DMO) which publishes a guide to buying gilts.