First time doing SAYE scheme, advice needed :)

aled247 · 28 November 2015 at 2:40PM

Hello everyone!

I work for Sainsburys and we are currently going through our Sharesave scheme/period.
(For those unsure it essentially means means we can save money for a fixed period and then buy shares at a reduced fixed rate of what it was on 12th November 2015)
Our option price this year is £1.95 a share.

I am planning on saving £200 a month for 3 years. (Total of £7200) which will then allow me to buy approximately 3692 shares in 3 years time at £1.95 a share.

I then have the choice of selling them immediately at the 2019 share price to make a profit (Obviously if the share price is high enough), keep the shares or just get every penny I put in if the share price is lower (So I only lose really the inflation element of my money)

Now the big question......do you think this will give me a greater return than the governments right to buy ISA over the same period of time?

I know that is a HUGE question and no definite answer but what are peoples gut feelings on this?

My gut feeling is that the Sainsburys shares will be the better option.... The reason I think this is that this option price is by far the lowest it has EVER been as they gave us the 20% discounted share price on what the shares were on 12th November (which was pretty much the lowest price per share date I can see all the way back to 2000/2001)

PS. This is to go towards buying my first house so will have all the benefits of the right to buy ISA.

Any gut feelings on this, anything obvious I am missing here?
Thanks

chris_m · 28 November 2015 at 2:57PM

Hmm, a guaranteed 25+% gain (depending on the HTB ISA rate you get) vs. a potential zero-whatever gain on the shares. I can see your thinking re. the shares, however who knows how they will really perform? The big supermarkets have been hit badly by the likes of Aldi/Lidl, will JS be able to turn that around sufficiently for your needs, I wonder?

How about a third option - splitting your saving 50/50 between the Sharesave and the HTB ISA? You "might" not do as well as the Sharesave could, or you "might" do better - either way you'd at least be in the position of knowing what gain half of your savings will give.

aled247 · 28 November 2015 at 3:19PM

chris_m wrote: »

Hmm, a guaranteed 25+% gain (depending on the HTB ISA rate you get) vs. a potential zero-whatever gain on the shares. I can see your thinking re. the shares, however who knows how they will really perform? The big supermarkets have been hit badly by the likes of Aldi/Lidl, will JS be able to turn that around sufficiently for your needs, I wonder?

How about a third option - splitting your saving 50/50 between the Sharesave and the HTB ISA? You "might" not do as well as the Sharesave could, or you "might" do better - either way you'd at least be in the position of knowing what gain half of your savings will give.

Thanks for the response!
At the moment that is what I am doing already as me and my GF save £600 a month between us.
I will save £200 into sharesave and me and my GF will be putting in £200 a month each into our Help to Buy ISA's come 1st December so £400 a month becomes £450 a month.
Wanted some advice though as I have until 3rd Devember to decide whether or not to put more into the shares and less into the right to buy ISA. £600 a month is my savings limit at the moment.

gadgetmind · 28 November 2015 at 3:31PM

Do you have an SAYE annually? The share price might even be lower in future years, so it's worth leaving some of your £500 pcm for future schemes.

Your split looks sensible to me, but I do think that Sainsburys show every sign of navigating the changing face or retail better than some of the other big players.

aled247 · 28 November 2015 at 3:44PM

gadgetmind wrote: »

Do you have an SAYE annually? The share price might even be lower in future years, so it's worth leaving some of your £500 pcm for future schemes.

Your split looks sensible to me, but I do think that Sainsburys show every sign of navigating the changing face or retail better than some of the other big players.

yes we have a SAYE annually, this is the first one I have done in the 5 years I have been with the company because the option price just looked so good! (As stated the £1.95 is the lowest the share price has EVER been as far back as I can track using google to May 2000. As of today it is running at £2.56 which is still in historic lows.
Working for the company I maybe biased but I do agree that we seem to be in a much stronger position to tackle the discounters.
One perk of our PAYE is that if the share price is lower than £1.95 this time next year then I can simply cancel this one, get all my money back and put the money into my monthly allowance to hopefully gain higher. (Eg increase my amount from £200 to £250) OK I have to wait an extra 12 months but hey ho!

gadgetmind · 28 November 2015 at 4:02PM

That's pretty much how all SAYEs work - it really is a one way bet as you either get good capital gains or your money back.

My wife owns some SBRY shares. She's 12% down on capital, but has had several years of good dividends. Plus I gave her the choice of SBRY or TSCO, and she said "Not Tescos, their stores are dumps", so now she thinks she's an expert invested.

First time doing SAYE scheme, advice needed :)

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