Sainsbury's Share save

marvin

Only open to employees this just wanted some views on the value of it.

The basic deal is save every month taken off your wages and get a guarenteed return in 3 or 5 years, depending on how long you chose at the outset.

Lets assume its £50 per month
in 3 years that's £1800 invested and the return will ne £1870 (or £70 in interest)
In 5 years it will be £3000 invested and a return of £3220 (or £220 interest)

At the end of the 3 or 5 years you can use the meoney to buy shares @ £2.31 per share (price fixed on 17th Nov and discounted by 20%) its not this bit I want opinions on as its rather silly to save the moeny then not buy the shares even if you simply sell them immediately.

Its the rate of return, is this good for this type of savings account?

ti1980

I don't think the rate of return is particularly good but the fact that you will make money from buying the shares at a discount price. You save now, in 3 or 5 years time you get a bit of money on top of what you have saved but the main part is the money you would get from buying and then selling the shares.

Obviously you want the share price to go up as much as possible by the time it comes to buying your shares as then you can sell them immediately and make quite a bit of money.

macca64

I would not worry about the rate of interest you are getting ie. £70 on your £1,800. The main advantage is the fact that you get to buy shares in the company you work for at a 20% discount to todays price, and then you can sell in 3/5 years times at the current market price. I think these are good schemes, I participated in one, and currently still hold the shares for the dividend, which works out to about 5%, and my shares are worth double what I paid for them...

dunstonh

These have the potential to be real money makers. Back in my banking days, there were clerks on relative low income in non-management with share values in the hundreds of thousands because of these. The values were significantly higher than the cost.

If the share price goes up, you make a packet. If they share price goes down, you take the bonus and the interest. You cant lose really.

An ideal way to do it is take the 5 year version and do one every year. When you get to the 5th anniversary, you then have a maturity a year. Very nice position to be in.

cheggers

The only problem I can see is your share save scheme is not with Britains leading supermarket chain, there the boys seriously making money these days.

marvin

My Girlfriend did point out one down side...gotta stay with Sainsbury's for 5 years or the benefits are only 1.5% interest per year.

Now that is depressing!

ffacoffipawb

marvin wrote:

My Girlfriend did point out one down side...gotta stay with Sainsbury's for 5 years or the benefits are only 1.5% interest per year.

Now that is depressing!

If you are made redundant (or transferred to another employer - not relevant here) you can exercise the options (and even pay the next six months moneys into the plan before doing so) up to six months after leaving the company based on the savings made up to the date of exercise.

If you leave of your own accord, you can just take the money out with a small amount of accrued interest (but you can still make 6 more payments to amke a bit more interest).

Lawnmower_Man

If you are going to be there for 5 years then please, please,please, please take out as much sharesave as possible.

I once worked for a large multi-national and prevaricated for years because I was young and wanted to spend the money on other things, as you do, and I didn't really believe it was quite literally a no lose situation.

I eventually took out sharesave and did quite well BUT those empty years cost me dear.

If ever I join any company in the future that has a sharesave scheme I will join it asap.

Regards Paul
formerly known as Lawnmower Man

Katgoddess

Do it!!

It's a win win situation which ever way the shares go.

The share save for my company (morrisons) matured last month, and I got a nice sum just from putting in the minimum amount. It is my biggest regret that I didn't put more in. I keep plugging figures into the calculator, what if I'd put in a fiver extra, what if I'd put in the full £250. But I was only 20 at the time, and didn't know what life had in store for me. I wasn't planning on still being there in 2005!

Even if you don't plan on being there in the next 5 years, put the minimum in because you don't know what will happen. If you do plan on being there, put the maximum you can afford in.

You won't regret it.

Teak

So I take it these schemes are pretty good or are there better alternatives? A relative has been offered the Morrisions 2006 3yr one.

Have I got this right as I haven't seen the details yet? At worst you'll get all your money back, plus an end of term bonus (worth 1.4x monthly contribution ~3.889%?) or just 1.5% tax-free interest if you end early (but save for at least 12 months). Worst case with the share options, they'd need to drop 20% to not be worth it. Even if they hardly rise in 3yrs you'll still have 20% profit on them. But best case they'll rise and will make more than 20%. Assuming you decided to sell them straight away of course.

The option price is 158p. Current market price is 191.75p, which is down from a high of about 215p in March. Lowest in the last 3yrs was just above 160p back in November 2005.

meanmachine_2

Yes, sharesave schemes = a good thing.

All you can lose is the interest you might otherwise have gained, putting the money into a higher rate account.

I've just joined a sharesave, despite believing the shares in my company are unlikely to go up in the next few years and me personally being unlikely to stay there for very long.

It doesn't matter - if your circumstances change you can still take the money out, plus interest (if the scheme has been running for more than a year).