HSBC Sharesave

Aegis

Hi all,

Normally I like to be the one answering questions rather than asking them, but this time it's a subject I don't have much experience with at all. Hopefully I'll be able to get some interesting opinions on this.

I've just been invited to joint the bank's Sharesave scheme at a very competitive strike price of 331p. As this is already a very much in the money option, I would like to take advantage of this as a 3-year scheme to try to make some money out of it. As it's a fairly safe investment due to the guarantee not to fall in value, I feel fairly comfortable putting a reasonable amount towards this if I can afford it. However, this is where the problems start.

At the moment I safe about £250 per month and invest about another £250 into my stocks and shares ISA. These values happen to coincide with the maximum Sharesave participation level, and to me it would make sense in some ways to balance the three equally. However, I don't believe that this is sustainable after this year. My mortgage is currently at such a low rate that I can fairly easily afford this level of saving, but this is likely to hugely decrease when it comes round to the end of the year and I have to change rates. I'm comfortable that I will continue to be able to afford the mortgage, but I'm concerned about the level of investment I will be commited to. In the worst case scenario I will be pushed down to about the £250 per month level in total, which would require me to be putting everything into the Sharesave rather than cash or the stocks and shares ISA.

As I'm not comfortable doing this, I assume that a lower rate of investment would be a good idea, however does anyone have any thoughts as to whether the sharesave should take priority over all other medium-long term savings/investments due to the guaranteed nature of the product, pr should I continue to invest in a balanced manner and only put in a much smaller amount to this scheme?

I appreciate that financial advice isn't possible here, but if anyone can give me an idea of how they've done in the past with Sharesave schemes vs stocks and shares ISA investments, that would be much appreciated.

Cheers!

jon3001

I've had extremely good experiences with such schemes in the past. Personally I would give it priority over other investments and fill your boots. You're being offered a one-way bet on the stock market and the opportunity to buy shares at a discount.

If in 12 months time it's looking pear-shaped then you can just cancel the scheme, get your money back and subscribe to the next issue.

Shares obtained through the exercising of these options also represent one of the few opportunities for transfering shares into an ISA (rather than sell and buy-back within the wrapper). So there will be ample opportunity to limit any CGT liability.

Obviously in three years time you might find that other investments might have fared better than discounted HSBC shares. But if you're a betting man then you'll consider the odds stacked in your favour.

baggies666

Personally we have decided to give all to this this years hsbc scheme as we really done well with other ones before, I wanted to give more into stocks and shares after clearing the credit cards too but this offer seems too good to miss. The last scheme was cancelled in Jan as the option price for next year was nearly £7 and profit wise not worth it, stopping the older scheme meant we could hope this years one was better and it is so went online and confirmed another 250 3 year option, worse case we cancel again and just have our money returned.

opinions4u

I'd prioritise the Sharesave and pile in £250 if I could sustain it. It's "heads you win, tails you get your money back with a bit of interest".

If times get hard, you can:

1) Freeze your contributions to a Sharesave for up to 6 months.
2) Reduce or stop you stocks and shares ISA.
3) Borrow from a parent (?) to help fund you through the remaining months of a Sharesave and share the profits out.
4) Withdraw from your stocks and shares ISA to fund the Sharesave.

Or simply stop it all together and walk away from the benefits.

Maximise your Sharesave. Once you buy in to the shares at the end, remember to diversify fairly rapidly by selling a large chunk of them (being aware of your CGT liabilities and how to avoid them) at the end.

I did very well out of my old HBOS share schemes and they paid for a large chunk of my current lifestyle and my son's education. But I made the BIG mistake of keeping too many shares in one company so my net gains are now significantly less than they were.

Pile in now, buy the discounted shares if the price is favourable in 3 years time and then diversify fairly sharply to realise your gains.

laffer

Out of curosity how do you get invited to participate?

Jonbvn

laffer wrote: »

Out of curosity how do you get invited to participate?

You have to work for the bank.

BTW, alway maximise your contributions to such schemes above all other investments and savings, since they really are a one way bet.