Is sharesave a good idea?

ReadingTim

You should also remember that you can only participate in the scheme while you're an employee of the company, so to get any benefit from (what you hope to be..) a rise in the share price means you're committing to staying 3 or 5 years with that company.

If you resign during that time, your options lapse, although you can keep contributing to the savings part of the scheme. The returns are generally average, and (I think) should be published in advance. You should therefore be able to work out the return on the savings aspect of the scheme, and compare this figure to the cost of your other debts.

All employee schemes such as Sharesave are generally very popular, and presented as a win-win for employer and employee alike, but they're also a very effective retention tool, a pair of 'golden handcuffs', if you will.

Could/would you commit to an extra 3/5 years with your employer? Or might you be tempted to leave, especially given you mention a pay rise that you're due, but don't seem to have had....?

spikyone

tbourner wrote: »

It just seems to me to be a win-win, or at least a win-don't_lose. The biggest risk of going for it is losing out on maybe a couple of months from clearing my debt

I hope you can see the flaw in this argument.

tbourner wrote: »

whereas the potential gains are thousands of pounds!!!

I'm starting to see how you have £25k of debt - did you put it on a hot tip for the Grand National?

tbourner

ReadingTim wrote: »

Could/would you commit to an extra 3/5 years with your employer? Or might you be tempted to leave, especially given you mention a pay rise that you're due, but don't seem to have had....?

I have no plans to ever leave TBH, I'd happily stay here until I retire (which is a long...... LONG way away! ). The only reason we haven't had pay rises is because of the planning mistake, which believe me is a rare mistake, in fact, here's a quote from our CEO:

Regardless of these events and whether we should have anticipated better or not, I am ultimately responsible. I acknowledge that we overlooked potential downside risks to our business.

Not something you often hear someone in a high position saying, so I have complete faith in the company for the future.

tbourner

spikyone wrote: »

I hope you can see the flaw in this argument.

I'm starting to see how you have £25k of debt - did you put it on a hot tip for the Grand National?

I used to do some gambling actually, finished it when my net gain dropped from over £100 to £43 (come to think of it, that £43 is still in my BetFair account!).
No I don't see a flaw, it's a gamble with a very low value risk and a very high potential for gain.

spikyone

tbourner wrote: »

No I don't see a flaw, it's a gamble with a very low value risk and a very high potential for gain.

It seems like your original question was asked in the hope of getting a positive answer...

I was pointing out the flaw that it's "win/don't lose" but you could in fact lose.
As someone who enjoys an occasional game of poker, for any bet I make sure that I know the amount I could lose, the amount I could win, and the probability that I will win (or how many different ways I could lose). For your investment, you have absolutely no idea of the amount you could win (other than "it could be zero"), or the "potential for gain". All you can say for certain is how much you could lose, and that should tell you something!
A CEO who admits he made a mistake is refreshing, but it doesn't mean that he'll get it right next time, or that the global economy can only get better (or that the economy will, in turn, lift your company's share price).

The main problem, as I see it, is that financial priorities should normally be - in this order:
- Clear outstanding debts
- Save*
- Invest

Whilst it may be called Sharesave, it's really an investment. I wouldn't recommend to anyone making an investment whilst they have outstanding debts, especially if those debts are a year's wages (obviously, I don't know what you earn, but AFAIK £25k is roughly the average annual salary)
That's not to say Sharesave schemes are a bad thing, in fact I'd recommend joining one, but only when you're in a better financial position.

[*It would be reasonable to convert "debts" into easily-accessible savings if the (guaranteed) return was greater than the debt interest. Or to pay into savings if there was no financial advantage to clearing the debts faster. But neither of those are the case here]

IronWolf

who do you work for?

tbourner

spikyone wrote: »

It seems like your original question was asked in the hope of getting a positive answer...

Possibly, I almost didn't hit submit cos I'd talked myself into it already (the usual dreams of winning vast riches quickly and easily), but I do trust this forums opinion at the end of the day, as annoying as it is sometimes.