RBS Sharesave 2011 - advice? thoughts?

MisterT

I work for RBS who are about to launch their Sharesave scheme for 2011.

The option price is likely to be around 32 pence based on a 10% discount of the price at the moment assuming it doesn't change too much before the 11th August when the actual price is announced.

What's exercising my mind just now is I'm already saving the max of £250 (£7250 saved so far) into the 2009 scheme where the option price was set at 38p. I took the 5 year option so the maturity date is 1st march 2014.

So, should I continue with my 2009 plan or cash it in and start again with the 2011 plan?

I'd appreciate some thoughts on this please - what do you think?

thanks in advance - MrT

Jegersmart

Hi

So the maximum is £250 per month across any number of Sharesave issues? Are the contributions fixed (amount) for the whole period? Can you stop the 2009 payments but remain in the plan and just exercise your option on matiry with whatever you have in there?

MisterT

Yes - the maximum is £250 and cant be varied. Unfortunately there is no option to stop paying and wait till maturity. I can only keep going with the current plan or cash it in and start again - and do something useful with the £7250 saved so far.

Jegersmart

Hi

Thanks, it sounds like similar schemes I have been part of in the past. Is it also the case that if you contunue to hold until maturity then if the share price is not favourable you get some nominal interest paid on your contributions to "compensate" for that? If so, what is thei nterest offered and do you forfeit *all* that if you stop and cash out?

Having said that can you wait until 11th AUgust so you know what the strike price is (can't remember what we used to do - I think I remember you would know the strike price and then decide)? If so, as the market is very volatile I would wait to see because the markets are very volatile right now, RBS lost around 7% yesterday alone IIRC. If it turns out that you can get a strike perice of 34p for exampel it is 10% better than theone you have and depending on the interest or bonus details as asked a few sentences back would be tempted to start a new one and invest the 7.25k in an ISA or similar if you have not used your limit for this year....

imho, dyor

gadgetmind

I've cashed out of one of these in the past and it worked well for me, however, the share price difference was more like 2x and I had less invested. In your case ... I'd probably still do it but definitely invest the £7.25k wisely.

MisterT

I'm leaning more and more towards cashing in my 2009 options and using the money saved.

I can take the 7.5k and pay off a lump of my mortgage which coincidentally is up for renewal at the end of August - good timing perhaps?

Taking out a new 5 or even 7 year plan now also gives the RBS share price more time to recover with a potentially decent return at maturity.

I think I'm starting to convice myself I know what I'm doing ! :rotfl:

gadgetmind

Paying off some mortgage makes sense if the interest rate is high, but I know others would recommend investing it instead.

As you say, it could take time for banks to get back on their feet and to start paying dividends, and their share price will be mired until they do. I'd like to think 5 years was reasonable, but I am an optimist. :-)

BTW, these share save schemes are subject to CGT, but if you time the exercise correctly, you can move 2x your ISA allowance worth of them directly into an ISA and also get 2x annual CGT allowance, and the latter can also be done for your spouse. At today's rates of allowances, this is over £60k with no tax!

Jegersmart

Well as I say, if you can wait until you know the strike price then do so, no point swapping for a worse price...................

UoTegne

..so I'm glad I stumbled across this thread.

My wife entered the RBS 2010 Share Save scheme for the maximum £250 and after looking at the abysmal performance for this year we were wondering whether cashing in the existing contract and rejoining this years was possible.

Especially after the way the share prices have bombed over the past few days.. But I guess that is too recent to have much effect on the strike price.

I'm wondering however whether as we're already in for the maximum that we'll even get sent any details of this years scheme. I'll get the Mrs to give them a ring I think!

gadgetmind

UoTegne wrote: »

I'm wondering however whether as we're already in for the maximum that we'll even get sent any details of this years scheme. I'll get the Mrs to give them a ring I think!

Yes, big time! I'd guess a fair few people have asked the same question. :-)

bingobob777

Several of the answers on here are wrong. You can continue paying 250 in to your current 2009 scheme AND open a new one and pay in 250.

My wife currently pays in to 3.