Next Sharesave Sheme

Red_Elle

My Husband has just started working at Next and has been invited to join their Sharesave Scheme.

Does anyone know how these work? He can put in £250 per month from net pay, so we're going to do that if it's a good thing to do. It says you can buy shares at 20% below market price if you choose to buy the shares.

This is the bit that confuses me - are you basically just saving out of net pay and at what point do you buy the shares and are they purchased at the point at which you decide to enter the scheme?

chris_m

Red_Elle wrote: »

This is the bit that confuses me - are you basically just saving out of net pay and at what point do you buy the shares and are they purchased at the point at which you decide to enter the scheme?

The option price for the shares is set at the start of the contract - so, assuming no change between now and the time that the option price is set and the saving contract starts, it's 20% below today's market value. You buy them at the end of the scheme - but at the option price, not the then market price.

If the shares go up in the next 5 years, the option price is still that set at the beginning so potentially a nice little earner.

If they go down, the option price is still the same but, as there is no obligation to buy them, you can take your cash back instead, usually with a bonus in lieu of interest.

atush

the schemes run from one to 5 years, depending on the company. At the end of the period, if your 'strike rate' ie the price you cazn buy the shares at, is above the current price you use the money (plus the interest it is paid) to buy shares. Then you can immediately sell them and bank your original money plus the amt you gained. Or you can continue to hold the shares and take the dividends and hope for an increase in value.

You can leave the plan early, if the share price goes below the 'strike rate' and start a new plan insted with a lower strike rate. If you leave a plan, you get your contribs back in cash.

You can invest 250 quid total, but it doesn't have to be all in one plan. You can do 100 this year, 100 next and 50 after that. or all 250 into one.

opinions4u

Heads you get your money back.

Tails you get to buy shares at a discount price that was set a few years earlier.

It's a no risk way that has the potential to make you a significant profit.

Don't waste it.

ses6jwg

You get most of the benefits of investing in shares without the risk. Worth a punt.

Red_Elle

Thanks for that everyone; makes it much clearer. We'll definitely go for that then.

MoneySaverLog

atush wrote: »

the schemes run from one to 5 years, depending on the company. At the end of the period, if your 'strike rate' ie the price you cazn buy the shares at, is above the current price you use the money (plus the interest it is paid) to buy shares. Then you can immediately sell them and bank your original money plus the amt you gained. Or you can continue to hold the shares and take the dividends and hope for an increase in value.

You can leave the plan early, if the share price goes below the 'strike rate' and start a new plan insted with a lower strike rate. If you leave a plan, you get your contribs back in cash.

You can invest 250 quid total, but it doesn't have to be all in one plan. You can do 100 this year, 100 next and 50 after that. or all 250 into one.

This is what makes them so good, you cannot lose. Whatever happens you have the option to buy the shares, does not mean you have to take the option if the price drops below you can just take out the savings and interest and if it goes up over the 3 or 5 year term you buy em and decide then whether to sell straight away or hold onto them.