share diversification...

Harveys_2

would really like some advice. in a couple of months I have some shares maturing...about £100k

what would you guys do? im not really versed in share dealing so would appreciate your thoughts.

thank you.

Your_Hero

That is a very open question and one that is almost impossible to advise without more information. You could start by telling us about your objectives, elaborate on "shares maturing"?, are you investing in individual company shares or funds? Etc.

Harveys_2

sorry. i invested in a five year share save which matures in august. rather than have 100k in one share I wanted to sell some to put in other companies with a good dividend rate.

i do not need to sell any as I have the usual Santander 123, club Lloyds, TSB bases covered.

Thank you.

bigadaj

Maybe need to clarify your tax position, may not be an issue but consider current or future capital gains implications. £15k can go straight into an isa, well from July.

I think you're right to be concerned about a large sum in a single company, to me there are two options. Either place the cash into some diversified funds, or with that sum you could compile your own portfolio of individual shares, twenty shares at £5k each might be a sensible amount to take into account dealing costs. Just ensure the shares are diversified in terms of sectors and that could provide a useful Income generating pot.

You'll have to declare dividends if you're a higher rate taxpayer, as you would currently do on interest on your savings/ current accounts, and pay the additional tax by self assessment or amendment to your tax code.

brendon

You say you have money in a Share Save scheme. Just to clarify, you don't actually own the stock but own stock options -- is this correct? I.e. you will have the choice to either buy-and-hold or buy-and-sell when the stock option matures. (And abstain if the price is lower.) Is this the correct interpretation?

If that's the case, the only tax you should be liable for is capital gains. (Until you start receiving dividends if you hold the stock.) If you want to minimise your CGT, you'll have to sell over a number of years. If you have a partner, you can also transfer some into his/her name.

Once you've sold, it's up to you what you do with the money. If you are selling gradually, you can put the money into Stocks & Shares ISAs, perhaps buy individual stocks or tracker funds. But, the ultimate question is, what do you want from the money? What level of risk is acceptable to you? How will the money ultimately be used and when?

(Just out of curiosity, who is your employer? BT?)

Harveys_2

Thank you to you both. Guess I have some thinking to do.

Considering the option price and the value of the shares now...I will buy and hold, also considering the dividend payment a month later in early September.

I will be putting 15k into an isa, and would like to sell some later in the year to buy other shares to get dividend/income.

traineepensioner

If it's the BT 5 year share save, with the option price of 61p , you're not going to be able to sell that many before reaching your annual CGT allowance. If you're married/with partner you could transfer some into their name and use up their CGT allowance. Once you've managed to convert the shares to cash moving the money into diversified funds wouldn't be a bad idea....rather than having all your eggs in one basket.

I was in a similar position with the 3 year maturity option and have been slowly reducing my single share holding into low cost tracker funds. Although these haven't performed as well as the BT shares :cool:

One thing I would advise is that you think about where you want the shares to be held... I had to move my shares out of Equiniti to sell at a reasonable commission.

Good luck :beer:

Harveys_2

ooops yes these are bt save shares...in addition I have 30k in direct shares. As the new save share is to begin in July, it's unsettling to hold so much in one company. Reading recently ocado shares nearly halved in a few months...

planteria

i suppose in theory the answer is to invest in a well-managed Equity Income fund...
but i think if i were you i would be very keen to understand the prospects for BT & decide whether/how many shares i wanted to retain.
and then perhaps look at selecting a small portfolio of direct holdings, perhaps with some specialist funds alongside.

gadgetmind

You're right to diversify, but do need to beware CGT as this is 18% for any gain that doesn't take you into higher rate tax and 28% afterwards.

As others have said, £15k can transfer directly into an ISA within 90 days of exercise, and you also get a CGT allowance for yourself and spouse. This gets you £22k of gain and £15k of value (you need to understand the difference) out of BT shares. and you can do the same again come April 6th next year. Note that many share save schemes allow you to defer for six months, and you then get 90 days to "ISA up" - this may *just* let you double dip the ISA transfers.

Vortigern

Harveys wrote: »

ooops yes these are bt save shares...in addition I have 30k in direct shares.

I think you'll find that the shares in "DirectShare" are sheltered from CGT until they come out of the scheme. There's no rush to deal with these as far as CGT is concerned.

You need to deal with the ShareSave shares first, because they have already made a significant capital gain, and you can avoid paying CGT on this if you follow gadgetmind's suggestions.

Read this earlier thread and particularly gadget's post #11

You also need to find a broker who will sell for a low flat fee rather than a percentage of your 100K. X-O will sell for £5.95