To sell shares or not - advice needed

Trifle_with_custard

Hello everyone,

I'd like some advice on whether it would be better to sell the shares I have. I've never looked into investing or buying shares so please excuse me if my question is obvious.

My parents brought me some shares in my name when I was a child. When I turned 21/22 they gave the shares to me so I've had them for a number of years now. I have just under a hundred in Centrica and just over 200 in BT. Since I don't have a huge amount of savings, I've been wondering recently whether it would be better for me financially if I was to sell the shares and place the money gained into a high interest account, like the TSB Classic Plus account. Would this be a good idea? I like the thought of giving my savings a boost, but if it's more worthwhile to keep the shares then I would be happy to do that.

I am not able to invest in more shares just now, so I would either sell the shares I have or just leave them as they are. What would people suggest is better for me in my situation?

Also, if I was to sell the shares, would I need to give part of the profit to the tax man and admin fees? If so, how much would they take? If it helps, I am a Basic Rate tax payer.

Again, apologies if any of these questions are obvious. Looking forward to learning more about saving and investing from this forum and website.

Thanks.

IronWolf

It is a bit risky to hold just two lots of shares without really knowing anything about the companys. So I think what you are considering is sensible - to sell them and put the cash in your rainy day fund.

If you do want to add some stock market investments at any point you can put money into more diverse things like index trackers or managed funds.

ChopperST

100 Centrica shares would be worth £309
https://uk.finance.yahoo.com/q?s=CNA.L

200 BT Shares would be worth £774
https://uk.finance.yahoo.com/q?s=BT-A.L

So you have roughly £1000 invested.

If you have no other savings and investments then you are adopting a high risk strategy having your money linked to the success of two companies. Traditional thinking is that you have a 3 to 6 month rainy day fund saved in cash before you start with investments.

Your idea of selling and switching them for cash would be a sensible one if you have no cash savings(unless you are happy taking the risk of a large fall in your net worth). You have clearly looked into the highest paying current accounts and TSB would be a safe place to start.

gadgetmind

Regards tax, as a BR tax payer there is no additional tax to pay on the dividends you're getting from those two holdings. I assume the dividend cheques are arriving?

Additionally, if you don't have any Capital Gains anywhere else, there is no way that selling that holding could exceed the £11k CGT allowance, so no more tax there either.

Trifle_with_custard

To the people who replied, thanks for your advice and help, it's much appreciated.

I'll be selling the shares to give my modest savings a boost. I hope one day to have enough saved to go into investing.

Gadgetmind - Yes, I've been receiving the dividend cheques. Attached to the dividend there is info about how many shares you hold, amount payable, etc but there is also an amount for tax credit. So I thought this might mean I would need to pay more tax if I was to sell the shares. I'm glad to hear I won't need to!

I've also received info in the post about buying more shares or selling the shares I have. However, it asks for £500 minimum for investing and that also made me wonder whether I should be doing anything about my shares. But apart from that I hadn't really thought about the shares until reading some threads on this forum about saving.

ChopperST

Keep reading on here trifle. Lots of useful advice and helpful people.

Monevator is also an excellent resource - http://monevator.com/emergency-funds-the-ten-essential-steps/

gadgetmind

Trifle_with_custard wrote: »

Attached to the dividend there is info about how many shares you hold, amount payable, etc but there is also an amount for tax credit.

That's only of significance for taxation of the dividends for higher rate tax payers, so you can ignore if you're comfortably within BR tax.

Other than the fact you only hold shares in two companies, investing for dividends like this makes lots of sense. Of course, you need to look at this alongside your other investments.

If you do decide to sell them, opening an online share dealing account and lodging the shares there before selling is often cheaper. You then need to decide whether to put the cash into savings or some income/other shares in an ISA.

atush

Personally, I'd transfer these shares or the money into a S&S isa. And cut back spending to save your rainy day fund.

I am not certain you would not spend the proceeds rather than save it.

Second, what is the yield of these two shares? Is it at or above the interest you would get on cash? What has been happening to the dividends? Have they been reinvested or have you been spending them?

Trifle_with_custard

gadgetmind wrote: »

If you do decide to sell them, opening an online share dealing account and lodging the shares there before selling is often cheaper. You then need to decide whether to put the cash into savings or some income/other shares in an ISA.

I know there is the option for me to sell the shares I have to buy other shares, but am I right to think that this would only be profitable if I happened to pick the 'right' shares for investing, and that this is risky for someone like myself, who doesn't have a lot of cash savings? Apart from the shares I mentioned above, I have a small amount of savings, but nothing near the 6-month emergency savings amount, which is what I would like to save for first. So whether I sell the shares and save the profit, or sell the shares and buy others, or just leave them as they are depends on what would be best for me in my situation. But maybe there isn't a definite right answer?

Trifle_with_custard

atush wrote: »

Personally, I'd transfer these shares or the money into a S&S isa. And cut back spending to save your rainy day fund.

I am not certain you would not spend the proceeds rather than save it.

Second, what is the yield of these two shares? Is it at or above the interest you would get on cash? What has been happening to the dividends? Have they been reinvested or have you been spending them?

You make a very good point, I could, whether intentionally or not, end up spending the money I get from selling the shares. However, I've had a look at my finances, following tips and advice on this forum, and I've realised I could save more than I've been saving each month just by keeping a closer eye on what I spend on. I like to think I'm not bad with money, but as I've heard people say, it's easy to end up not saving money each month, even if you've not been spending it on the newest gadgets, clothes, first-class train tickets, etc. So I like to believe I would be able to keep the profits in my rainy day fund if I were to sell the shares. I also consider myself lucky that I don't have any debts to repay.

I had thought about the idea of investing more shares but I would like to sort out my rainy day fund first before going down this route. The dividends I've been getting are not a lot, at the top of my head they've usually been in the region of £7.00 to £10.00. I'm not keen on the idea of using £500+ of my modest savings to buy more shares, but I hope to be able to invest at some point later on. Like my reply above, would it only be profitable to go down the S+S ISA route if I was able to put in more money towards buying shares?

gadgetmind

Trifle_with_custard wrote: »

I know there is the option for me to sell the shares I have to buy other shares, but am I right to think that this would only be profitable if I happened to pick the 'right' shares for investing

The key is to diversify across many companies, and also multiple territories and asset classes. Most people do this by using "collective investments", so funds, trackers, investment trusts, etc.

If this sounds scary, well it's a lot less scary than holding shares in just two companies!