Standard Life - 73p Cash Payment But .......

pinklady21

Thanks for that, Bowlhead. I just wondered if I had missed something!
It seems that in previous years the price tends to bounce up just before Divi payment time and then settles back down, although this could have just been co-incidence. Now swithering what to do with my shares, is this the right time to sell, or should I hold on a little longer.
Need to invest in a crystal ball!

bowlhead99

Say you have £1000 of shares with them.

Simply imagine you don't have any shares at all with them because you 'accidentally' sold them, and you now instead have £1000 proceeds burning a hole in your back pocket.

Out of all of the investment options available to you for your £1000: e.g. 2000+ individual UK listed companies, 20000+individual international companies, 2000+ generalist and specialist investment funds that have a portfolio of assets rather than all their eggs in one basket, and every other savings or investment opportunity on the planet - not to mention material posessions like a new handbag, watch, TV, house upgrade, tickets to a foreign holiday - would you really put your pin in the phone book and buy shares in SL again at their current price (10-20% higher than last month?). My guess is that you would not.

So, is there a particular reason they are better than any other insurance and investment management company that you could buy shares in? Or any other type of company generally? And better than a balanced investment fund holding various underlying assets in a more diversified manner? Again, probably not.

Consequently you should not need a crystal ball to tell you to dis-invest. Of course you might like to invest in them for another few months and gamble on the share price changing for the better. Gambling is fun - Las Vegas and Macau turn over billions every year from people who enjoy it. It doesn't mean it is the right thing to do.

The fact that you are asking whether to sell now or whether to wait a little longer to sell later, still says you are planning to sell. So imagine you already did sell. Would you buy them back to hold them for another few months?

My guess is 'of course not', which gives you the answer.

SamDude

Slightly confused, so not sure if I've missed something.

Mrs Sam had 878 Standard Life shares pre-consolidation.
At the current share price of 473p, the valuation is: £4152.94

Her Standard Life Share Portal is showing 718 shares ((878/11)x9), so is the post-consolidation number.
The current value for 718 shares (at 473p) is showing as: £3396.14

For the 'windfall' of 73p per share, she will receive (878 x 0.73) £640.94

£4152.94 - £3396.14 is: £756.80
...but the windfall being returned is £640.94

So what is the calculation to work out the difference in valuation between the pre and post-consolidation?

molerat

IIRC the 73p is based on a share price of 401p so your calculation should be :
Old holding 878 x 401 = £3520.78 (718 x 401 = £2879.18 + 878 x 73 = 640.94 = £3520.12)
New holding = 718 x 473 = £3396.14 + cash of 878 x 73 = £640.94 = £4037.08

SL is today worth 4% less than it was valued at on that calculation date despite giving away 18% of that value as cash and your holding of shares and cash is worth 15% more.

SamDude

It was the defined 401p share price that I didn't take into account - thanks molerat.

Coveredinbees!!!!

pinklady21 wrote: »

Can anyone explain to me why the share price seems to be so high just now? Is this simply related to the 73pps windfall or do the markets know something else?
Intrigued!

I don't know but it's gone bananas, up to nearly £4.80 today.

pinklady21

Thanks for the comments, Bowlhead You are quite correct, I do wish to sell the shares at some point. Like so many other S/L shareholders I was given the shares at demutualisation, and bought another £1000 worth then too. The 1450 I have now, (pre-consolidation) are the only shares I hold now (the others were Northern Rock shares that were also given to me as an account holder, and were initially quite a success as they rose to around £5k worth at one point. But we all know what happened to them after that....!)
So timing is everything - and although I don't really need to realise the cash for the shares at the moment, I am very wary of continuing to keep all my eggs in the same basket.
My dual quandary is, when to sell - which I suspect will be sooner rather than later, and what to invest in instead.
I am a Higher Rate taxpayer, and have already maxed out on Premium Bonds, winning so far at least £25 a month, sometimes more, occasionally nothing, and a cash ISA, which is yielding 2.6% fixed until 2016.
As I have never really had the benefit of the S/L shares as cash, I probably can afford to take a little bit of risk with whatever I gain from selling, but don't really want to lose the lot if I can avoid it.
I am leaning towards a Stocks and Shares ISA - to spread risk and (with luck and a bit of sound judgement) increasing the yield.
Does this sound sensible?

xylophone

Had you considered increasing contributions to your pension?

pinklady21

Thanks Xylophone - I have an employer's pension, where my employer contributes 15% and I contribute 5%.
I could consider increasing this, I suppose. I am around 25 years off retirement, and not entirely sure I want to invest further into the pension fund. Not sure why this seems unattractive, particularly given the tax incentives.
Could be because the pension seems such a long way in the future, anything could happen before then! and again I am mindful of changes that have already happened to pensions, and no idea what may happen in future. A pal of mine also lost heavily in her pension when equitable life went south.
Other things I could do with it would be to overpay further on my mortgage, or blow it on an exotic holiday. Would probably prefer to overpay the mortgage TBH - not very exciting!
Any other ideas?
If I decided to go down the road of a S and S ISA, where would be a good place to start looking?

xylophone

If you choose the S&S route, you are starting with a modest amount so choose a low cost platform- maybe Charles Stanley would suit?

You might start with the Acc units of a global equity income fund?

http://www.trustnet.com/News/498202/the-cheapest-global-equity-income-funds-for-your-portfolio/3/1/

Or a tracker?

http://www.thisismoney.co.uk/money/investing/article-1583915/A-guide-cheapest-index-tracker-funds.html