Is this a sensible idea?

Wellgood

I currently have a matched share scheme at work - I buy one , work buys one. Initially I was just going to let it build up over my career and then have a nice little pot in say 30 years. After all it would have to more then halve for me to be worse off!

However as I read regularly on MSE you should really always diversify therefore does it make sense to cash in what I can of my shares lets say annually and put it into Pension AVC/ISA?
Otherwise I guess I run the risk of the share price collapsing in the future. So in summary - Cash in and invest elsewhere in Pension or leave in share scheme? (Note: when I cash them in they are free of income tax & NIC - not sure if this effects my decision or not)

Thanks for any opinions

saver861

Wellgood wrote: »

I currently have a matched share scheme at work - I buy one , work buys one. Initially I was just going to let it build up over my career and then have a nice little pot in say 30 years. After all it would have to more then halve for me to be worse off!

However as I read regularly on MSE you should really always diversify therefore does it make sense to cash in what I can of my shares lets say annually and put it into Pension AVC/ISA?
Otherwise I guess I run the risk of the share price collapsing in the future. So in summary - Cash in and invest elsewhere in Pension or leave in share scheme? (Note: when I cash them in they are free of income tax & NIC - not sure if this effects my decision or not)

Thanks for any opinions

Buy one ... get one free. It's everywhere it seems!!

It all depends on the stability of the company and its future etc ... difficult to predict. However, given that as you say you would need to halve before you take a hit.

Personally, just at face value of what you say, I would be sticking with the share scheme but be continually mindful of their progress or otherwise. You can always cash in at any time.

If you cash in and invest into a pension etc these too have the same risk and may well drop in price also. If you are thinking 30 years, then it is a long time to make up any drop. However, I would also ensure I had my pension sorted out separately. If you are saying you are relying on the shares to be your pension in 30 years then that would be a different matter.

Ultimately it will be down to your approach to risk.

kidmugsy

If there really is no penalty on cashing in, and neither tax nor NIC, then I'd say you should diversify. If.

Linton

Your investment in your employer should be a pretty small % of your total investments. If the company folds and you lose your job you dont want to lose your life savings as well. There is no need to get rid of all your shares, just keep the amount of money involved within sensible bounds.

dunstonh

I know a number of ex millionaires who did their profit shares and SAYE in Lloyds Bank shares. They failed to diversify.

The ideal scenario is to take the free bits. Keep as long as necessary for tax purposes and then diversify after the tie in periods.

However as I read regularly on MSE you should really always diversify therefore does it make sense to cash in what I can of my shares lets say annually and put it into Pension AVC/ISA?

Changing tax wrapper isn't diversifying. It is the investments you hold where you diversify.

robin61

I have no idea whether this is an urban myth or not but I was told at a retirement seminar about some poor guy who worked for RBS all of his life and had built up a huge amount of shares something like £750k. Then just before he was due to retire the shares were basically reduced to junk status after RBS had to be bailed out by the government. He should' ve diversified !

atush

How much do you put into pension annually anyway?

If it is already substantial. you could also cash in the Share save shares and fill your S&S isa with funds instead. Also diversifies you?

What is the yield on your company's shares?

Down the road, once you are diversified, you might want to keep some (in your isa) if they have a good yield. But only once they are a smaller part of your portfolio.

redpete

As an ex-Marconi employee/shareholder I know how the value of shares in a company can lose far more than 50% of their value - fortunately I did sell a good proportion when the share price was soaring.

Now I sell a tranche of ShareSave shares whenever the value of available shares is around £1000 (they become available with no tax or NI liability 3 or 5 years after purchase).

westv

This is what I've been wondering too. We have a buy one get two free share scheme. We have to keep them for 2 years to keep the extra shares or 5 years to gain the full tax benefits.

le_loup

Many people who worked for Enron - supposedly one of the safest companies in the world - lost their jobs, their shares and their pensions all in a day!
Sell as soon as you can and buy a diversity.

rpc

Sell when they are free from tax restrictions, you have a huge downside risk with SAYE shares.

Aside from it being a single company focus which is awfully risky, your income and your savings can be strongly correlated. Company hits hard times -> Share prices drop -> you lose your savings at the same time as your job.