Is this a sensible idea?

marlot

As others have said, its very easy to become hugely dependent on your employer. When I had shares I always sold them as soon as it became tax efficient.

fuelcrusher

Sounds like a share incentive plan rather than sharesave, at least that's what they're called at my work.
We are allowed to contribute £150 a month, before tax, which buys 10-11 shares. Then we're given 6 free shares.
The way I see these schemes is that for my initial investment, once the tax, child benefit, and free shares are taken into account, has 'paid off' once the shares are made unrestricted. The gain is huge. I've 'won'. Therefore I take the money out and put this money (most of which was free) into a pension for the tax relief gain, further boosting this fantastic investment stream.
Granted I don't do this every month due to dealing costs, usually a couple of times a year when the price feels good.
I did work out the rough growth for my pound once, I'll see if I can dig the calculation out.

fuelcrusher

Found it. Old. Back then we could only contribute £125.

One tranche of 166 shares I sold cost me about £833 net by the time the sale proceeds were in my pension and I'd taken into account the tax rebate and child benefit the total return was £4197.

It pays to work these things out.

rpc

marlot wrote: »

When I had shares I always sold them as soon as it became tax efficient.

The other way to look at it once you reach this point is:

"If I had £X, would I use it to buy shares in my employer?"

If the answer is no, you should sell the shares.

fuelcrusher

rpc wrote: »

The other way to look at it once you reach this point is:

"If I had £X, would I use it to buy shares in my employer?"

If the answer is no, you should sell the shares.

I also go with this. Last October we had a sharesave mature worth about £28k to max subscribers. Amazing how many of them just allowed it to buy and hold the shares for them. Every one that I asked the question "If you had £28k of your own money would you invest it all in the company?" proceeded to admit that no they wouldn't... but they just had.

westv

Of course the other side of the argument could be the bonus you might get from a company takeover.

AnotherJoe

westv wrote: »

Of course the other side of the argument could be the bonus you might get from a company takeover.

What makes your employer any more likely to be taken over than any other company? The same could said for any companies shares you buy except one too big too be taken over ?

westv

AnotherJoe wrote: »

What makes your employer any more likely to be taken over than any other company? The same could said for any companies shares you buy except one too big too be taken over ?

Obviously I wasn't talking about any specific company.

rpc

westv wrote: »

Of course the other side of the argument could be the bonus you might get from a company takeover.

So if, having £10k in cash (for example) you decide that your employer is worth a punt in case of takeover then you would equally take the shares. Assuming you don't get done for insider trading.

If you wouldn't be prepared to put £10k cash into shares for your company than it doesn't make sense to treat £10k shares that you hold any differently. £10k in cash, £10k in shares, £10k in soya beans doesn't really matter - you sell some and buy others to maintain your asset allocation. If your desired asset allocation doesn't include a chunk of your employer's shares (and for most people company shares aren't a good idea) then you should sell them as soon as you can do so without penalty.