Employee shareholding plan... worth it?

immoral_angeluk

DH has been in his new job for 3 months and had an invitiation to open up a company shares plan through the post this morning..
has anyone any experience of these? We haven't! lol!

christhesparky_2

Im no expert, im sure someone more knowledgable will advise further but,

these are generally a good way of saving for a fixed number of years as you usually get to purchase the shares at a reduced cost therefore over the fixed period gain as you are buying the shares at a discount in effect

PasturesNew

I'd go for it.
What you are doing is committing to "saving" £X per month, which over (5?) years goes towards buying shares in the company - the price of which are fixed at today's price.

Then in 5 years' time you get to choose whether to take the cash or the shares. As shares have usually gone up in value, you're better off taking the shares. Which you can then keep or sell.

I knew a guy who would put £250/month into this scheme. He did it by doing £50/month in Year 1, then £100/month in year 2 ... up to year 5. He actually funded this by using his annual salary increases too, so he didn't even notice it.

After year 5 he always had one lot "paying out" and stopping, so he started a new one at £50.

Anyway .... he kept his all as shares. And the company was bought out. Somebody knew his share holding and at age 30 he had £100k in shares. This was a guy on a £17k job who lived with his mother - and at the time £100k in that town would have bought him a 4-5 bed detached modern tasty house.

Go for it. You can't lose.

cagey76

yep, agree with the above, you shouldn't be able to lose because at the end of 5 years you even get the choice between the discounted shares, or taking back your original cash plus some interest !

SoozyJ22

I think it depends where the company is based? My company are American and we don't have the option of getting the cash back at the end of the contribution period - which is only 3 months anyway - we have to buy the shares. We get the shares at a 15% discount on the lower of the price at the start of the quarter and the price at the end.

You should also check out the tax implications - any gain we make between the actual price of the shares and what we buy them at is taxed through payroll - so tax and NI is deducted.