Company Sharesave vs ISA...or alternatives

grocerjack

Hello, I work for a company who recently stopped A BOGOF share scheme and replaced it with further 'share save' schemes where you save money for a fixed term and then buy shares at a preset discount (-20% on the current price at scheme start- they already had these in operation alongside BOGOF) and then at maturity you sell at the hopefully higher price. I've done both for 25 years now but moved the £125 per month BOGOF investment into the additional share save schemes. I have 5 schemes running using the whole of the £375 per month maximum. In effect one matures each year and pays off a holiday or goes towards improving our repairing something in the house. I buy at the option price set x years before and sell at the current price. In general it pays about 25% increase in the investment. Any gain is tax free under these schemes.

However the share price is on its backside and all the schemes option prices are way above the current price. I'll get the cash investment back with a tiny bit of interest so haven't lost out. However I'm now wondering if this is no longer the lucrative investment scheme it had been. Share price has halved in months and is hard to see it coming back any time in the next few years. I'm now considering an ISA but it's all so confusing. I'd be putting around £6.5k into it and then circa £400 each month. We do want to take cash out probably twice a year.

Am I being too jumpy? Is it time to find another savings vehicle? A lot of colleagues have stopped with the shares altogether because they aren't as good as the BOGOF scheme.....but then what is? Some have moved their money as a protest at a huge and profitable company cutting the BOGOF due to 'costs'..but unsurprisingly leaving the senior management options untouched. Some just think ISAs are more flexible and less restrictive when cash is needed.....you don't have to dob the whole lot in unlike a sharesave scheme which you have to close to get the cash.

ISAs seem like the best alternative but it's confusing so I'm happy for noddy guides, advice, recommendations, warnings, thoughts on other options and any comments.

Cheers in advance, Jack

eskbanker

grocerjack wrote: »

I buy at the option price set x years before and sell at the current price.

[...]

However the share price is on its backside and all the schemes option prices are way below the current price.

Have you got this the wrong way round? Option prices way below current price sounds like an opportunity to make a killing (buying low and selling high) but your tone suggests that this isn't the case....

Reed_Richards

You plan to deposit about £5000 per year but spend about £2500 every six months. Unless you have a large pot of savings that you have not mentioned then you will derive no benefit from an ISA because even if you are a higher rate taxpayer the first £500 of the interest you earn is free from tax (taxed at 0%). It's the first £1000 if you're not a higher rate taxpayer. These days you tend to find better interest rates for non-ISA accounts and the best rates you will find are for regular saver accounts, usually linked to a current account.

A warning: in my case a large fall in the share price of the company I worked for was followed by waves of redundancies and the eventual complete failure of the company.

grocerjack

eskbanker wrote: »

Have you got this the wrong way round? Option prices way below current price sounds like an opportunity to make a killing (buying low and selling high) but your tone suggests that this isn't the case....

Ooops, thank you......senior tired moment there :)

grocerjack

Reed_Richards wrote: »

You plan to deposit about £5000 per year but spend about £2500 every six months. Unless you have a large pot of savings that you have not mentioned then you will derive no benefit from an ISA because even if you are a higher rate taxpayer the first £500 of the interest you earn is free from tax (taxed at 0%). It's the first £1000 if you're not a higher rate taxpayer. These days you tend to find better interest rates for non-ISA accounts and the best rates you will find are for regular saver accounts, usually linked to a current account.

A warning: in my case a large fall in the share price of the company I worked for was followed by waves of redundancies and the eventual complete failure of the company.

Interesting points and thank you very much. I hadn't considered that. I'm an a higher rate tax payer. As I say I'm feeling the water for the best alternative savings vehicle and all I see is lots of chat about ISAS. In today society saving seems rare and I appreciate how lucky we are to be able to save that much per month. But for me savings are there to be spent when needed or wanted.....I'm not after six figure sums to leave behind! On the redundancy point....we live with that bullet in danger of being fired constantly now. I'm 57 and the idea of going to competitive interviews for jobs that others are willing to do at half my current salary fills me with dread. I would be looking at retaining or starting a little business or even investing in a local one and taking my experience there. Thanks again

Alexland

grocerjack wrote: »

I'm an a higher rate tax payer. As I say I'm feeling the water for the best alternative savings vehicle and all I see is lots of chat about ISAS

Have you considered if making additional pension contributions could bring you down to basic rate?

Alex

grocerjack

Alexland wrote: »

Have you considered if making additional pension contributions could bring you down to basic ratE.

Alex

I'd have to take a substantial cut to do below that.

Alexland

grocerjack wrote: »

I'd have to take a substantial cut to do below that.

If you are earning so much that even putting £40k pa into a pension doesn't get your taxable income down to under £50k next tax year then it might be worth getting some independent financial advice?

Alex