Withdraw from saving scheme and reinvest again?

LW7

Hi all,
 Wanted to sense check something here with you if I may.

My employer offers a yearly savings scheme whereby you save a set amount each month for 3 or 5 years, and at the end  you can either take your cash back risk free, or use it to buy company shares at an option price set when you entered the scheme.

In 2019, the saving scheme gave an option price of £2.84. At the time of joining the share price was £3.40, and rose to roughly £4.00 by the end of the year. 
I entered the scheme and invested £50 per month, knowing in 3 years I could use the cash to buy shares at £2.84 each and sell them for the market rate (or hold for 6 months ad sell). Which at the time, looked like a nice yield over 3 years. 

In 2020, our scheme is open again and the option price is £2.20, as our current share price (post stock market crash) is hovering at £2.90. 

We've just replaced our CEO again and a new direction, post COVID-19 and post Brexit decision set up awaits, so there is no telling what our share price will be. Although market articles state for a mid to long term, our company looks great value, considering.

My decision i'm toying with is:

Should I drop out of the 2019 scheme, and double up in the 2020 scheme @ £100 per month. The option price is 0.64p better per share at current rate, but all market indications are that we will rise again bit by bit  over the next 2-4 years, meaning it would make quite a bit more difference in 3 years time in terms of the additional benefit.

The only draw back I see here is that I'd have to wait another year before I can get the cash (as I'm effectively delaying my scheme maturity by a year). Which is OK as I don't need the cash at the moment. 

Is there anything obvious I'm missing here? 

[Deleted User]

Hi,

keep the 2019, start the 2020, you may get another offer in 2021, then you will have them maturing in 2022/23/24, at a good profit, hopefully.

LW7

[Deleted User] said:

Hi,

keep the 2019, start the 2020, you may get another offer in 2021, then you will have them maturing in 2022/23/24, at a good profit, hopefully.

Thank you. I think that's kind of where I am, it'd be nice to have one every day as we move forwards. The gains could be more, but I'd had to wait another year, and in-fact I could use the money and re-ivest perhaps in something else and diversify a little bit. 

bowlhead99

LW7 said:

[Deleted User] said:

Hi,

keep the 2019, start the 2020, you may get another offer in 2021, then you will have them maturing in 2022/23/24, at a good profit, hopefully.

Thank you. I think that's kind of where I am, it'd be nice to have one every day as we move forwards. The gains could be more, but I'd had to wait another year, and in-fact I could use the money and re-ivest perhaps in something else and diversify a little bit. 

Although you think the 2020 one is better because of the lower option price, it may ultimately be worse because by the time it matures (a year later) the market could be worse in 2023 than it is in 2022.  Lots of unknowns. But the good thing is, if the share price is below the option price you would simply not exercise the option and then get your money back. So generally makes sense to commit a decent chunk of your savings to this sort of scheme, if it won't give you month-to-month cashflow problems.

If you plan to stick around in the company, keep the one you have (as even if the share price is underwater in 2022 and you get no profit, it won't hurt to have £3k+ of cash savings built up; the money will help you fund whatever schemes are available to you at that point.  And for now if you can scrape together another £100pm, split it 50:50 between the 3 and 5-year versions of the 2020 offers. You will then have schemes maturing in 2022,23 and 25; next year you can hopefully add something for 2024 and perhaps 2026 too. Your pay would hopefully tick up from time to time, giving you more capacity to make contributions within the limits allowed.

LW7

bowlhead99 said:

LW7 said:

[Deleted User] said:

Hi,

keep the 2019, start the 2020, you may get another offer in 2021, then you will have them maturing in 2022/23/24, at a good profit, hopefully.

Thank you. I think that's kind of where I am, it'd be nice to have one every day as we move forwards. The gains could be more, but I'd had to wait another year, and in-fact I could use the money and re-ivest perhaps in something else and diversify a little bit. 

Although you think the 2020 one is better because of the lower option price, it may ultimately be worse because by the time it matures (a year later) the market could be worse in 2023 than it is in 2022.  Lots of unknowns. But the good thing is, if the share price is below the option price you would simply not exercise the option and then get your money back. So generally makes sense to commit a decent chunk of your savings to this sort of scheme, if it won't give you month-to-month cashflow problems.

If you plan to stick around in the company, keep the one you have (as even if the share price is underwater in 2022 and you get no profit, it won't hurt to have £3k+ of cash savings built up; the money will help you fund whatever schemes are available to you at that point.  And for now if you can scrape together another £100pm, split it 50:50 between the 3 and 5-year versions of the 2020 offers. You will then have schemes maturing in 2022,23 and 25; next year you can hopefully add something for 2024 and perhaps 2026 too. Your pay would hopefully tick up from time to time, giving you more capacity to make contributions within the limits allowed.

Thank you for your time in putting a response together.
AFAIR they offer 3 and 5 years, every year, so next year I could enter another for £100 or (as you say wage increase dependant) more, which in 2 years time from now and then every year, I would get a lump sum once a year just before Christmas for either what I put in, or for more.