Sainsburys Sharesave 2021 - Is it worth optinging for it?

mazibee

Sainsburys is offering Share Save scheme for 2021 at 161p per share ( 20% discount which comes to 25% profit on purchase price)

Maximum £250 per pay period for three years:  3years  x 12 months  x 250 per month  = £9000 in three years

Sainsburys Share todays closing  =  209.40,  52 Week Low = 165.22, 52 Week High  = 228.44

The share is trading 9% below its 52W High and 21% above its 52 W Low

The scheme offers a 20% discount which comes  25% profit on purchase price.

Interest rates are too low, so instead of opting the scheme,  if money is kept in bank account, the money  will be devalued due to inflation.

To me the only advantage of the scheme is that in case of reduction in share price one gets the orininal amount back, in case the price stays the same or increase its a plus point

What can me the best use of that £9000.00 if invested else where for three years for maximum growth/ capital gains?

Sainsburys also owns Argos now and they are closing 80% standalone Argos stores, is it worth investing in Sainsburys shares?

Is it worth applying to Sainsburys Sharesave Scheme and bounding the money for 3 years or just buy £9000 worth of Sainsbury shares at prevailing rates.( I know that investing in single share is riskier) or invest somewhere else (buy something else)

I have no idea after three years how one can sell the shares or can these shares be transfrred to S&S ISA, what will happen to the dividends of these shares  bought through sharesave schemes during these three years.

Suggestions / comments from seniors / experienced will be extremely appreciated as deadline is approaching soon.

blenz101

Well the only thing you shouldn't do it buy the exact same shares in the open market if you are able to obtain them via your staff scheme at a discount at guaranteed future price (i.e. no capital lost).

If you have that amount of money available over and above any other financial commitments then it is a low risk way of investing in the future of the company you work for.

In the past these schemes have also taken the deductions via salary sacrifice so their have been further tax savings, you would need to see the terms of the offer to see how that is being treated in this specific instance.

DireEmblem

Difficult to say as no-one can accurately forecast the future.  Certainly not if this is your only savings as the risk is much higher in a single stock.  

History tells us competition is increasing for supermarkets - think the Lidl's or Aldi's, and Ocado's online deliveries.  Similarly with the current economic environment, Sainsbury's is one of the more premium supermarkets in the UK.  I'm not entirely sure that helps make it best placed over the next few years with Covid recovery.  Thats just my opinion, but we're rather short on time to perform any meaningful research or due diligence.  That being said, if it were me, I would be tempted to put up to 10% of my monthly savings into this.  Brokers don't seem to rate it much either - https://www.lse.co.uk/ShareBrokerTips.asp?shareprice=SBRY&share=Sainsbury-J 

Three years is also quite a short time investment wise.  I think the average return from a cheap FTSE All World Index fund is about 8%, but that's long term.  If you don't already have investments, make sure you have an emergency fund, and then bonus bag some of the newcomers first.

Nutmeg currently offer £60 for an investor that deposits £500 and then £100 a month for a year through Quidco.  Thats a 3.5% head start not counting for fees.

Actually, L&G have a similar offer but with £110 through Quidco.

Vortigern

You don't buy the shares until the 3 years saving scheme is completed, so if the share price falls, you don't buy and you've lost nothing except the interest you could have earned on £250/month. You don't get dividends during the 3 years because you don't own the shares.

After 3 years you can sell the shares immediately, or transfer them to an ISA, subject to the ISA limit at that time.

DireEmblem refers to investment risk in single company shares and the prospects for supermarkets. There is no investment risk until you buy the shares in 3 years time, at which point it would be wise to trade the shares for a more diversified investment.

I've done many sharesaves before and never regretted it. In your position I would subscribe to this sharesave scheme. Go for it.

[Deleted User]

Sharesave is risk free investment with good potential upside. You are 20% ahead at the start. 
I would endorse Vortigern’s recommendation. Go for maximum investment; if you can’t afford it all yourself, share the benefit.

md258

Go for it. It is high risk investing (single company), but with a large amount of the risk removed as you don't buy if the share price has fallen and you sell it all as soon as possible for a profit if the share price has risen.

The only caveat I would say is if you're planning to leave within the scheme timeframe, what happens to your money? I assume you just get it back, but worth checking.

[Deleted User]

Sharesaves I was in had an option to bail out at par at any time (useful to move to a newer scheme if price falls) and in the event of redundancy there may be a provision to continue saving for six months. 
End of term selling will be a simple process but don’t be in a rush to turn an instant profit; one of my three year option shareholdings is now worth a hundred thousand pounds, which is nice.

[Deleted User]

I'd say go for it. I do these where I work. It's not risky as others have said. If the share price falls below your option price you get your money back.
At the end of the scheme you have options. Pity you don't get the little savings bonus at the end now though.

AlanP_2

Disagree with ZPW on the point about hanging on to them once purchased at a discount. Would you buy that many shares in 1 company on the open market at that point in time, at the current price because you thought they were a lijkley great investment?

If the answer is NO then sell them and recycle the money through a more diversified spread of global funds.

Back in the late 80s / early 90s I worked for Digitasl (or DEC), the 2nd largest IT company in the world behind IBM at the time with 100k+ employees. They ran a sharesave scheme and lots of the old timers had held on to their shares for years and were showing vast paper profits and looking forward to retirement and a life of luxury.

Company went downhill, as did share price, eventually sold at a very low price per share along with a massive redundancy program. Lots of them ended up out of work and struggling to get a new job due to age and IT market conditions and realised a large loss on their shareholdings. Too many eggs in one basket! 

Dandytf

Vortigern said:

You don't buy the shares until the 3 years saving scheme is completed, so if the share price falls, you don't buy and you've lost nothing except the interest you could have earned on £250/month. You don't get dividends during the 3 years because you don't own the shares.

After 3 years you can sell the shares immediately, or transfer them to an ISA, subject to the ISA limit at that time.

DireEmblem refers to investment risk in single company shares and the prospects for supermarkets. There is no investment risk until you buy the shares in 3 years time, at which point it would be wise to trade the shares for a more diversified investment.

I've done many sharesaves before and never regretted it. In your position I would subscribe to this sharesave scheme. Go for it.

Interested to know about workplace sharesave -Non Sainsbury's.
If after 3 years share price is lower -Is it an option to purchase anyway and self make up difference.
How do purchased shares get passed over to an Isa account, is it all workplace schemes and all Isa's (In Limit).
t.I.a.
OP is your Sainsbury's sharesave via employers or open to everyone.
Thanks

mazibee

Dandytf said:

Vortigern said:

You don't buy the shares until the 3 years saving scheme is completed, so if the share price falls, you don't buy and you've lost nothing except the interest you could have earned on £250/month. You don't get dividends during the 3 years because you don't own the shares.

After 3 years you can sell the shares immediately, or transfer them to an ISA, subject to the ISA limit at that time.

DireEmblem refers to investment risk in single company shares and the prospects for supermarkets. There is no investment risk until you buy the shares in 3 years time, at which point it would be wise to trade the shares for a more diversified investment.

I've done many sharesaves before and never regretted it. In your position I would subscribe to this sharesave scheme. Go for it.

Interested to know about workplace sharesave -Non Sainsbury's.
If after 3 years share price is lower -Is it an option to purchase anyway and self make up difference.
How do purchased shares get passed over to an Isa account, is it all workplace schemes and all Isa's (In Limit).
t.I.a.
OP is your Sainsbury's sharesave via employers or open to everyone.
Thanks

I have received the letter few days back in post and I assume that its only to the employees working for Sainsbury's and is not open to everyone.