Good rule of thumb on how much to invest/save?

steampowered

"Save as you earn" share schemes are often highly beneficial, as they are a one-way bet that allow you to benefit if the share price increases, but you don't have to proceed if the share price drops.

It's a bit like going to a betting shop - except that you lose no money if your bet loses, but you make money if your bet wins. 

That's a no brainer, if you have a scheme like that you should make the most of it. Once you have the shares you should sell them as soon as possible in favour of a more diversified investment.

Thatsthespirit

MDMD said:

JohnWinder said:

Thatsthespirit said:

Hiya, so the company is a utilities company and a bonus of this scheme is if the shares ever drop you just get back what you’ve put in. You can’t lose basically - at worst it’s just used as a savings account. 

Yes, I can see why that would give one some comfort. But keep in mind that General Electric was a massive conglomerate and an investment that was above reproach for decades, but its price fell about two thirds in the last 4 years or so.

Getting just your money back is like a bond with zero yield (that's Treasury level yield these days, although you'd get any value increase); and where would employees with equity stand in the line of other creditors like banks or bond holders if things went bad enough?  Who knows, maybe your contract says, but does what you're getting compensate for the loss of diversification? Perhaps.

I suspect it is a just a standard Save as you earn scheme where you pay from post tax earnings into a pot (held in a bank account your name) that at the maturity you have an option to either buy shares at a predetermined discounted option price (which you can immediately sell) or if the current price is below the option price you just get the cash back. You don’t run any financial risk (other then the funds attract 0% interest) as you don’t own the shares until maturity and can buy and sell on one day.

The plans are usually run by organisations such as Equiniti or Yorkshire Building Society and you will also probably be able to cash them in at any point. I did the same when my employer’s share price halved in March and was below the option price.

https://www.gov.uk/tax-employee-share-schemes/save-as-you-earn-saye

https://www.ybsshareplans.co.uk/employee/index.html

https://www.shareview.co.uk/4/Info/Portfolio/default/en/home/Pages/Home.aspx?wp

This is exactly this, thank you for explaining. Ours is done through Equinti.

I have one open already at £50 per month over 3 years. You are allowed a maximum of 3 open (3 or 5 years) with a maximum input of £500. I’m tempted to set another 3 year up at £200. 

In regards to pension I am only putting 4.5% in at the moment (maximum is 7.5%) 

Albermarle

In regards to pension I am only putting 4.5% in at the moment (maximum is 7.5%) 

It is unusual for there to be a maximum on your contribution , especially at the the relatively low level of 7.5%.

The main priority is always to contribute enough that you get the maximum employer contributions possible , as this is free money.

Thatsthespirit

Albermarle said:

In regards to pension I am only putting 4.5% in at the moment (maximum is 7.5%) 

It is unusual for there to be a maximum on your contribution , especially at the the relatively low level of 7.5%.

The main priority is always to contribute enough that you get the maximum employer contributions possible , as this is free money.

The company doubles whatever we put in, I think that’s why. It’s an excellent incentive. So if I put 7.5% in... the company will put 15% in. 

Alexland

Thatsthespirit said:

The company doubles whatever we put in, I think that’s why. It’s an excellent incentive. So if I put 7.5% in... the company will put 15% in. 

So don't you kick yourself for every payday that you didn't claim this free money?

csgohan4

try and max out pension/LISA first then move onto other tax wrappers, ISAs. 

you could even consider salary sacrifice if you have enough to spare as well, The state pension is not very much to live on

However ensure you have decent amount of emergency fund first, no point in throwing everything you have and you have nothing for emergencies. 

NottinghamKnight

Albermarle said:

In regards to pension I am only putting 4.5% in at the moment (maximum is 7.5%) 

It is unusual for there to be a maximum on your contribution , especially at the the relatively low level of 7.5%.

The main priority is always to contribute enough that you get the maximum employer contributions possible , as this is free money.

It's not that unusual to have a maximum though I've historically made additional payments to a sipp. I changed jobs around six months ago to work for a large listed company with smart pension and they confirmed that maximum employer contribution was 7.5% and maximum employee contribution was 20%. 

Albermarle

Thatsthespirit said:

Albermarle said:

In regards to pension I am only putting 4.5% in at the moment (maximum is 7.5%) 

It is unusual for there to be a maximum on your contribution , especially at the the relatively low level of 7.5%.

The main priority is always to contribute enough that you get the maximum employer contributions possible , as this is free money.

The company doubles whatever we put in, I think that’s why. It’s an excellent incentive. So if I put 7.5% in... the company will put 15% in. 

So every month you are refusing 6% of your salary as free money offered by your employer .

Eco_Miser

Albermarle said:

Thatsthespirit said:

Albermarle said:

In regards to pension I am only putting 4.5% in at the moment (maximum is 7.5%) 

It is unusual for there to be a maximum on your contribution , especially at the the relatively low level of 7.5%.

The main priority is always to contribute enough that you get the maximum employer contributions possible , as this is free money.

The company doubles whatever we put in, I think that’s why. It’s an excellent incentive. So if I put 7.5% in... the company will put 15% in. 

So every month you are refusing 6% of your salary as free money offered by your employer .

It may be free money, but you don't get it, or the money you put in, until you turn 55, or 57, or whatever minimum retirement age is when you get there.  Buying a house and other more immediate needs take priority.
This is not to say don't save in a pension, but don't let the lure of free money cause you to lock away so much of your income that you have cash flow or affordability problems.

Eco_Miser

Thatsthespirit said:

Hey , I’ll try and keep this short. 

For example, 
£1700 monthly take home...
£1000 mandatory outgoings (includes food, haircut)
Leaves with £700 essentially for leisure/savings/car repairs etc but how much of that is best to put away without selling myself short?
ive just paid off my debts and long terms plans are really just to buy a house - looking at 3-5 years. Our company has a shares scheme im looking to invest as much as possibly in 

My rule of thumb is save whatever you don't spend, and spend only what you need to.  In this context you need to spend sufficient on leisure that you don't feel trapped in a work-sleep-eat cycle, but a lot of leisure pursuits can be low cost.