I work for a very large construction company. I have the option of a sharesave scheme, where i save an amount of money every month for 5 years. Then when it matures I can buy share at a price which is set now. This price is currently about 20% below the current price regardless of what happens to the share price.

Is this a good idea? Seems to me like it is.

Can't go wrong really.
If it's the same as our scheme you don't have to buy the shares if they're in the gutter in 5 years, and you get a reasonable interest rate if you don't want to but or leave before the 5 years.

It sounds like a bit of a gamble to me.

How do you know what the share price is likely to be in five years? Who would have guessed five years ago that the financial landscape would look like it does now? You may well end up paying substantially more for the shares in five years than they are worth (unless they're virtually worthless now, in which case investing in the company is probably risky anyway).

Also, you'll have all your eggs in one basket. If your company goes bust you'll not only lose your job but you'll lose your savings too! I work in construction and know just how quickly even major players disappear. If we end up with a new Government next month then construction spend in the UK could well be decimated and lots of companies will be at risk.

Schemes like this are often offered to employees because it makes you less likely to leave (what happens if you want to leave in the next five years?), they get some free investment, from their employees, and you're more likely to work hard as you're protecting your own investment.

I'd get some advice from an independent financial advisor, I'm just a simple Accountant.

It sounds like a bit of a gamble to me.

How do you know what the share price is likely to be in five years?

It doesn't matter – he can elect not to buy the shares when the scheme matures

True, although I'd still want some kind of protection should the company go bust, it'd be a bit of a kick in the teeth if you lost your job and lost your savings.

I think there's more in it for the Company than the employee. I bet the interest rate they're giving employees is way less than their cost of capital.

You'd think construction will be doing better in 5 years.

I was reading about these schemes recently and some of them are very attractive indeed. Look into the T & C's and if it looks good then you're onto a good thing. Kier by any chance?

I think there's more in it for the Company than the employee. I bet the interest rate they're giving employees is way less than their cost of capital.

I thought they were usually run by an external company rather than in-house? & I'm pretty sure there's safeguards for the money

You usually can't go wrong with these types of schemes.

And if/when you elect to buy the shares, sell them straight away (there is usually a 'deal') – otherwise when the company goes pop and you lose your job, you'll lose your savings also.

Many of you are right, the money is kept seperate from the company, I think RBS is the bank, the share scheme is run by a seperate company again.

So I pay 50 pounds a month for 5 years, 3 grand in total. I think I only get about 1.5% interest so it works out at about 3150. Now in 5 years I can opt to buy shares at the rate set today. The company is the biggest construction company, and is classed as a safe bet by most investors.

I can access the moeny at anytime and stop paying at anytime, however I will not get the 1.5% so the worst I will get the moeny I put into it.

And it's not putting all my eggs in one basket, I still have my pension and other savings etc..

the money is kept with a bank/building society or some intermediary…
Your company only affects the share price – at the beginning or at maturity . Your not obliged to buy the shares just because your in the scheme.

You don't lose your money if the company goes t1ts up. If the back goes bust you'll be covered by the FSA.

Nothing to lose.

As others have said is very safe, the way ours (and most others I suspect) works is the money is held by Yorkshire Bank
(nice and tightfisted I like 😉 )
The share price you buy at is set at the begining of the 5 year period, you then have a set amount you pay into the pot every month. At the end of the term you can buy shares at the pre agreed price from your pot of money or you can take your money with whatever interest was agreed.

Example for me:
I am paying £150 a month in over 5 years = £9000 (thats my pot)

The issue price per share at the beginning of the term was £9.97

So that buys me 903 shares, only they are now worth £18.32 which makes my pot now worth £16543 😉 there will be commision to pay when I sell them but I'm still quite happy.

I managed to lose money on one! It was on a 12 month cycle, the company waited until the date employees had to decide to buy the shares before releasing bad news – fekkers!

'Can't Lose'

I have benefited from company sharesave schemes for umpteen years now, IME you cannot lose – the failsafe is that at the end of the term you get your money back (plus interest). I have never resorted to that as our shares have consistently done pretty well… 😆

Mudshark – feel for you. That's a pretty low thing to do…

You 'almost' can't go wrong, you can get the money out with interest at the end if the share price has gone down. There is some risk in taking the share options at the end of the scheme and holding them rather than selling, but I've found it to be minimal.

My wife works for the same company and we took a 6 figure sum out of the last one that matured, that was for £15k invested over 5 years each: £250 a month!

If the shares go down over the first year I always cancel and start a new one. I did this with the last release, that is now sitting at £24K for £15K invested

🙂

The money you put in is before tax as well.

But any profit from the share sale is liable for CGT.

I think its a great way to save, but sell my shares as soon as I get them.

As I have enough already "invested" in the company I work for because I work for them… if you catch my drift

Go for it, my employer does the same. We can invest upto 250 per month over a set 3 or 5 year period. You get the option price fixed before you buy your shares (usually 20% discount) as Ropey said, they are from your gross salary, when they mature flog them off in such a way you don't have to pay CGT or have a cash/shares ISA. My employer also pays us 5% interest on our monies. The best way to do it mathematically is do it every 3 years. We also do a share match scheme so for every (£200) a month I but ~ 100 shares and they give me 200 shares.

Basically do it you will not loose and it's an easy way to acrue decent stashes of cash!

As above, virtually impossible to lose.

I pay into a couple, the main one was £100 over 5yrs, total £6000. They bump it up to £6800ish for staying in the scheme.

My option price was something like £2.79, shares currently at around £2.20, but it doesn't matter as I'll just take the £6800 in a few months time when it ends. (shame its already been spent…)

As mentioned above, the only risk is when you opt to take the shares when they are worth more than the fund. You can take the shares and ask the holding bank (Halifax for me) to sell them in one big sale (or take the shares and keep them). The sale is something like 30 or 60 days from when you give your request. Once you've requested them to be sold, you have to sit tight. If the share price suddenly skydives, you can't retract your request, they will be sold regardless. So if the shares are only worth a little more than the fund, it can make sense to just run with the cash rather than take the shares and risk the price dropping before the sale.

The second one I started a few months ago, the share price had dropped and the option price was just 88p (ish) so I cancelled the last two years that started at around £3.00 and took my money, this free'd up my allowance (max £250 can be paid into any number of schemes) and lumped it all into the new scheme. Its got four years to go, but at the current price I've already tripled my money. £150*60mths=£9000 value, if the share price is the same as it is now that'll be £27,000 thank you 🙂

If you can spare the cash you'd be a fool not to join the scheme 🙂