Discussion
I'm employed by Tesco and have the opportunity to invest some of my monthly wage into some shares, i'm only looking at putting in £50 but this is taken out before tax is paid on it.I'm not really clued up on this type of thing so just wanted to ask.
Also later this year I can take up another incentive where I can again invest £50 p/m into tesco shares, but with this one Tesco guarentees your investment wont lose so its kind of a good way of putting money aside for a rainy day, the period is for 3 or 5 years
Any advice appreciated
Also later this year I can take up another incentive where I can again invest £50 p/m into tesco shares, but with this one Tesco guarentees your investment wont lose so its kind of a good way of putting money aside for a rainy day, the period is for 3 or 5 years
Any advice appreciated
VTECMatt said:
Pay as much as you can you will normally do well from it 
+1. Hear hear. You should make money. If you're worried about the fact that the share price does fluctuate, google "pound cost averaging". Basically your £50 buys more when the price has dropped so really you're still neutral. We have the same schemes at my employers - share purchase scheme every month before tax, plus another opportunity to subscribe to a 3 year purchase where you can get the money back if the share price is below the option price. In the first, you're effectively buying the shares at a discount equivalent to your highest tax rate, and in the scheme that ended a few months ago now, the share price had almost doubled over the 3 years- it could go the other way of course, but we were guaranteed nominal interest on the money we had invested over the 3 years.
If I was you, I would max out on both.
If I was you, I would max out on both.
Stegel said:
We have the same schemes at my employers - share purchase scheme every month before tax, plus another opportunity to subscribe to a 3 year purchase where you can get the money back if the share price is below the option price. In the first, you're effectively buying the shares at a discount equivalent to your highest tax rate, and in the scheme that ended a few months ago now, the share price had almost doubled over the 3 years- it could go the other way of course, but we were guaranteed nominal interest on the money we had invested over the 3 years.
If I was you, I would max out on both.
The first scheme that you mention where you purchase shares each month exposes you to the risk of the share price falling. Also, I'm not sure but you may have to hold the shares for a certain period of time before you can sell them without having to pay back tax that you've saved. And if you leave the company, there may also be tax implications. So it's not necessarily a good choice for all people.If I was you, I would max out on both.
The second scheme you mention, where you save the cash for several before choosing to exercise an option to buy shares doesn't have the risks that I mention above and I think is the better of the two schemes.
Thanks guys, the 1st scheme I've entered I think I'll just leave at the £50 I'm currently paying in, but the 2nd one which I've yet to enter I've done a bit more digging into and I can only pay in a max of £50 per month for either a 3 or 5 year term, my mrs also works for Tesco and we will both join this scheme and we don't really have anything to lose on it, so does seem a no brainer
Mobile Chicane said:
What about the long term prospects for Tesco which would impact on your investment?
I personally don't rate these, however please feel free to disagree. It's your money.
After hearing what the Tesco Chairman said the other day, I'm not overly confident in how the share price will go, but it's not a major amount of money so the risk isn't massiveI personally don't rate these, however please feel free to disagree. It's your money.
fandango_c said:
The first scheme that you mention where you purchase shares each month exposes you to the risk of the share price falling. Also, I'm not sure but you may have to hold the shares for a certain period of time before you can sell them without having to pay back tax that you've saved. And if you leave the company, there may also be tax implications. So it's not necessarily a good choice for all people.
The second scheme you mention, where you save the cash for several before choosing to exercise an option to buy shares doesn't have the risks that I mention above and I think is the better of the two schemes.
True, although given I'm buying them before paying top rate tax, there's a hell of a fall needed before I'm in negative territory. You're correct on timing too - you need to hold for 5 years before they're free of clawback tax in the event of a sale.The second scheme you mention, where you save the cash for several before choosing to exercise an option to buy shares doesn't have the risks that I mention above and I think is the better of the two schemes.
And yes, the second scheme is undoubtedly safer and not liable to be tripped up by moving employer.
fandango_c said:
The first scheme that you mention where you purchase shares each month exposes you to the risk of the share price falling. Also, I'm not sure but you may have to hold the shares for a certain period of time before you can sell them without having to pay back tax that you've saved. And if you leave the company, there may also be tax implications. So it's not necessarily a good choice for all people.
The second scheme you mention, where you save the cash for several before choosing to exercise an option to buy shares doesn't have the risks that I mention above and I think is the better of the two schemes.
True, although given I'm buying them before paying top rate tax, there's a hell of a fall needed before I'm in negative territory. You're correct on timing too - you need to hold for 5 years before they're free of clawback tax in the event of a sale.The second scheme you mention, where you save the cash for several before choosing to exercise an option to buy shares doesn't have the risks that I mention above and I think is the better of the two schemes.
And yes, the second scheme is undoubtedly safer and not liable to be tripped up by moving employer.
a4cabrio said:
I think the max is £50 for the 2nd one, i'm sure thats what ive read somewhere.
Are you also in a tesco scheme??
No, I'm not. The numbers quoted are government maximums for the two schemes you describe. Looks like your employers have set their own limit below the goverment one.Are you also in a tesco scheme??
I'm in similar schemes at my place, and have maxed out my allowance.
In the save-as-you earn scheme you've got a guarantee of no loss as you can choose at the end whether to buy the shares or have you money (plus a small bit of interest) back. If the share price goes in your favour you'll make a lot more than you would in a savings account.
The other scheme you buy at a discount as it comes out of your pre-tax salary so you save at least 20% on the share price. They have to stay in the scheme for five years to stay free of income tax. At the end of that five years each month a batch of shares will become available to you. In the meantime, if the share price goes down a bit you end up buying more shares so that when the price does rise again you'll benefit. In the meantime you'll also be earning dividend on the shares which can be re-invested in the scheme to buy more shares with.
All above is just my opinion as a layman of course, but I think they are nice little perks.
JungleJim said:
No, I'm not. The numbers quoted are government maximums for the two schemes you describe. Looks like your employers have set their own limit below the goverment one.
I'm in similar schemes at my place, and have maxed out my allowance.
In the save-as-you earn scheme you've got a guarantee of no loss as you can choose at the end whether to buy the shares or have you money (plus a small bit of interest) back. If the share price goes in your favour you'll make a lot more than you would in a savings account.
The other scheme you buy at a discount as it comes out of your pre-tax salary so you save at least 20% on the share price. They have to stay in the scheme for five years to stay free of income tax. At the end of that five years each month a batch of shares will become available to you. In the meantime, if the share price goes down a bit you end up buying more shares so that when the price does rise again you'll benefit. In the meantime you'll also be earning dividend on the shares which can be re-invested in the scheme to buy more shares with.
All above is just my opinion as a layman of course, but I think they are nice little perks.
Thankyou, I understand it all better after reading your post. My partner also works at for Tesco, so we'll both go into the 2nd one with as much as we can put in. With the 1st one we'll leave it at the £50 a month and see how it pans out.I'm in similar schemes at my place, and have maxed out my allowance.
In the save-as-you earn scheme you've got a guarantee of no loss as you can choose at the end whether to buy the shares or have you money (plus a small bit of interest) back. If the share price goes in your favour you'll make a lot more than you would in a savings account.
The other scheme you buy at a discount as it comes out of your pre-tax salary so you save at least 20% on the share price. They have to stay in the scheme for five years to stay free of income tax. At the end of that five years each month a batch of shares will become available to you. In the meantime, if the share price goes down a bit you end up buying more shares so that when the price does rise again you'll benefit. In the meantime you'll also be earning dividend on the shares which can be re-invested in the scheme to buy more shares with.
All above is just my opinion as a layman of course, but I think they are nice little perks.
Thanks again
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