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BT Sharesave

Investment discussion for beginners. Why you should invest your money, get help getting started
Scott0966
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BT Sharesave

#310613

Postby Scott0966 » May 21st, 2020, 12:26 pm

Does anyone have any suggestions as to what they would do about investing in a BT sharesave scheme. A family member has just started working at BT and has the opportunity to join the 2020 scheme. There is a 3 yr (10% discount) and a 5yr (20% discount) option based on the share price past week (110p) and the maximum that can be invested is £300 a month across the schemes that start each year.
Her net income is about 1400 at the moment and she lives at home. She's pretty good at saving and is quite frugal so could afford the full amount and is aware of the commitment and loss of that income for other things.

Would you put all 300 now in the 5yr scheme for instance, or maybe 100 in each of the next 3 years to spread the opportunity to gain - I suppose I'm wondering if there's anything obvious I'm missing about a strategy.

We're aware that the BT price may continue to dip so the worst case is the loss of gain / income from an alternate investment. I'll go through some other tracker type options or for instance the gov't house deposit schemes.

1nvest
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Re: BT Sharesave

#310671

Postby 1nvest » May 21st, 2020, 2:23 pm

BT is presently a pension scheme with a Telco business strapped on. However it is evolving. Old (high cost) pension schemes are seeing those on historic high pensions dying and being replaced with lower pension liabilities, and its retained its dividends to fund upgrading its network (to 5G) so it will borrow less as part of that upgrade. Given the recent Corona declines, and price declines due to having cut dividends its share price is potentially relatively low and could do (very) well once it has that network in place (perhaps over the next 5 years). If you can also secure a 20% discount on top of that - personally I'd max out the 5 year choice. More so given that more often you do better lumping in as soon as funds are available rather than cost averaging in.

Once it matures, sell and use the proceeds to buy into a Index fund. The idea that workers are also shareholders is nice, but leads to concentration risk, where if the company hits bad times you might not only see the loss of your job, but were also heavily invested in the then lower share price and could even see your occupational pension lost/hit as well.

Just to clarify I don't work for BT, do hold some shares in it via a Index fund, and the above is just my personal opinion.

tjh290633
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Re: BT Sharesave

#310780

Postby tjh290633 » May 21st, 2020, 8:27 pm

1nvest wrote:Once it matures, sell and use the proceeds to buy into a Index fund. The idea that workers are also shareholders is nice, but leads to concentration risk, where if the company hits bad times you might not only see the loss of your job, but were also heavily invested in the then lower share price and could even see your occupational pension lost/hit as well.

Just to say that I concur with that comment. I had several friends who had worked for GEC and had a lot of shares in the company, which became effectively worthless after the Marconi event. Also a lot of people who had worked for ICI, who paid their annual bonuses in ICI shares, had a big proportion of their wealth tied up in them. Hopefully they got Zeneca, now AstraZeneca shares along the way.

TJH

AleisterCrowley
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Re: BT Sharesave

#310786

Postby AleisterCrowley » May 21st, 2020, 8:41 pm

Without knowing the details of the current scheme I can't comment on this particular case, but when I worked for BT (indirectly) many years ago it was an absolute no-brainer.
If the share price dipped we could just get the money back (with interest/bonus IIRC) when the scheme matured
The risk starts when you have the shares, and as mentioned you can flog 'em on day one and put the cash into a cheap tracker
Mine all ended up in a Halifax ISA (I forget the mechanics) and even today my HSDL ISA account is called a 'BT ISA', despite being full of other stuff bought later

1nvest
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Re: BT Sharesave

#310787

Postby 1nvest » May 21st, 2020, 8:42 pm

From a quick search it looks like a cert in this low interest rate era.
The company's current Sharesave scheme allows you to save for three or five years. At the end of the period you can either buy BT shares at a discount to the market price at the start of the plan – 10pc for the three-year plan, 20pc for the five-year – or get your money back.

Haven't looked any deeper but suspect that you might also be able to cancel the sharesave scheme, so perhaps also the opportunity if a later years offer was better you might (???) be able to scrape your current version and start with the later better offer.

Scott0966
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Re: BT Sharesave

#311084

Postby Scott0966 » May 22nd, 2020, 3:23 pm

Thanks everyone - useful comments.

We're thinking of effectively drip feeding in, maybe £100 into each of the next 3 years into the 5 yr scheme. That gives her a bit of flexibility in case the money is needed upfront.

I'll look into whether she can max out this year and then reduce the amount in future years - the total investment she can put in is £300/month across all the schemes and it looks like there is one each year. I see in a few places that the view is changing and the long slide will start to turnaround but timing it is obviously difficult, hence the dripping in.
Good point about what to do at the end to spread the risk - we held onto some Halifax shares some years ago so know how easy a 'single bet' can disappear

It will give her something to learn anyway about sensible long term investing - at least she's picked up that given interest rates this is a no lose bet against a bank account.

dealtn
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Re: BT Sharesave

#311095

Postby dealtn » May 22nd, 2020, 3:46 pm

Scott0966 wrote:Thanks everyone - useful comments.

We're thinking of effectively drip feeding in, maybe £100 into each of the next 3 years into the 5 yr scheme. That gives her a bit of flexibility in case the money is needed upfront.

I'll look into whether she can max out this year and then reduce the amount in future years - the total investment she can put in is £300/month across all the schemes and it looks like there is one each year. I see in a few places that the view is changing and the long slide will start to turnaround but timing it is obviously difficult, hence the dripping in.
Good point about what to do at the end to spread the risk - we held onto some Halifax shares some years ago so know how easy a 'single bet' can disappear

It will give her something to learn anyway about sensible long term investing - at least she's picked up that given interest rates this is a no lose bet against a bank account.


Maybe ensure the extra £200 in months 1-12 and the £100 in months 13-24 get saved somewhere too as part of the "investing habit".


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