Invest in Shares or increase AVC

C

Chantilly

Registered User
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Dear All,

My company is opening a shareplan for employees to avail of; I am wondering which option is best contributing more to PRSA (currently 6% max matched by employer) via AVC or join the share options? Thank you for your expert guidance.
 
Well we'd need to know more about the share option... But generally speaking it is not a great idea to invest a large portion of your savings in the company you work for, as if things go wrong you will get hit double and furthermore it is a very concentrated investment.
 
The share plan gives the option to buy the shares at a fixed price in 12 months by contributing to a fixed monthly amount deducted from your net salary from next month. Hope that answers your query and thank you for the inputs.
 
Chantilly said:
The share plan gives the option to buy the shares at a fixed price in 12 months by contributing to a fixed monthly amount deducted from your net salary from next month. Hope that answers your query and thank you for the inputs.
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Not really...
- Is this a publicly quoted company?
- What sector does the company operate in?
- Will you get the shares at a significant discount to the market price?
- What happens if the shares fall say 20% during the 12 month period?
- How long will it take until the shares vest in you and you can dispose of them?
- What are the arrangements for receiving and disposing of the shares?
- How are the shares treated for tax purposes?
 
Agree with Jim, don't rely on the same company for your salary and your savings. Doesn't matter if you work for Google or Amazon.

There are lots of other companies you can access through investing in an index fund and not be concentrated on one stock.

It will also stop you from obsessively watching the share price of your company stock every day like everyone with share options does.


Steven
www.bluewaterfp.ie
 
Jim2007 said:
But generally speaking it is not a great idea to invest a large portion of your savings in the company you work for, as if things go wrong you will get hit double and furthermore it is a very concentrated investment.
Click to expand...

I would absolutely agree with this, however,

Jim2007 said:
- Will you get the shares at a significant discount to the market price?
Click to expand...

This might put things in a very different light.
 
My view is that it really depends on the details of the share plan. If you have the option on whether to acquire the shares in twelve months time then it could be a no-brainer. For example, you save for 12 months out of net salary and you can have the option, but not the obligation, to buy the shares at a set price determined at the start of the savings period. If the share price is above your option price you exercise and, if not, you don't. Once you exercise you may be able to sell the shares straight away and realise your profit. If you don't exercise you get your money back. However if the plan requires you to use the funds to buy shares regardless of the price then it is a different proposition.

You will be liable to tax on any profit you make so you may need to sell some of the shares to pay the tax in any event. After realisation you can use the funds to invest in AVCs. So you may be able to do both.
 
Thank you all for those insights, it did help asking the right questions. So it gives the option after 12 months to buy them but no obligation, your 12 months provision money is refunded with interest and subject to taxes if any benefit.
But looks like not the best option then from what I am reading above. I am just concerned of putting all my small extra cash in pension only, which is not accessible in short term and also risky if legislation changes by the time I retire ( another 25 years... if I survive that long!).
 
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