Well that doesnāt sound very diversifiedā¦
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Yeah that does not sound smart to have all your eggs in one basket.
Maybe there was a lack of education and diversification and rebalancing at that place.
I mean;
ā¢ When the property market is down, you generally buyā¦
ā¢ When stocks sell-off, you look at why, then you buyā¦
ā¢ When commodities are low, you look at why, then buyā¦
Then;
ā¢ When property is in a bubble, you look at de-riskingā¦
ā¢ When stocks are in a bubble, you look at de-riskingā¦
etcā¦ etcā¦
Just storing your only Ā£50K in a bank scheme is down to education.
I donāt think you understand how corporate schemes work. You can take your bonus as cash or you can use it to buy shares in the company. You are expected to hold these shares for a set length of time after which you are awarded an additional number of shares which you can then sell. The additional shares were up to 50% of your initial investment. If you received a Ā£10k bonus and took the whole lot as shares, even if the price didnāt move you would have Ā£15k after 2 years with the extra free shares. The price to pay was having to wait to sell the shares without a tax penalty.
You could also invest in a sharesave scheme where you make a regular investment in a fund with the intention of purchasing shares later at a guaranteed price. When I joined the company the sharesave offer price was Ā£4.30 and you were expected to invest for 2 years at which time your option could be exercised at the offer price. The price after 2 years was Ā£6.80 and just before the company tanked the shares had hit Ā£11.90.
The incentive was all about being vested in the business and these types of option scheme are very common. The tax penalties handcuff you into the schemes.
But that doesnāt mean investing is gambling, you didnāt have a choice what shares to buy and were forced to be undiversified. With a Freetrade account, or any other broker for that matter you can choose your own strategy, and research what you want to invest in rather than someone else deciding for you
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SIPs are very tax efficient but not without potential downside. Sharesaves however are that rare beast - a chance to lock in a potentially substantial gain with zero risk.
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