Should I continue the matched shares program?

[Realist35]

Hello everyone!

I would highly appreciate you knowledge and expertise. The company I work for has a matched shares program (one of big 3 miners). Basically every year we can buy up to 6k value of shares and in three year we receive matched shares. This is the second year I have been participating in this program. However, I'm lately questioning the viability of my investment. First of all those matched shares are taxed against my taxable income . Second, when I decide to sell them I pay tax again (CGT, if I do make any profit). And thirdly, last year I bought around 6k worth of shares that are now worth only 50% of the original value.

What are your thought, continue or stop these investments?

 

[Value Collector]

Hello everyone!

I would highly appreciate you knowledge and expertise. The company I work for has a matched shares program (one of big 3 miners). Basically every year we can buy up to 6k value of shares and in three year we receive matched shares. This is the second year I have been participating in this program. However, I'm lately questioning the viability of my investment. First of all those matched shares are taxed against my taxable income . Second, when I decide to sell them I pay tax again (CGT, if I do make any profit). And thirdly, last year I bought around 6k worth of shares that are now worth only 50% of the original value.

What are your thought, continue or stop these investments?

The tax side is fair, I mean they are giving you $6k of shares, so that's income you would have to pay that whether they gave it to you for free or whether you earned it delivering pizza on th side, and then obviously you have to pay capital gains tax on half your gain if you make one, eg if you make $1000 you have to pay tax at your marginal rate on $500.

Whether it makes sense to invest in the company or not is what you think the outlook for the company is, do you want to own shares in the company? If so this scheme seems like a cheap way to get them.

 

[skyQuake]

To clarify, if you buy $6k of shares do you get $6k more for free 3 years down the track?

 

[Realist35]

To clarify, if you buy $6k of shares do you get $6k more for free 3 years down the track?

Yup, that's correct. But the problem is that they already tanked 50% over the past year. And of course, taxes. .

 

[Realist35]

The tax side is fair, I mean they are giving you $6k of shares, so that's income you would have to pay that whether they gave it to you for free or whether you earned it delivering pizza on th side, and then obviously you have to pay capital gains tax on half your gain if you make one, eg if you make $1000 you have to pay tax at your marginal rate on $500.

Whether it makes sense to invest in the company or not is what you think the outlook for the company is, do you want to own shares in the company? If so this scheme seems like a cheap way to get them.

Hi Value Collector,

I really don't know much about stock market and hence I'd like to seek an advice here.

I first enrolled into this scheme thinking I can't lose any money unless the price of shares drops by 50% which I thought would be very unlikely. Unfortunately I was wrong. I bought them when they were 33$ and now they are 15$ per share.

Shares are bought every three months and then I receive matched shares 3 years later. Any thoughts?

 

[Realist35]

To clarify, if you buy $6k of shares do you get $6k more for free 3 years down the track?

Sorry I think I wasn't clear. I'll clarify myself .

So in 2014 I bought around 180 shares for 6000$ (around 33$ per share). In 2017 I'll receive matched shares, 180 of them, so I'll have a total of 360 shares. Does that make sense?

Obviously I will pay income tax on those shares and later on CGT when I decide to sell them.

 

[Bill M]

Sorry I think I wasn't clear. I'll clarify myself .

So in 2014 I bought around 180 shares for 6000$ (around 33$ per share). In 2017 I'll receive matched shares, 180 of them, so I'll have a total of 360 shares. Does that make sense?

Obviously I will pay income tax on those shares and later on CGT when I decide to sell them.

You made an investment with a good company, you had good thoughts and you thought you wouldn't lose but you did. We all make bad stock selections from time to time but yours was no where near as bad as what it could have been for the ones who bought at $33 and got NO freebees.

Quite frankly, in my opinion and this goes against the grain of most posters here, I would most likely buy another 6K package this year at the very low price the shares are selling at now. In 3 years time the price might well jump and you will get equal amounts of new shares at the higher prices. However if you think the company is a total dud and could collapse then that might not be a good idea.

What is all the secrecy about anyway? We all know which BIG AUSTRALIAN company it is, why not just put it out there? Or are you bound by the companies code of conduct or something? Cheers.

 

[skyQuake]

Still sounds like a great deal. Unless you think the company is going bust you'll most likely be fine...

If you like, you can hedge your exposure to the stock by short selling the amount of shares you'll receive in the future.
There will be a few associated fees but you'll get to rest easy! (or be annoyed if the share doubles )

 

[Realist35]

Thanks very much guys!

I think I will continue with the scheme. The regular share purchases are in March, June, Sept and Dec. At the end of the day it's a long term investment, for me maybe 3-5 years, so hopefully things get better by then.

 

[So_Cynical]

Quite frankly, in my opinion and this goes against the grain of most posters here, I would most likely buy another 6K package this year at the very low price the shares are selling at now.

I would as well, you have taken a long term position and need to see it through would be my thinking, but each to their own, individual outcomes are up to the individual.

 

[qldfrog]

If this company is BHP...just saying, I would definitively put a lot in now;
I worked as a contractor for that big miner...and had a similar discussion with employees 5 y ago or so when the shares were at $45 and recommended they do NOT put anything in and sell: we were definitively all aware of the coming problems at the time and argued that a 50% discount was not enough;
we are now more toward the bottom of the cycle and I would personnaly pile up as much as possible under that scheme if I had the choice today;
obviously just a personal choice: DYOR; but this is what I would do and why.