HBOS shares Question

I make the gain 40.24%.

Whether you sell the shares or use your savings depends on several things, such as are you prepared to take the risk of your share value going down, do you like the excitement of owning shares, do you mind if you don't get any more dividends, are the shares a large part of your total investments? How did you acquire the shares in the first place - were they freebies? Would you buy shares again?

There's no simple answer to this question because a share is a different animal to a deposit account.

Rob Graham

Hi the shares were a freebies and no I do not intend buying any other shares. I worked it out that if I had cashed them in and put the money in a savings account in 1997 at a rate of 3.9% that is what it would be worth now. I forgot to take into account any dividends I have had so I guess that just leaving them until I actually need to cash them in would be the best bet. Tricia

So do I, but over 9 years that's on average 3.8% *per year*, and perhaps if the actual time she's held them is slightly less than 9 whole years, such as (say) 8 years 10 months, then 3.9% would be spot on.

That's not particularly relevant to the question of whether you should get rid of them.

Again, that may not be relevant to the immediate question. They may well make up as high a proportion of your total savings as you would be unkeen to expose to the high-ish risk inherent in shares despite the potential for higher overall returns than from a "boring" savings account.

Quite.

Yes, you should look back at what the average dividend has been over the past 9 years, as a percentage of the share value at the time the dividends were paid, you'd add that to the 3.9% to get what the return from the shares was really worth each year.

There is the risk aspect to consider, i.e. the return will not be fixed or steady all the time, but will fluctuate and could be negative in some years, but chances are that on average they will outperform the savings account. Or rather, this is one of the questions to ask your crystal ball. "Past performance is not a good guide to likely performance in the future", as they say. You were literally right when saying "best bet", inasmuch as you should be aware that it is a bet, a gamble, a risk, to be holding shares. Cash deposits are very much less risky.

Then there's the tax angle. Assuming you are a standard rate taxpayer, then unless you're comparing with a cash ISA savings account, you will be paying

20% income tax on savings interest, so if ICICI are paying you 5.15%, that's really only 4.12%. But both dividends and capital gains on your shares are tax free. That is to say of what you get in your dividend distribution, you get to keep it all, and with such a small holding of shares, you will be unlikely ever to realise enough gains in any tax year to be paying CGT.

I half recollect there was a capital restructure. I think there was a cash return (probably reducing some number of the shares) and there was a rights issue out of the blue which diluted holdings. But both those aspects are, presumably, fully taken account of in (a) the current price, and (b) whatever number of shares the poster now has (less than received at flotation, IIRC). Perhaps the poster should double-check how many shares they have - it may not be the number they originally received.

______________ best wishes, Ron

It's far too late for the correct advice. I put my Halifax shares in a PEP as soon as possible after I received them. The PEP has almost doubled in value since, whereas - as you say - HBOS shares haven't exactly shone over that period.

Unless you see HBOS shares suddenly shining, my advice FWIW would be to sell.

You half remember correctly.

Let's say that the OP had 200 shares, on 1st June 1999 this would have reduced to 185 shares, and she would have received £124 cash.

Taking the original value as 735.5p, and the latest value as 1012.5p, that makes the rate of return 3.57%. If you add in the value of dividends received, the return goes up to about 7.9%.

It's far too late for the correct advice. I put my Halifax shares in a PEP as soon as possible after I received them. The PEP has almost doubled in value since, whereas - as you say - HBOS shares haven't exactly shone over that period.

Unless you see HBOS shares suddenly shining, my advice FWIW would be to sell.