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I recently started working for a large international company that is a big player in its industry on a global scale.

I only have very limited investment experience (a Lifetime ISA which is managed by the provider and buying shares in the Post Office when the government sold their stake in it).

My employer offers the chance to apply for a SIP (Share Incentive Plan) which I can contribute to monthly.

As I understand it, contributions to a SIP will be made pre-tax so my monthly contribution would be taken from my gross salary.

I don't have any concerns about investing in the company and I would say it's probably a relatively 'safe' investment, based on my limited knowledge of the work that they are involved with, and how they are looking to progress (at least, in the particular division I work in).

Are there particular things I should take into consideration before deciding whether or not to invest in the SIP? If so, what sort of things?

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  • How senior is your position, i.e. how much influence do you as an individual have over the share price? One risk is that you are effectively putting all your eggs in one basket, and if your employer goes under you lose your job and your savings.
    – Vicky
    Nov 20, 2019 at 15:58
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    It depends on the exact details of the plan as well. Sometimes, it's not worth tying up a significant portion of your income for the return that the discounted price supplies. How much of a discount can you purchase the stock for? What are the tax implications for selling the shares immediately? (In the US, at least, you need to hold the shares for some time after they are acquired to get the full tax benefit.)
    – chepner
    Nov 20, 2019 at 16:01
  • @Vicky My position is not very senior- I have no individual influence over the share price... I have joined a particular product team within a division of the company, and have a mid-level rank within that team. Given the size of the company, the number of industries they work in & their standing in the market, the risk of them going under is negligible. Nov 21, 2019 at 8:50
  • @chepner I can't see where it says how much of a discount the I can purchase the stock for on the SIP Help website they have provided... maybe this information will be provided during the actual application process...? Absolutely somthing to bear in mind though- as I wouldn't see the incentive to invest in the SIP unless I am able to buy the stock at a discount. They state on the website that you would typically have to keep the stock for 5 years in order to sell or transfer tax free. It states that you can contribute up to 10% of your salary per month (maximum limit of £150/ month). Nov 21, 2019 at 8:57
  • Wow, five years? In the US it's only 18-24 months (depending on ... something), although that typically only means the difference between paying capital gains and normal income tax, rather than not paying tax at all. Anyway, that's a factor to keep in mind. In the US, the stock is also purchased with a 5-15% discount, but it sounds like if you can sell it tax-free, that would be an alternate incentive to invest in this way.
    – chepner
    Nov 21, 2019 at 12:38

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