DRIP re-investment

[cinemasaint]

Hi I purchased shares in 2013 and changed over the drip program does anyone know how long it takes for your extra shares to be credited to your account?

[TrueBlueTerrier]

Should be something on the equiniti website I'll check when I get back to my desktop. Currentlying posting on my smartphone.

[mark.cup]

Does anyone know if we can change to DRIP with the free shares once they can be sold after the 3 years?

[RobertT]

Does anyone know if we can change to DRIP with the free shares once they can be sold after the 3 years?

As far as I know we can’t reinvest the dividends as long as the shares are in the SIP, so the only way to do that between 3 and 5 years is to transfer them out and into your own name instead. But that would mean paying tax and NI in the same way as if you’re selling them, so that would be pointless.

After 5 years you can either keep them in the SIP, transfer them into our own name or sell them. If you transfer them you can then choose to reinvest the dividends.

That’s my understanding anyway.

[mark.cup]

Does anyone know if we can change to DRIP with the free shares once they can be sold after the 3 years?

As far as I know we can’t reinvest the dividends as long as the shares are in the SIP, so the only way to do that between 3 and 5 years is to transfer them out and into your own name instead. But that would mean paying tax and NI in the same way as if you’re selling them, so that would be pointless.

After 5 years you can either keep them in the SIP, transfer them into our own name or sell them. If you transfer them you can then choose to reinvest the dividends.

That’s my understanding anyway.

Ok thanks

[toomuchcoke]

Ok thanks

There are ways that you could (effectively) get dividend reinvestment on your existing shares ...

The easy way :-
1. Open a Halifax Sharebuilder account.
2. Every time we get paid a dividend, transfer the money to your Sharebuilder account and use it to buy shares. (Any shares you've purchased within Sharebuilder will, by default, have their dividends reinvested in more shares).

The more involved, but slightly cheaper way to do this :-
1. Open a bank account with a good interest rate (personally I'd look at the Tesco Current Account - pays 3% on balances up to £3k and doesn't require you pay your salary in or set up any direct debits).
2. Open a Halifax Sharebuilder account, with the direct debit set to the Tesco account you opened in step 1. (If that's the account you chose to use.) Set your Sharebuilder account to automatically pay out any dividends received, rather than automatically reinvesting them. (You'll pay slightly less in commission overall if you go this route.)
3. Whenever the Royal Mail pay out a dividend, transfer it to the account you opened in step 1.
3b. Optionally set up a standing order to transfer money from your current account every Friday when we get paid. Even £1/week might add noticeably to the amount of shares you own when you retire!
4. Whenever the balance of the bank account from step 1 is more than £404, transfer it to your Sharebuilder account and use it by shares. (I've said £404 there because there's 0.5% of stamp duty on share purchases, and Halifax charge £2 commission so if you use more than £404 your purchase costs are less than 1%.)

PS: None of the above should in any way be taken to constitute "financial advice", it's merely an example of how I might go about achieving it.

Edited to add : Something to be aware of if thinking of doing any of the above. Having too much of your net-worth tied up in the shares of you employer does have risks associated with it. Imagine that the Royal Mail goes bust in a spectacular "casters up" way - you could be out of a job and owning a large chunk of worthless shares, not a good place to be!