: Building Society windfall survey: What to do with all that lovely loo t

Building Society windfall survey

The post has been and the good news has been confirmed. You and many of your neighbours have won a share in Britain's biggest payout. Forget the lottery, Ernie, or the football pools. This is the big one: 8 million people are in line for a shares windfall from one of the institutions converting from mutual to company status.

If you are one of those who have received some shares, or are expecting to receive some, you should be thinking now about what to do with them. Should you sell them, keep them, or swap them for some other kind of investment?

To make the right decision you need to consider the options. While the shares may be a good long-term investment, your immediate needs may mean it makes more sense to sell them now, or you may be able to invest the money elsewhere to greater effect. There are numerous reasons why you may want to sell your shares. For example, you may have debts you want to clear, such as on a shopping card, credit card, overdraft or personal loan. By clearing the debt not only will you save the interest you would otherwise have to pay, but you may also buy yourself peace of mind.

If you do not have any savings you could use the money from your shares to open a savings account for emergencies. Ideally this should be a minimum of three months' income and should be easy to get at, such as in an instant access savings account.

Alternatively, you could use the money from your shares to go on a spending spree. If you have always wanted to fly on Concorde or visit the Grand Canyon your windfall could make that dream come true.

Selling your shares could also raise cash to help towards the deposit on a house or car, or to pay for the perfect wedding you never thought you would be able to afford.

If you do not need the money from your shares you may still be better off selling them and using the money elsewhere. For example, you may want to sell the shares and put the money into your pension. Or you may not want to hold individual shares but prefer to invest in a selection.

Stock market investment is not for everyone. Many people prefer to put their money in a savings account where they know there is no risk. Several building societies have set up special savings accounts to attract windfall money. Savers should also consider opening a Tax-Exempt Special Savings Account (Tessa) as these offer tax free returns as long as you keep the account for five years.

If you decide to sell your shares you can either do so immediately or wait for a time in the hope of a price rise. To sell all your shares straight away fill in the relevant section of the allocation form you receive from the institution, which will then sell the shares on the first day that trading starts.

The service will cost very little and may even be free. The money from the sale will automatically be deposited into your account or you will receive a cheque.

While this is convenient you will not know what price your shares will fetch until after they have been sold. You may also find, as was the case with Alliance & Leicester, that the share price rises sharply in the first few weeks. If you had kept the shares and sold them a little later you would have got a better price.

Selling the shares this way means that you will have to make your own arrangements, but there are several dealing services available from both high street banks and stock broking firms; the cheapest tend to be postal or telephone services with charges from pounds 7.50.

Many people may want to keep their building society shares. It could be that you think the shares are a good investment or you may want to retain an interest in the company. You may even find that if you have an argumentative relationship with the manager, being a shareholder is no bad thing.

The most tax efficient way of keeping shares is in a personal equity plan. By placing your windfall shares in a PEP, all the dividends you earn from your shares and any profit you make when you come to sell the shares is tax free.

If you decide to put the shares in a PEP there are several from which to choose. The choice depends on a variety of factors such as whether you already have such a plan, whether you are in line for several windfalls, and whether you have any other shares or unit trusts that you want to include.

If you like the idea of investing in the stock market but are nervous about only having shares in one company you could swap your shares for units in a unit trust or shares in an investment trust. Unit trusts and investment trusts pool investors' money and put it in a range of shares, thereby spreading the risk.

Several investment houses are offering to accept windfall shares into their unit trust or investment trust PEP free of charge. The firm will sell your windfall shares and invest the proceeds for you into its own personal equity plan. You can only invest in one plan each tax year so if you already have a PEP you will have to speak to the firm concerned to see if it will accept your windfall shares.