Just over a year ago I started dabbling in shares via the Freetrade app. My trading philosophy is to buy shares in services that I use and claw back some of what I spend almost as discounts or cash back.
My supermarket of choice, until the cost of living crisis, has always been Sainsbury’s. It might be a little more expensive than Asda or Tesco and not quite as pricey as Waitrose or Marks & Spencer, so it’s a happy medium.
Sainsbury’s loyalty scheme is Nectar which was once called Air Miles, if I recall correctly. For every £1 you spend In Sainsbury’s you get a nectar point. Earning two hundred nectar points, you’ve got a pound to spend. So to earn £1 you need to spend £200. That’s a 0.5% return on investment.
On the Freetrade app it says the Sainsbury’s dividend yield is 5.55% (Correct at the original time of writing, Dec 2022 – They’ve dropped to just 4.62% in March 2024)
You don’t have to be a genius to work that out but you get 10 times better ROI having shares rather than Nectar points.
So when I spent £30 of Nectar this Christmas that was off the back of spending £6,000 on groceries and fuel. The simple maths of shares is that £6,000 worth of Sainsbury’s shares would have earned me a dividend of £330.Thinking alternatively, to have earned £30 to spend in the supermarket I’d have had to have invested only £545.45 in shares.
As you can see, having shares in Sainsbury’s provides a better return than spending to earn Nectar points. That’s not to say you shouldn’t keep collecting your loyalty points, especially if their fuel’s cheap and you can get “triple points” vouchers every so often. But if you want £30 at the end of the year to spend on extra seasonal treats, you only have to invest a little over £500 to get that not a whopping £6,000.
However, there’s also the issue that you get just one Nectar point for every litre of fuel purchased in a Sainsbury’s petrol stations. With fuel costing around the £1,50 a litre mark, that makes Nectar points even more expensive to collect. You can occasionally get vouchers to earn double or triple points on fuel, so keep a look out for those.
Also, if you use the Nectar app, you can win free Nectar points with their digital scratch cards after every purchase, so take advantage of that too to keep your points tally as high as you can. These are typically +5 points, as if you’d spent another fiver, (But are worth 2.5p) but you can sometimes earn +10 or even +20 Nectar points. Very occasionally you’ll get a no-win, no-points scratch.
I wish I had a spare £500 to invest in Sainsbury’s shares, but things are tight at the moment. If you’ve got the money, that’s a good bet and you have the option sell your shares too, getting your £500 back if their price is stable.
Investing Philosophy
So that’s a decent philosophy – invest in supermarkets, banks, insurance companies, telecoms, and energy providers. They always take money from you, so now it’s time to get some back. Shareholders are often bemoaned for getting their money when standards and services go down. Don’t be a victim – if you can’t beat ‘em, join ‘em, and play them at their own game, even though your stakes may be small.
You can download the Freetrade app for free on Android or iOS, but if you want an invite and start your account with £50 in it, we can both get a free share worth between £10 and £100 – just ask me for a referral.
NB: I am not a financial advisor nor am I regulated by any industry standards. The value of stocks and shares can decrease as well as increase, so you may not get your initial investment back and dividend yields may vary. This is not financial advice but merely commentary and observation from my own experiences trading small amounts in the stock market. I do own a small amount if shares in Sainsbury’s and wish I could invest the amounts that I’ve estimated in this blog post.
NB [2024 03 11]: Should you buy or sell Sainsbury’s stocks? That’s entirely up to you. Right now the BoE base rate is 5.25% and inflation is 4.0% so you’d earn more in in a savings account at this very moment in time. The choice to sell or buy is yours. I’ll be hanging on to mine for the time being.
NB [2024 03 24]: I’ve noticed that a lot of people are finding this page when searching the world wide web for Sainsbury’s Shares. This page is my personal opinion and experience on the matter, so for official information on the latest, as well as the historic Sainsbury’s share price, it’s worth visiting their official share price chart.
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