Our company is offering (ESPP) Employee Stock Purchase Plan enrollment right now and I am wondering if I should participate or not. I am just looking to invest a measly 1% of my income, that’s all.
Our ESPP is typical in that they give you a 15% discount applied to the stock price at the beginning or end of the six-month purchase period – whichever price is lower .
So should I even bother with this or not?
Note: I work for a fortune 500 Healthcare Corporation. Also, I am already squared away with my main investments, this is just something a little extra.
ESPP) Employee Stock Purchase Plan
Re: ESPP) Employee Stock Purchase Plan
Sure...why not. Investing 1% of your income likely won't make much difference one way or the other.
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Re: ESPP) Employee Stock Purchase Plan
This should be a no-brainer. It's as close to an investment guarantee as you can get. No where else can you get this kind of return with so little risk. I would go all in, as much as they allow, as long as you can afford the cash flow hit. If you adopt a strategy of selling the shares immediately as soon as you get them, it is a big win. The only way you can lose is if your company stock is sinking fast when the offering period expires and before you have access to the shares. Even then, it would have to drop by more than 15% for you to lose. Just don't succumb to the temptation to hold on to them because you think the stock might go up. Stick to a plan of selling them immediately every time and you will come out way ahead.
Re: ESPP) Employee Stock Purchase Plan
I would be churning this for as much as they'd let me put through it. Buy the max, sell as soon as you get the discount, repeat.
Re: ESPP) Employee Stock Purchase Plan
I agree this can be a great tool - not for long term investments but for getting a 15% return on your money. My husband and I are striving to max his out this year even though doing so has hit our cash flow (we're basically drawing down savings a bit each month while he gets very little net pay). We'll start selling in December though and after that the cash flow crunch will be over. Each quarter we will buy the max and sell the max allowed. If the stock goes up then great, but we are just doing it for the 15% spread.
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Re: ESPP) Employee Stock Purchase Plan
I would definitely do it! I did it even when it was a 5% discount which is way riskier.Nerdicus wrote:Our company is offering (ESPP) Employee Stock Purchase Plan enrollment right now and I am wondering if I should participate or not. I am just looking to invest a measly 1% of my income, that’s all.
Our ESPP is typical in that they give you a 15% discount applied to the stock price at the beginning or end of the six-month purchase period – whichever price is lower .
So should I even bother with this or not?
Note: I work for a fortune 500 Healthcare Corporation. Also, I am already squared away with my main investments, this is just something a little extra.
Keep good records though for tax time.
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Re: ESPP) Employee Stock Purchase Plan
One thing to consider is the high fees charged by the broker. In my past experience, Morgan S charged a flat fee base plus a % on amount. Make sure that your 1% contribution to ESPP makes these fees higher and thus erodes the 15% discount.
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Re: ESPP) Employee Stock Purchase Plan
In general the 15% discount is as close to money in the bank that you will ever get. The only caution I have is to be careful if in your role you tend to be privy to insider information (such as a merger or acquisition) that could lock you out from selling the immediately following the purchase.