Suppose the price is $1I can't wrap my head around this math. could you explain this further. thank you.A 10% discount is actually an 11.11% gain (you are buying at 1/.9) so your gain is larger than you think. If your offering periods are every 6 months as most are - you are looking at a 22.22% yearly gain (more actually since you aren't giving up all this money at the beginning of the period).
I always sell all shares immediately and think of the program as a bonus plan. Consider if your really want to risk holding as much as your company stock as you are holding.
If you have not been maxing out you should start doing so - don't leave free money on the table.
You get to purchase it for $0.90
Now you sell immediately for $1
Total gains are ($1 - $0.9)/$0.9 = 11.11%
+1 on Smileyface's comments about selling immediately. That's what I did during my working years. All of my employers had ESPP with a 15% discount.
1. Decent, low-risk returns by just selling immediately, even if you have to pay short term capital gains.
2. This is bogleheads - we typically promote owning index funds and not individual stocks. I sold immediately and used the proceeds to purchase shares of my favorite stock fund.
3. I had enough risk with my employer just by working there. Why add more risk beyond my paycheck? After 22+ years at my first employer, that risk was realized.
4. I asked myself whether I would own my employer's stock if I didn't work there and didn't have access to stock via ESPP and RSU's Stock Options. Answer was "no". Partially due to #2 above and also due to all of my employer's being in tech, which means high volatility stock prices.
Cheers.
Statistics: Posted by dcabler — Sat Apr 20, 2024 6:33 am — Replies 6 — Views 415
