Author Topic: Company shares - What to do with those?  (Read 1087 times)

max9505672

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Company shares - What to do with those?
« on: November 24, 2018, 11:34:16 AM »
Hello mustachians,

A friend of mine is working for Air Canada and the end of 2010, the company offered 130 shares to every eligible employees.

The shares were bought at around 3.50$ each and are now worth 26.17$.

I am currently trying to help this friend getting its personal finances back on track. She has +/- 2500$ in credit card debt (at 20% interest rate) that she only manages to pay minimum each month.

My question is : Should she sell the shares (130 * 26.17$) = 3400$ and pay the credit card debt or should she keep the shares? The shares being pretty volatile, I would advice her to sell for a gain, but I just want to make sure I'm not missing anything here?

Thanks!
« Last Edit: November 26, 2018, 10:37:51 AM by max9505672 »

jacoavluha

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Re: Company shares - What to do with those?
« Reply #1 on: November 24, 2018, 11:40:03 AM »
Yep, sell, pay off debt, never carry a balance again, save money for applicable gains taxes

terran

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Re: Company shares - What to do with those?
« Reply #2 on: November 24, 2018, 04:05:50 PM »
More broadly speaking I would sell company shares as soon as I was allowed to. Having concentrated risk in a single company is not good, and it's especially not good when you rely on that company for all of your income.

I also wouldn't hold any investment I can think of while I had debt hanging around I was paying 20% on. Not going to find a investment that reliably has that kind of return.

MustacheAndaHalf

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Re: Company shares - What to do with those?
« Reply #3 on: November 25, 2018, 01:01:08 PM »
The shares were bought at around 3.50$ each and are now worth 26.17$.
Back in 2010, the company couldn't even meet it's pension obligations and had a risk of going bankrupt.  So it's a riskier stock, and that risk paid out.  But you can't assume the "near bankruptcy to recovery" story can repeat from here.  Great run up, but it's time to sell and diversify.

In the U.S., and probably most countries, you owe tax on profits.  So when you sell the shares, you'll pay tax on the difference between purchase price and sale price.  So you might need to sell some shares to cover credit card debt, and then more shares to cover the tax on those earlier shares.  (And technically, a few more shares to cover the tax on the shares you sold to pay taxes...)

max9505672

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Re: Company shares - What to do with those?
« Reply #4 on: November 26, 2018, 10:40:40 AM »
Thanks everyone! Exactly what I thought, just wanted to confirm.

marty998

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Re: Company shares - What to do with those?
« Reply #5 on: November 26, 2018, 01:18:00 PM »
There's a well founded view that Airlines make the lousiest of all investments.

High Capex, high operating costs, volatile input costs (fuel), seasonal demand, and an entire customer experience designed to send the average traveller batshit crazy.

Qantas in Australia only makes for a good investment when the unions are held back and the oil price is falling. In fact its share price behaviour demonstrates a strong negative correlation with the oil price. If you think oil will fall and you can't short it then you could do worse than buy Qantas shares.

effigy98

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Re: Company shares - What to do with those?
« Reply #6 on: November 26, 2018, 02:58:38 PM »
I sell as soon as possible and invest in ETFs that are not in my industry to be hyper diversified. Loosing your job while your industry is tanking at the same time taking your investments sucked in 2000's.