The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: MVal on November 03, 2017, 08:31:45 AM
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My company is opening enrollment in our ESPP this month and we will be able to buy company stock at a 15% discount. We are one of the top 10 publicly traded companies in our field in the country and we always seem to do better and better each year as far as I know. I've never participated in an ESPP plan before, but I'm wondering if I should.
Here's the problem. We've received notice at my small office we're all going to be laid off sometime in the new year, but we don't know when. It could be 2 months from now, or 6 months... If I know I'm not going to be here this time next year, would it still be a good idea for me to purchase company stock? And if I do, how long should I hold it? Less than a year? More than two years? Is this even a good idea?
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How often is the purchase?
Our plan withholds from every paycheck and the purchase is every six months at a 15% discount of the lower of the first or last day. We sell immediately and convert it according to our desired AA.
In general, the 15% bonus is a no brainer. In your case, you aren't guaranteed the 15% (unless it could be worked into your severance package), so it might be better to be earning on those funds in your own account.
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If you get laid off, the company should refund all of the money you have paid into the ESPP program since the last purchase period.
I participate in mine, since it's free money of a few thousand dollars a year and it makes saving easier for us psychologically since it makes my paychecks seem smaller.
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How often is the purchase?
Our plan withholds from every paycheck and the purchase is every six months at a 15% discount of the lower of the first or last day. We sell immediately and convert it according to our desired AA.
In general, the 15% bonus is a no brainer. In your case, you aren't guaranteed the 15% (unless it could be worked into your severance package), so it might be better to be earning on those funds in your own account.
This is how ours will be, from what I've read.
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verify if the plan has minimum holding periods. I choose not to participate in mine, even though it also has the 15% discount, because I don't want be forced to hold stock in the company I work for for that timeframe. If I could sell on day 1, I'd participate.