Hello. I have a few questions related to stocks purchases, taxes, and smart investing.
Desired outcomes of this thread 1. When, if ever, would it be pragmatic to take part in an employee stock purchasing program at a fortune 200 company?
2. Resources for me to better understand taxes and other trade-offs as they relate to stocks
3. What professionals ( cfp, ea, etc) would be best at walking through the trade offs of possible scenarios
Employee stock purchase program details:a. Using after tax income withheld to end of the quarter and then amount that was withheld is used to purchase company stock at 15% less than market.
b. Immediately available to resell once posted to financial institution, typically within 5 biz days or less.
c. Maximum annual withholding is 21,250, i.e. 15% less than $25k
Family Background:For reference we currently have combined $130K in index funds mostly in IRA like shelters. We are willing to put more in to index funds, rather than rebalance with bonds, are we are in wealth creation & funding phase of wealth building.
We currently have some debt (student loan, car, home, all less than 4% interest rate, some close to 3%. Even with full participation in the Employee Stock purchase plan, we could be debt free by end of 2018).
Income A.
90k base salary less
18k 401k contributions less
3300 HSA contribution less
700 transportation saving account less
68,000
5500 Roth IRA contribution
62,500 - available for life expenses and further investments
Plus Income B.
87500 base salary less
18k 401k contributions less
69,500
5500 Roth IRA contribution
64,000 -- available for life expenses and further investments
My concerns
1. I've never owned stock so it seems too speculative. This has me leaning towards selling any Employee Stock on same day as they post seems a more predictable process even if taxes are higher.
2. If I do hold stock for a time period that moves me to long-term gains tax bracket, what % of investments should I hold in stock against index funds: no more than 1%, 5%, 10% in stocks? why?
Questions
1. How do I calculate tax liability of selling stock on day it posts?
2. Would simply investing the $25000 in open market in a Betterment / Wealthfront possible better? How would you suggest I model possible outcomes?
Threads references:
https://forum.mrmoneymustache.com/ask-a-mustachian/selling-employee-stock-in-order-to-pay-debt-or-reinvest/msg1427924/#msg1427924https://forum.mrmoneymustache.com/ask-a-mustachian/esop-(employee-stock-ownership-plan)-experiences/msg499425/#msg499425https://forum.mrmoneymustache.com/investor-alley/employee-stock-purchase-plan-49075/msg928185/#msg928185