Comments on: All About Employee Stock Purchase Plans (ESPP)

By: How to Start Investing for Retirement

How to Start Investing for Retirement — Tue, 16 Mar 2010 03:54:31 +0000

[...] employers also offer great deals on employee stock and allow for stock plan flipping. I do this with my company and there is no risk and I get a great return. I invest the proceed in a [...]

By: That One Caveman

That One Caveman — Mon, 09 Jun 2008 17:59:36 +0000

Unfortunately, my employer only gives a 5% discount – not enough for me to justify doing a flip. They withhold money from my paycheck in a 0-interest account and purchase on a certain date. They want us to hold onto the stock, but I (honestly) don’t feel like owning any of my company’s stock.

By: Weekend Reading during Site Updates : Money Smart Life

Weekend Reading during Site Updates : Money Smart Life — Sat, 07 Jun 2008 16:59:00 +0000

[...] – Prime Time Money – All About Employee Stock Purchase Plans (ESPP) [...]

By: Frank

Frank — Fri, 06 Jun 2008 19:31:44 +0000

Isn’t this kind of a risky way to try to earn a few extra dollars on your property taxes? If the stock drops, than you will have to actually pay more in taxes. If the stock price goes up, which will not be much in 6 months (conservatively) you owe taxes on the amount. Unless they are treated differently than normal stocks and the standard capital gains rule doesn’t apply, you would still be forced to pay taxes at your current income tax rate (probably around 25%).

So even a gain 4% gain on a 6-month investment of 2k (which is somewhat reasonable) would be $80.00. Take another 25% off of that for taxes and you are up about $60.00. All while, hedging your stock won’t go down, in which case your tax bill increases.

Do I understand this correctly? Seems like a risky game to play to earn a couple bucks. Also, are their costs associated with buying and selling?

Thanks for the post! I have never heard of ESPP, as you can tell, I’m very curious.

By: PT

PT — Fri, 06 Jun 2008 18:00:51 +0000

@ Mrs. PT – Yeah. You know me.

By: Mrs. PT

Mrs. PT — Fri, 06 Jun 2008 17:49:21 +0000

So…you’re down with ESPP?

By: AndyS

AndyS — Fri, 06 Jun 2008 17:34:09 +0000

Great post and ESPP are a good idea. Unfortunately I work in the financial services sector and my company’s stock price has been falling faster than the low point I get to buy the stock at (including the 15% discount). Still it is also a good way to dollar cost average one’s way into a stock.

It is important to make sure though you don’t put all your investments into your comapny’s stock (remeber what happened to Enron and Worldcom employees?)