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Company stock @15% market discount
Posted on 8/2/13 at 10:51 pm
Posted on 8/2/13 at 10:51 pm
My company has offered us a chance to buy company stock at 15% discount off of the market rate. We are able to purchase between 1-8 % of our weekly pay to buy into the option. Each paycheck the money is put into an account and they purchase the stock at the end of the quarter. It is taxed off of the gross but subtracted from the net pay. The catch to getting the discount is the stock cannot be sold for 2 years from purchase date. Is anybody familiar with this type of thing? Also, I already contribute 11% to 401k with company matching half up to 6%. Should I back off on the 401k and pump more into the discount stock or do I just keep doing what I'm doing? Not real familiar with stocks and not great with mathematical equations. Sorry in advance.
4
Posted on 8/2/13 at 10:53 pm to LSU999
Edited
This post was edited on 8/2/13 at 11:01 pm
Posted on 8/2/13 at 11:00 pm to LSU999
15% discount sounds nice, also warren buffet bought a big stake so there seems to be lots of confidence there
Posted on 8/2/13 at 11:07 pm to eng08
I'm testing it out for sure. I was increasing my 401k a percentage a little at a time. This deal has me thinking differently. I would like to see how it all looks on paper and understand the entire deal, before I contribute anymore into the company stock.
Posted on 8/3/13 at 12:11 am to LSU999
My wife's company has a similar deal, though they are capped on how much they can purchase, however they can turn right around and flip it for 15% profit. Though she holds on to the max since her company pays a pretty healthy dividend.
Posted on 8/3/13 at 8:17 am to LSU999
If I had faith in the company I would try my best to purchase all that I could. Also, a 15% discount is worth more than 15%. A 50% discount would mean the stock it worth 100% more than you paid for it. A 15% discount is worth 17.6% more than you paid for it. If it goes up 10% in two years, you will have a return right at 30%.
Posted on 8/3/13 at 8:38 am to eelsuee
That's the type of info that can help me. I appreciate any information given. Like I said I'm not a market guy and I'm just willing to take advantage of anything that will make me money without putting too much on the line.
Posted on 8/3/13 at 9:04 am to LSU999
We have almost the same deal except we can put in 10%, we get an 18% discount, and the stock is purchased using the price of the stock on the first day or last day of the quarter,whichever is lower. I can also sell right away, but it usually takes around 15 days to actually get processed. I haven't made less than 30% (including the discount) yet. Definately worth it. I'll keep the money in it if I think there is money to be made, but our stock has stayed pretty much te same far about 2 years. I've just been using it as a savings and pulling it out at the end of the quarter when the stock gets a dollar or so higher than normal.
Posted on 8/3/13 at 10:17 am to LSU999
Do it, it's literally free money. Contribute to your 401k up to the matching percentage, then contribute to the stock purchasing program. Any left over percentage you can afford should go back to the 401k.
Be careful about the percentage of your investments related to your company becoming too high. It's like double dipping, you shouldn't do it. I had an aunt and uncle that went from being multi-millionaires to middle class over night because their company went bankrupt and they had a ridiculous percentage of their 401k and taxable investments in their company stock.
Be careful about the percentage of your investments related to your company becoming too high. It's like double dipping, you shouldn't do it. I had an aunt and uncle that went from being multi-millionaires to middle class over night because their company went bankrupt and they had a ridiculous percentage of their 401k and taxable investments in their company stock.
This post was edited on 8/3/13 at 10:20 am
Posted on 8/3/13 at 10:54 am to Beerinthepocket
How confident are you in your company to grow and create more value in the next couple years? If shares remain flat over two years, you make 15%. (12%-13% adjusted for inflation)
1) Case 1: Buy shares at $85 on 1/1/13 (15% discount from market price of $100/share). Tough couple years, and on 1/1/15, shares are trading around $90/share. You've made about 6% over two years which is ok, but maybe you could have made more somewhere else.
2) Case 2: Company's shares remain flat at $100, could you have put your money somewhere else for two years and made more than 15%? (probably not)
3) Case 3: Company's shares increase 15% over two years and you sell at $115 and you've made about 35%. You killed it, and there's unlimited upside (maybe the company's equity appreciate more than 15%)
Also, does the company pay a dividend? If so, just makes it a sweeter deal.
1) Case 1: Buy shares at $85 on 1/1/13 (15% discount from market price of $100/share). Tough couple years, and on 1/1/15, shares are trading around $90/share. You've made about 6% over two years which is ok, but maybe you could have made more somewhere else.
2) Case 2: Company's shares remain flat at $100, could you have put your money somewhere else for two years and made more than 15%? (probably not)
3) Case 3: Company's shares increase 15% over two years and you sell at $115 and you've made about 35%. You killed it, and there's unlimited upside (maybe the company's equity appreciate more than 15%)
Also, does the company pay a dividend? If so, just makes it a sweeter deal.
This post was edited on 8/3/13 at 10:56 am
Posted on 8/3/13 at 11:40 am to raw dog
Thanks guys. Not sure about any company dividend. I know they just keep rolling it over and buying more stock until we sell. I am contributing 11% now to the 401k that has nothing to do with the company other than them matching half of what we put in up to 6%. So there is free money I make there. Just to start and see how it works , I'm currently investing 4% into the company stock option. It's a total of 15% of my pay coming out for stock and 401k. I'm not anywhere close to an "OT Baller", just looking for an easier life later on.
Posted on 8/3/13 at 1:17 pm to LSU999
(no message)
This post was edited on 12/21/21 at 9:42 am
Posted on 8/3/13 at 9:15 pm to XanderCrews
I had same deal with my company, and I put in the max allowed. Profit.
I would not like to work for a company where I thought the price of the stock would be heading south. My resume would be out.
I would not like to work for a company where I thought the price of the stock would be heading south. My resume would be out.
Posted on 8/4/13 at 2:49 am to matthew25
My company is middle of the road when it comes to base salaries, but things like this are where we make a killing. we have the same 15% discount and can contribute up to 15% of our salary to stock purchase. We also get 401K matching up to 8%, and our healthcare is out of this world (my dad actually didn't believe it when he first saw my contract).
Maxing my 401K and getting 15% discount on a strong company with consistent dividends is
.
Maxing my 401K and getting 15% discount on a strong company with consistent dividends is
.Posted on 8/4/13 at 3:10 am to FootballNostradamus
Just checked my company, stock's up 25% since the start of the year 
.
.
Posted on 8/4/13 at 6:51 am to LSU999
LSU999 you work for franks
Posted on 8/4/13 at 2:34 pm to tigernation56
Franks Ballpark Hotdogs?
Posted on 8/4/13 at 5:20 pm to LSU999
Only thing I don't like in your deal is that you have to hold onto it for 2 years. I was in a company stock plan and this wasn't the case. My discount was only 7.5% off of the lowest stock price of both the first and last day of the 6 month period, though.
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