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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 8/3/13 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 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
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