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re: Employee Stock Purchase Program
Posted on 8/9/16 at 11:18 am to Spec1
Posted on 8/9/16 at 11:18 am to Spec1
my experience with ESPP is they are a great concept but you can't make that instant 10% like you think you can. The stock often takes days after the purchase to hit your account, and then taxes.
if you buy and hold, then maybe its a good deal. Maybe not.
if you buy and hold, then maybe its a good deal. Maybe not.
1
Posted on 8/9/16 at 11:38 am to Hawkeye95
I never understood why people don't do the max amount of their ESPP. Even if you have little faith in the company, if you sell right away you still will turn a 8-9% profit.
Example:
Jan2016 market price: $30/share
July2016 market price: $24/share
6 month withholdings (note: this is post-tax): $5000
Grant price: $24 x 0.85 = $20.40/share
Granted: 245 shares on July 1st 2016.
Sell immediately at $24/share....
245 shares x $24 = $5880
Pay short term gains tax (ordinary income) on $880 profit/benefit
~25% x $880 = 220$ in taxes
NET 6 MONTHS GAIN AFTER TAXES IS $660!
Only way you would possibly get burned is if that in that small time frame after the stock is purchased and before it is processed into your account, the stock price drops significantly. My experience is that this period is typically only 1.5-2.5 weeks.
Example:
Jan2016 market price: $30/share
July2016 market price: $24/share
6 month withholdings (note: this is post-tax): $5000
Grant price: $24 x 0.85 = $20.40/share
Granted: 245 shares on July 1st 2016.
Sell immediately at $24/share....
245 shares x $24 = $5880
Pay short term gains tax (ordinary income) on $880 profit/benefit
~25% x $880 = 220$ in taxes
NET 6 MONTHS GAIN AFTER TAXES IS $660!
Only way you would possibly get burned is if that in that small time frame after the stock is purchased and before it is processed into your account, the stock price drops significantly. My experience is that this period is typically only 1.5-2.5 weeks.
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