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Employee Stock Purchase Plans---anybody have serious gains through this program?
Posted on 3/17/18 at 2:33 pm
Posted on 3/17/18 at 2:33 pm
My understanding is that they sell company stock at 10-15% discount to employees or have a look back provision that can provide additional instant capital over time. It's a quick way for some employees to turn a profit every year if they buy and sell. I don't know how feasible this is.
I remember my fathers company used to offer it and one year he ended up grossing like $7,000 just from buying and selling it in a day. This had to be mid-90s and I was like 10. It seemed like millions of dollars to a kid.
I'm assuming holding long-term is always the best play but I can remember him taking the quick gains every year for a few years.
I remember my fathers company used to offer it and one year he ended up grossing like $7,000 just from buying and selling it in a day. This had to be mid-90s and I was like 10. It seemed like millions of dollars to a kid.
I'm assuming holding long-term is always the best play but I can remember him taking the quick gains every year for a few years.
12
Posted on 3/17/18 at 3:02 pm to YoungManOldMan
never had the option. 15% return is great in most markets though.
Posted on 3/17/18 at 3:03 pm to YoungManOldMan
quote:
I'm assuming holding long-term is always the best pla
Actually selling the first day you are eligible is the best play. It’s something like a guaranteed 11% return if you were able to purchase at 15% discount if I remember correctly. Holding brings on nothing but risk and way too much concentration in a single stock.
Posted on 3/17/18 at 3:30 pm to YoungManOldMan
It depends on the plan. Some, like the ones I've had exposure to, had minimum holding periods.
Posted on 3/17/18 at 4:08 pm to YoungManOldMan
I guess it'd be a no brainer to dump as much money as you can in there then withdraw at the first opportunity, correct?
What am I missing?
What am I missing?
Posted on 3/17/18 at 4:22 pm to YoungManOldMan
You keep looking for those homeruns and missing out on real money making opportunities.
Warren has a message for you
Warren has a message for you
Posted on 3/17/18 at 4:41 pm to stout
Never miss an opportunity to insult me. I asked to be more educated about the opportunity. Not to make quick bucks.
Posted on 3/17/18 at 5:05 pm to BallyHOO
quote:
What am I missing?
The fact that you can still lose money? Just because you buy at 15% discount doesn’t mean the stock can’t drop 20%, 50%, or even go to zero. There are generally holding periods before a sale can take place too. It’s not like this is some instant arbitrage opportunity.
That goes into the argument of having all (or too many) of your eggs in a one basket.
Not to say it’s not a good perk to take advantage of, but it’s not without some risk.
Posted on 3/17/18 at 5:40 pm to YoungManOldMan
My company offers a 15% discount off of the lowest of either the first trading day of the year or the last. I usually take advantage of it due to the convenience of it coming as a post tax payroll deduction. It's usually capped around $7,500 annually.
Posted on 3/17/18 at 8:24 pm to YoungManOldMan
Want to know how I know none of you have really been involved in such a plan? If you sell before holding the shares for two years, you pay tax at your income tax rate on the gains. If you hold for two years or more, you pay long term capital gains. More often that not, if you believe in the future prospects of your company, holding for the long term is the way to go. I have been fortunate enough to see 5x gains on my ESPP shares.
Posted on 3/17/18 at 8:50 pm to YoungManOldMan
We have a buy one get one free share up to 195 bucks a month with a 3 year holding period. Stable giant in the FTSE 100. If the stock just held steady I’d basically be doubling my money, great perk.
This post was edited on 3/17/18 at 8:53 pm
Posted on 3/18/18 at 4:55 am to LSUDeadboy
quote:
Want to know how I know none of you have really been involved in such a plan? If you sell before holding the shares for two years, you pay tax at your income tax rate on the gains.
One year, not two.
Posted on 3/18/18 at 5:03 am to YoungManOldMan
It depends on the specific details of your plan, but generally speaking you should get as much of that discounted stock as you can.
The general rule is that you should periodically sell everything in the plan you own that is subject to long-term capital gains, i.e. you've had it for one year or longer. You don't have to be particularly vigilant about it, just make sure you don't have too much of your money tied up in the company you work for. I personally sell once a year and use the proceeds to fund my IRA for the year.
If you don't do this then really you're just betting more and more of your retirement on your own company. Maybe that works out, maybe it doesn't. From a risk/reward perspective it isn't smart but YMMV.
The general rule is that you should periodically sell everything in the plan you own that is subject to long-term capital gains, i.e. you've had it for one year or longer. You don't have to be particularly vigilant about it, just make sure you don't have too much of your money tied up in the company you work for. I personally sell once a year and use the proceeds to fund my IRA for the year.
If you don't do this then really you're just betting more and more of your retirement on your own company. Maybe that works out, maybe it doesn't. From a risk/reward perspective it isn't smart but YMMV.
Posted on 3/18/18 at 8:52 am to YoungManOldMan
I did it when my company started offering it. Took money out each pay period, but had
to wait until each quarter for company to purchase the shares. The company knew what they were doing by offering it at the time of its highest stock price and the stock has gone down drastically. Most people would say that's the risk, and I would agree except the more we find out, the more the company was trying to hide things.
This company knew and is being investigated for it. The company has been bought out and waiting for deal to be finalized. I don't know if I'll ever get my money back from it. I'm also not sure what happens to it after deal goes through officially. They stopped the program when the sale was announced.
I have since put that percentage I was contributing to the EPP, into my 401k. I thought the same thing about how can it not be good @ a 15% discount ? Well, now I feel like a jackass, who should've just put it in my 401k at the time. This is just an example of what could go wrong with these programs. Mine may just be an isolated occurance. Good luck either way.
to wait until each quarter for company to purchase the shares. The company knew what they were doing by offering it at the time of its highest stock price and the stock has gone down drastically. Most people would say that's the risk, and I would agree except the more we find out, the more the company was trying to hide things.
This company knew and is being investigated for it. The company has been bought out and waiting for deal to be finalized. I don't know if I'll ever get my money back from it. I'm also not sure what happens to it after deal goes through officially. They stopped the program when the sale was announced.
I have since put that percentage I was contributing to the EPP, into my 401k. I thought the same thing about how can it not be good @ a 15% discount ? Well, now I feel like a jackass, who should've just put it in my 401k at the time. This is just an example of what could go wrong with these programs. Mine may just be an isolated occurance. Good luck either way.
Posted on 3/18/18 at 9:16 am to LSUDeadboy
quote:
Want to know how I know none of you have really been involved in such a plan? If you sell before holding the shares for two years, you pay tax at your income tax rate on the gains. If you hold for two years or more, you pay long term capital gains.
I hope you aren't doing your own taxes...
Posted on 3/18/18 at 9:18 am to LSU999
quote:
The company has been bought out and waiting for deal to be finalized. I don't know if I'll ever get my money back from it. I'm also not sure what happens to it after deal goes through officially. They stopped the program when the sale was announced.
They should be refunding your money.
Posted on 3/18/18 at 10:04 am to MusclesofBrussels
Yea, I have been trying to forget about it, since all I could do is wait it out. It has slowly gone upward some since the buyout, so now that you say that, I guess that is what will happen.
Posted on 3/18/18 at 12:29 pm to foshizzle
quote:
One year, not two.
He's half right. It is two year holding period on most of these plans to be able to pay capital gains rates instead of income rates on the 15% discount. All other gains though are taxed as long term after a year holding just like any other stock purchase.
Posted on 3/18/18 at 2:20 pm to YoungManOldMan
My company has one of these that is a pretty sweet deal. Buy period is every 3 months, and you buy the shares for 15% off the price on either the first or last trading day of the period, whichever is lowest. You have to sign up before the period with 1-15% of your income to be deducted and used to buy shares after the 3 months.
I don’t have a ton of faith in the company, so I just sell as soon as I get it. The stock fluctuates a lot and I’ve profited a minimum of $100 up to a max of about $2000 each quarter. I don’t worry about the tax rate, since if I’m getting a profit than that’s good enough for me.
It reduces your paycheck a lot though, since the percentage is your pre tax income, but it’s deducted after tax.
I don’t have a ton of faith in the company, so I just sell as soon as I get it. The stock fluctuates a lot and I’ve profited a minimum of $100 up to a max of about $2000 each quarter. I don’t worry about the tax rate, since if I’m getting a profit than that’s good enough for me.
It reduces your paycheck a lot though, since the percentage is your pre tax income, but it’s deducted after tax.
This post was edited on 3/18/18 at 2:24 pm
Posted on 3/18/18 at 9:34 pm to TheIndulger
My company offers 5% discount haven't felt it was worth it. I'd be in at 15 though
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