Employee Stock Purchase Programs (ESPP's)
Discussion
Does anyone know anything about them? I've always avoided them in the past as I don't really know what I'm doing 100% but after doing some reading it appears with most of them you can buy and flip them straight away to make a profit of whatever discount you bought them at...
In general, are they worth doing?
Thanks!
In general, are they worth doing?
Thanks!
i Made tens of thousands over the years one some ...depends on the company I guess and how volatile their share price is, if they are growing rapidly etc
it was an easy win the other year whent the markets crashed and I automatically bought via payroll a load of shares at 20% of their peak value ...20 months later after everything has calmed down, sold for 5x gain...shame it was only tens of thousands, not hundreds
dont forget the tax on the gain though ;- I cant remember the rules, best check on how long you have to hold them for before for the different tax free/tax to pay ruling...but if you are getting them at 15% discount on market price, you ARE taxed on the benefit when you cash them in, at whatever tax rate you pay. im not sure if this is only for first 3 years though ...
..so all of a sudden your 15% easy win, could be 7.5% ...and on some shares you can make that on a days volatility by buying at the right price...so then you have the downside of only being able to sell during the trading window once a quarter...when it might not be the optimal time....
although they are good schemes, for long term investors staying with the company. If you get in a growing company you can turn a small monthly payment into good returns, they do have downsides too....most will want you to cash in if you leave also
check the small print on your particular scheme ....if it was a giant blue-chip you are working for, over 20 years buying Vodafone at 15% discount, you would have some very nice compound gains...
it was an easy win the other year whent the markets crashed and I automatically bought via payroll a load of shares at 20% of their peak value ...20 months later after everything has calmed down, sold for 5x gain...shame it was only tens of thousands, not hundreds
dont forget the tax on the gain though ;- I cant remember the rules, best check on how long you have to hold them for before for the different tax free/tax to pay ruling...but if you are getting them at 15% discount on market price, you ARE taxed on the benefit when you cash them in, at whatever tax rate you pay. im not sure if this is only for first 3 years though ...
..so all of a sudden your 15% easy win, could be 7.5% ...and on some shares you can make that on a days volatility by buying at the right price...so then you have the downside of only being able to sell during the trading window once a quarter...when it might not be the optimal time....
although they are good schemes, for long term investors staying with the company. If you get in a growing company you can turn a small monthly payment into good returns, they do have downsides too....most will want you to cash in if you leave also
check the small print on your particular scheme ....if it was a giant blue-chip you are working for, over 20 years buying Vodafone at 15% discount, you would have some very nice compound gains...
Gassing Station | Finance | Top of Page | What's New | My Stuff