Author Topic: ESPP opinions?  (Read 5516 times)

Amelia

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ESPP opinions?
« on: December 12, 2013, 09:59:50 AM »
I've been trying to figure out the best plan for my ESPP shares; sell as soon as I'm allowed and reinvest the funds and take the tax hit or let them sit?  We're allowed to purchase at a 15% discount and I have to hold them for a year before I can sell.  The company's price is climbing slowly over the last three years and hasn't shown a significant decline.

Bohb Daishi

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Re: ESPP opinions?
« Reply #1 on: December 12, 2013, 03:23:45 PM »
Are you talking about an Employee Stock Purchase Plan (ESPP)? If so, you might want to move this to the "Investing - General (not P2P)" section of the forums.

That said, if you are talking about selling your company stock, you should consider what % of your assets are held up in your company. If you are in the 10-15% range, you might be ok to hold on to the shares (depending on the company you work for). But if you are in the 25%+ range, you would be foolish not to dump some of your shares and diversify.
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Fred

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Re: ESPP opinions?
« Reply #2 on: December 12, 2013, 10:00:44 PM »
If you are in the 10-15% range, you might be ok ....

I'd say that holding even 10% of your assets in any one company is not recommended.

Rob L

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Re: ESPP opinions?
« Reply #3 on: December 12, 2013, 11:39:06 PM »
Continuing the same theme, common wisdom is that holding substantial stock in the company you work for is not a good idea. When times are tough for the company there's the possibility of losing your job and watching your stock value drop at the same time. Diversifying to another company in a different economic sector, or into a low cost index mutual fund or ETF might be a better plan. Someday you're gonna take the tax hit anyway if gains are had. Only two sure things in life...

Bohb Daishi

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Re: ESPP opinions?
« Reply #4 on: December 13, 2013, 02:33:14 AM »
If you are in the 10-15% range, you might be ok ....

I'd say that holding even 10% of your assets in any one company is not recommended.

That would depend. If the company you work for is General Electric or another blue-chip, you would probably be ok to hold 10%. But if you are in some hotshot tech company like Twitter or Facebook (where valuations are through the roof yet it makes no money), you should definitely diversify some more.
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Amelia

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Re: ESPP opinions?
« Reply #5 on: December 13, 2013, 02:25:50 PM »
I guess I should have stated that this is only a small portion of my overall portfolio and my question revolves around the strategy of my company stocks.  Hold or sell for the 15% gain and reinvest in IRA?

dontvote

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Re: ESPP opinions?
« Reply #6 on: December 13, 2013, 03:08:16 PM »
A large portion of your future wealth is already invested in your company, even without those shares. If your company takes a dive you'll have enough problems without also watching your shares go up in smoke (Merrill Lynch, Wachovia). The 15% is a gift. Sell and diversify.
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bobeubanks

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Re: ESPP opinions?
« Reply #7 on: December 13, 2013, 03:19:38 PM »
ESPPs typically have a tax benefit to hold for 2 years from the beginning of the ESPP period, which is typically 1.5 years from the purchase date. As you have to hold for a year already, it may be wise to hold a little longer.

Be careful though, if the stock price goes down during the period, it can be advantageous taxwise to NOT hold for the 2 year period.

That said, there is a saying to never make stock decisions based on taxes. :)