I was talking with a guy at work the other day about the Employee Stock Purchase Plan, which allows deductions from your pay check to purchase company stock at a 15% discount. The maximum amount you can contribute is $25k per year which comes to around $960 per paycheck (after tax money).
The plan is broken up into two 6-month periods. What they do is keep the money that you contribute each week, and at the end of the 6 month period, they purchase shares at the lower stock price of either the first day or the last day of the 6 month period, minus 15%. This means you get a guaranteed 15% gain on your investment, minus whatever you would get had you taken the money each week and put it in savings, invested it separately, etc.
Assuming you could contribute the maximum allowed and sold the shares as soon as the period ends, you could make an additional $3750 per year at a minimum (minus what you'd make outside of the ESPP if you didn't join the plan), and more if the stock actually went up.
Has anyone done anything like this and do you think it's worth the hassle of living off less money each week to get it all back plus 15% at 6 month intervals? If so, how much would you contribute? I have a few weeks to consider whether or not I should do this. You can quit making contributions at any time, but you can't get back in the plan until the next offering period starts. A modest trading fee is applied when you sell the shares ($6 I think).
The plan is broken up into two 6-month periods. What they do is keep the money that you contribute each week, and at the end of the 6 month period, they purchase shares at the lower stock price of either the first day or the last day of the 6 month period, minus 15%. This means you get a guaranteed 15% gain on your investment, minus whatever you would get had you taken the money each week and put it in savings, invested it separately, etc.
Assuming you could contribute the maximum allowed and sold the shares as soon as the period ends, you could make an additional $3750 per year at a minimum (minus what you'd make outside of the ESPP if you didn't join the plan), and more if the stock actually went up.
Has anyone done anything like this and do you think it's worth the hassle of living off less money each week to get it all back plus 15% at 6 month intervals? If so, how much would you contribute? I have a few weeks to consider whether or not I should do this. You can quit making contributions at any time, but you can't get back in the plan until the next offering period starts. A modest trading fee is applied when you sell the shares ($6 I think).