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When should I sell my shares from my ESPP?
06-06-2021, 01:20 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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When should I sell my shares from my ESPP?
I have had an employer ESPP since 2007 and have always sold on profit. Usually once every year. Plan requires that I hold shares for 1 year before I can sell. That being said, how long should I wait to sell some shares on a profit?
Company stock is about 1% on my total portfolio and I also get 15% discount per share.
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06-06-2021, 02:02 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: NW Pennsylvania
Posts: 1,803
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Quote:
Originally Posted by F.I.R.E User
I have had an employer ESPP since 2007 and have always sold on profit. Usually once every year. Plan requires that I hold shares for 1 year before I can sell. That being said, how long should I wait to sell some shares on a profit?
Company stock is about 1% on my total portfolio and I also get 15% discount per share.
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I always sold one day after my shares were eligible to be sold. I never was in a situation where I wasn’t at a profit.
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06-06-2021, 02:25 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by PaunchyPirate
I always sold one day after my shares were eligible to be sold. I never was in a situation where I wasn’t at a profit.
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Oh ok. Did you reinvest the gains elsewhere?
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06-06-2021, 02:30 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: NW Pennsylvania
Posts: 1,803
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Quote:
Originally Posted by F.I.R.E User
Oh ok. Did you reinvest the gains elsewhere?
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Most of the time. Or I spent it on something. The reason I sold quickly was to minimize my stock holdings for the company I worked for. Diversification.
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06-06-2021, 02:44 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by PaunchyPirate
Most of the time. Or I spent it on something. The reason I sold quickly was to minimize my stock holdings for the company I worked for. Diversification.
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Oh ok.
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06-06-2021, 02:59 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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So sell it as soon as I am eligible and use that money to perhaps invest in my taxable VTSAX?
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06-06-2021, 03:14 PM
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#7
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Recycles dryer sheets
Join Date: Jul 2019
Location: Phoenix
Posts: 328
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Quote:
Originally Posted by F.I.R.E User
I have had an employer ESPP since 2007 and have always sold on profit. Usually once every year. Plan requires that I hold shares for 1 year before I can sell. That being said, how long should I wait to sell some shares on a profit?
Company stock is about 1% on my total portfolio and I also get 15% discount per share.
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Why do you think there is a correct answer to this question? What do you think?
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06-06-2021, 04:03 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by LarryMelman
Why do you think there is a correct answer to this question? What do you think?
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I guess it varies.
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06-06-2021, 05:17 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Oct 2014
Posts: 1,677
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If you wouldn’t hold shares in your company that were not purchased through the ESPP, then you shouldn’t hold ESPP shares.
I usually sold mine as soon as I was allowed.
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06-06-2021, 05:25 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by Philliefan33
If you wouldn’t hold shares in your company that were not purchased through the ESPP, then you shouldn’t hold ESPP shares.
I usually sold mine as soon as I was allowed.
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They were purchased through my company’s ESPP. It’s at Fidelity.
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06-06-2021, 06:21 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Posts: 1,088
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My method is different so do not follow if you are not able to handle the risk.
I held on to 3 ESPP stocks from 3 companies that I worked for. One was a complete loss. The other 2 with substantial gain (200% - 300%) after holding on to the shares for more than 15 years. I now treat them as my long term holdings.
So, this really depends on your company outlook, and how your investment style guides you. If your company is one of the FANG companies, I might hold on to the shares. Otherwise, sell as soon as you are eligible, and move the funds to S&P 500 index.
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06-06-2021, 06:26 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by fh2000
My method is different so do not follow if you are not able to handle the risk.
I held on to 3 ESPP stocks from 3 companies that I worked for. One was a complete loss. The other 2 with substantial gain (200% - 300%) after holding on to the shares for more than 15 years. I now treat them as my long term holdings.
So, this really depends on your company outlook, and how your investment style guides you. If your company is one of the FANG companies, I might hold on to the shares. Otherwise, sell as soon as you are eligible, and move the funds to S&P 500 index.
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Not a FANG company but a very big well known company.
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06-06-2021, 06:30 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: NW Pennsylvania
Posts: 1,803
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Quote:
Originally Posted by F.I.R.E User
They were purchased through my company’s ESPP. It’s at Fidelity.
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His point was “is this a stock that you would buy if you were NOT employed there and NOT a member of the ESPP PLAN?”
In other words, if you would not normally buy this stock outside of your ESPP, then don’t hold on to it any longer than necessary to get your profit.
If you have researched and believe the stock is a good long-term holding, then ther is nothing wrong with holding it to hopefully make even more money. Just be cautious to not let it rise to become a large percentage of your investments. What is a “large percentage”? Opinions vary. But many say that up to 5% of holdings in one individual stock might be safe IF your investments are otherwise widely diversified.
Others feel that having a large % of your investments in the company that also supplies your salary is not healthy. If the company begins to fail, you could be laid off at the same time a large % of your investments fall in value. The more diversified you are with your investments, the less impact on your being laid off. But, again, opinions vary on the value of “large percentage.”
There is no right answer for everyone. Just consider all of this in making your own personal decision.
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06-06-2021, 06:32 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 2,852
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I sell them right away.
__________________
Eat, Drink and Be Merry.
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06-06-2021, 06:35 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by PaunchyPirate
His point was “is this a stock that you would buy if you were NOT employed there and NOT a member of the ESPP PLAN?”
In other words, if you would not normally buy this stock outside of your ESPP, then don’t hold on to it any longer than necessary to get your profit.
If you have researched and believe the stock is a good long-term holding, then ther is nothing wrong with holding it to hopefully make even more money. Just be cautious to not let it rise to become a large percentage of your investments. What is a “large percentage”? Opinions vary. But many say that up to 5% of holdings in one individual stock might be safe IF your investments are otherwise widely diversified.
Others feel that having a large % of your investments in the company that also supplies your salary is not healthy. If the company begins to fail, you could be laid off at the same time a large % of your investments fall in value. The more diversified you are with your investments, the less impact on your being laid off. But, again, opinions vary on the value of “large percentage.”
There is no right answer for everyone. Just consider all of this in making your own personal decision.
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I am not a fan of buying individual stocks because of high risk. This is the only common stock I own because I get 15% discount per share. I would not buy this stock if I was not employed at this company. I have never lost money since I have invested in 2007. It is a very slow moving stock.
According to Personal Capital it should not be more than 3% of total portfolio.
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06-06-2021, 06:36 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by tulak
I sell them right away.
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Oh ok. Maybe, I will start to do just that. You sell them even if it is only 1 share to sell?
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06-06-2021, 09:13 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 2,852
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Quote:
Originally Posted by F.I.R.E User
Oh ok. Maybe, I will start to do just that. You sell them even if it is only 1 share to sell?
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Yep. I do the same with RSU shares.
I worked for a company whose stock didn’t move forever. It took me about 10 years to say screw it, sell the shares, and then reinvest in my AA.
Beyond some fun money, I don’t invest in individual stocks.
__________________
Eat, Drink and Be Merry.
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06-06-2021, 09:16 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Oct 2020
Location: Sugar Land, Texas
Posts: 1,185
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Quote:
Originally Posted by tulak
Yep. I do the same with RSU shares.
I worked for a company whose stock didn’t move forever. It took me about 10 years to say screw it, sell the shares, and then reinvest in my AA.
Beyond some fun money, I don’t invest in individual stocks.
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AA?
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06-07-2021, 07:22 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Dallas
Posts: 1,148
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Quote:
Originally Posted by PaunchyPirate
I always sold one day after my shares were eligible to be sold. I never was in a situation where I wasn’t at a profit.
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+1. I had calendar entries for the sale dates! Math was very simple: 15% off minus 25% tax on 15%. So 11.25% return every 6 months so annualized 22.5%. Rinse and repeat.
The reasons I didn't hold ESPP were two fold:
1. Business risk. I am a total market kind of guy so it didn't make sense to hold an individual security.
2. You are already invested in your employer by your job. If your employer went under then you would loose your job AND your savings (however small). Unacceptable in my book.
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06-07-2021, 07:32 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,806
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Quote:
Originally Posted by F.I.R.E User
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Company stock is about 1% on my total portfolio and I also get 15% discount per share.
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Tell me about the 15% discount. At my former MegaCorp, and some others I was familiar with, that 15% applied to the lowest of either the start of the period, or the end of the period (our period was 6 months at the time). IOW, it was essentially a guaranteed 15% gain, more if the stock rose.
I *always* sold as soon as it hit my account. You can't get a guaranteed 15% in any other way that I know of. This isn't an investment, it's a benefit. Take it.
No one knows if your company stock will be a good investment going forward. Take the money and diversify (or spend it).
edit: What pjigar said!
-ERD50
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