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When should I sell my shares from my ESPP?
Old 06-06-2021, 01:20 PM   #1
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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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Old 06-06-2021, 02:02 PM   #2
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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.
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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Old 06-06-2021, 02:25 PM   #3
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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.
Oh ok. Did you reinvest the gains elsewhere?
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Old 06-06-2021, 02:30 PM   #4
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Oh ok. Did you reinvest the gains elsewhere?
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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Old 06-06-2021, 02:44 PM   #5
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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.
Oh ok.
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Old 06-06-2021, 02:59 PM   #6
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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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Old 06-06-2021, 03:14 PM   #7
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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.
Why do you think there is a correct answer to this question? What do you think?
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Old 06-06-2021, 04:03 PM   #8
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Why do you think there is a correct answer to this question? What do you think?
I guess it varies.
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Old 06-06-2021, 05:17 PM   #9
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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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Old 06-06-2021, 05:25 PM   #10
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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.
They were purchased through my company’s ESPP. It’s at Fidelity.
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Old 06-06-2021, 06:21 PM   #11
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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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Old 06-06-2021, 06:26 PM   #12
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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.
Not a FANG company but a very big well known company.
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Old 06-06-2021, 06:30 PM   #13
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They were purchased through my company’s ESPP. It’s at Fidelity.
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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Old 06-06-2021, 06:32 PM   #14
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I sell them right away.
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Old 06-06-2021, 06:35 PM   #15
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Originally Posted by PaunchyPirate View Post
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.
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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Old 06-06-2021, 06:36 PM   #16
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I sell them right away.
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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Old 06-06-2021, 09:13 PM   #17
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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?

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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Old 06-06-2021, 09:16 PM   #18
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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.
AA?
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Old 06-07-2021, 07:22 AM   #19
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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.
+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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Old 06-07-2021, 07:32 AM   #20
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Company stock is about 1% on my total portfolio and I also get 15% discount per share.
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!

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