Should You Sign Up For Your ESPP

Hi, I’m Tom Lo with Vested Financial Planning, here to help you answer the question: Should you sign up for your ESPP?

The answer is if you can sell your stock within a few days after the ESPP ends, then I would max it out. Remember, you’re going to get typically get a 15% discount off the lower of the beginning price or the price at the end of the period. So at a minimum, you’re going to earn a 15% return.

If you think about the time your dollars are invested when you first invest your dollars, those are six months ago and then the last dollars you put in were put in a few days ago. So on average, it’s roughly three months your money is invested. So if you annualize, 15% of return in three months, it becomes 90% plus. The ability to get a 90% plus return with a few days of risk, you can’t get that anywhere else. So that’s why I suggest if you can max it out and you can sell it within a few days then I would do that.

If your company requires you to hold it for a year or more, which some companies do, then you’re taking on more risk. So should you sign up for your ESPP will depend on if you think holding too much company stock is worth that risk or not.

If you want to learn more, come to my website at vestedfinancialplanning.com. Thank you very much.

Submit a Comment

Your email address will not be published.

Understand Your Employee Equity Cover

Understand Your Employee Equity

DOWNLOAD YOUR FREE GUIDE TODAY

Make the most of your employee equity and use it to make progress towards your dreams.

Success! Check your email for your Free Guide.