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Savings Chart w/ ESPP (lemmy.world)

submitted 6 months ago by [email protected] to c/[email protected]

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There's a pretty popular savings chart in the personal finance community, and I just noticed it seems to be missing the option for when your employer offers an ESPP (Employee Stock Purchase Plan) unless I'm completely missing it.

Where would you guys put it if you could add it to this chart?

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[–] [email protected] 2 points 6 months ago (2 children)

ESPP is only really done in huge companies, and the terms vary too widely to be added to a common calculator. When I had one, though, I could sell right away. And the purchase price had a few different ways of being calculated, and they applied whichever was lower, so sometimes my effective discount was 25% or more.

I just cranked that shit up to the max, and sold most of it right away. I kept a small portion from each purchase as a side investment, just in case they screwed me over. I considered it my own personal severance plan, built up essentially for free.

[–] [email protected] 2 points 6 months ago (1 children)

Definitely. Mine is basically min(first_day, last_day) over a 6 month period. Able to sell right away and 15% discount.

[–] [email protected] 2 points 4 months ago* (last edited 4 months ago)

I don't see a lot of love here for the ESPP, so I'll add my perspective. If your company is not prone to large fluctuations, then a quicksale with 15% discount is usually a good investment (if locking your money up for 6 months isn't a problem).

Even without the min of start/end, it's giving you a very good shot at 15% benefit for an average investment of ~3 months (your initial contributions are held for 6 months, but your most recent st ourchase for weeks). I don't know of any investment that can fairly confidently return near 15% in 3 months.

So long as you are confident in your stock, my strategy is:

contribute to the espp
quicksale
withdraw the money (set aside some for taxes if necessary) and invest it into index (assuming all bills/debts are paid off)

Yes, it is taxed as short term gain this way, but your salary/other stock incentives/insurance are likely already tied to your employer, and holding it a year is riskier than quicksale