If you work for a publicly traded company, you may have access to discounted company shares via an employee stock purchase plan, or ESPP. Here’s what to…
If you work for a publicly traded company, you may have access to discounted company shares via an employee stock purchase plan, or ESPP.
But whether and to what extent you decide to participate depends on other short-term priorities and"how comfortable you are sacrificing cash flow" during the offering period, Garasic said.employer's 401 matchDuring an"offering period," which is often six months, ESPPs collect after-tax contributions from each of your paychecks and use the money to buy discounted company stock on a specific date. Tax-qualified plans have a $25,000 yearly limit.
For example, with a $20 starting price and $22 ending price, you could get a 15% discount on $20 and pay $17, for total savings of $5 per share, which is a roughly 22.7% discount off the current market price. However, there's no guarantee of future stock performance. If you hold it for longer,"you're gambling on the stock price cooperating over that period," Garasic said.
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