Employee stock purchase-am I missing something?

[Piecey]

Wow, I didn't do it because I was only 19, didn't really understand and now I guess I'm glad I didn't.

Would you recommend doing it if you've got the money (I also have 5% contributed into a 401K which is matched by my company) and you're fairly positive that your company will be around for awhile?
(Like, we're in the top 15 of the Fortune 500 list!)
Or just contributing more to 401k.
By the way, I'm only 20!

 

[Hedy]

Wow, I didn't do it because I was only 19, didn't really understand and now I guess I'm glad I didn't.

Would you recommend doing it if you've got the money (I also have 5% contributed into a 401K which is matched by my company) and you're fairly positive that your company will be around for awhile?
(Like, we're in the top 15 of the Fortune 500 list!)
Or just contributing more to 401k.
By the way, I'm only 20!

Piecey, if I worked for your company, I would.

 

[HooKooDooKu]

You can't blanket say that participation in an ESPP is a good or bad idea.

Each company that offers ESPP (Emplyee Stock Purchase Program) has different plan rules/benefits. You have to learn the plan rules and think through the risks.

The first ESPP I ever participated in was with a growing company that had a stock price that (over time) was always increasing. You got to buy the stock at a 15% discount and had to hold it for a year. There was an obvious risk, but over all, I made money.

The second ESPP I ever participated in was with a company with a stock price that had wild swings (started around $20, climbed to around $40, dropped to about $4, and ended around $20 when the company sold). Again you got a 15% discount, but it was 15% off the lower of the quarterly openning price or quarterly closing price. Fortunately the gains I got during the $4->$20 time period MORE than made up for losses during the $40->$4 period. Obviously a very risky situation I fortunately came out on top of.

The third ESPP I participated in didn't offer a discount and didn't require you to hold the stock for any fixed length of time. What you did get was a 25% match on your contributions a year later. So if you could stand to have 15% of your paycheck delayed and didn't mind the hassle of logging in to sell your stock after each paycheck, there is almost no risk (because of the short term hold) yet a year later, you basically get free money. So basicly little risk to get free money... why wouldn't you participate?