On Apr 18, 2:39 pm, Tad Borek <bore...[at]pacbell.net> wrote:
- quote -

Yes, but IMHO 1 year from the purchase or 2 years from the beginning
of the offering period is way too long a time to half the tax due, all
the while exposing the 15% discount to market volatility. So the
question is: take 10% net now or wait to take 12% net, if one's lucky.

In my case, I use it to pay car and homeowner's insurance and property
taxes, so I cannot afford the risk, when selling immediately makes
more sense. If I've got some months until such bills, I just put the
money in a CD with the proper time-period and make even more profit on
it.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Bill Woessner wrote:
- quote -

I'm surprised how many of the replies have been in the sell-immediately
school of thought, I've never seen comprehensive stats but it seems more
common not to do that. Yes it does represent concentrated risk to own
your employer's stock but depending on the company, that 15% discount,
plus the fact that it's often applied to the low price of the purchase
period, builds in a buffer. I do see people who sell their shares
immediately for that near-infinite overnight return, but plenty of
people (especially those with limited or no other equity participation
in their company) choose to hold for the longer term. There can be a tax
incentive to holding longer, if you're not familiar with all the rules I
think fairmark.com covers it somewhere.

-Tad

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Will Trice <wtrice[at]notmonitored.com> writes:

- quote -

That was my approach as well. In addition, even if a company's stock
is "worth holding" by some random investor, it may make less sense
for an employee to own the stock; having both job security and savings
tied up in the same business seems like a Bad Idea to me. If your
company also offers stock options as part of its compensation package,
then you already have exposure to upside potential in company stock with
no risk to your own savings if the stock price takes a nosedive instead.

Just my own $.02 worth, but the only situation where I'd feel
comfortable holding company stock is if it's a small enough company
where I can see a direct link between my own daily work and the
company's profitability. That wasn't going to happen in a company
with 80,000 employees, given that I wasn't in line to be the next CTO
or whatever.

-Sandra the cynic

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

jIM wrote:

- quote -

I disagree *if* the OP is able to flip the shares upon receipt.

- quote -

<snip
- quote -

I have to disagree with this as well. I have participated in these
plans before (however, the plan at my current employer is inside our
401(k) but offers no discount and a minimum 5 year holding period - why
would anyone do that?) and I usually flipped my shares as soon as I
received them. But I did that because I evaluated the company and
decided that I wouldn't buy shares outside the plan, so why would I hold
shares inside the plan? If the company is worth holding, that might be
the right choice. But that's certainly not always the right choice.

-Will

william dot trice at ngc dot com

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Elizabeth Richardson wrote:
- quote -

I think Jim was thinking of this as a 1.5% addition to salary (10% of
salary at 15% discount), which is actually a little higher as Steve
points out.

-Will

william dot trice at ngc dot com

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Apr 8, 7:16*pm, "Elizabeth Richardson" <erich...[at]worldnet.att.netwrote:
- quote -

I would expect the return to be closer to 17.5%. I participated in a
similar plan in which my employer offered company stock at a 10%
discount. If there was no price change between purchase and sale, the
gain was actually 11.11% (minus transaction costs and taxes). For
example, if the stock was selling for $10/share, I could buy at $9.
If I sell for $10, the gain is 1/9 (11.11%).

I could not sell for about 3-4 days after the purchase date.
Therefore, my actual gains varied somewhat. It netted pretty close to
the 11%. The transactions costs to sell where fairly low. I was
buying $5,000 per quarter (max allowed), so the transaction costs were
not a big impact. You also have to do some extra work when filing
your taxes.

I used the gains to purchase a diversified mix of stocks/bonds, rather
than concentrating an investment with my employer.

Steve

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

"jIM" <noreplysoccer[at]hotmail.com> wrote in message > My opinion is that as you have termed your strategy, you are taking on
- quote -

I don't get this math. He buys a stock for 15% less than the ticker price.
If there is no price fluctuation, why isn't his gain 15% when he sells? I
must be missing something. Bill said his "bonus" was 1.5% because
technically that's what the company is giving him, gratis. But if you or I
saw a gain of 15% in a stock, which is what Bill is seeing, we'd call that a
15% gain, not 1.5%.

Elizabeth Richardson

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Bill Woessner wrote:
- quote -

First, how often is the stock purchased? Is this plan annual? (My
experience is every 6 months.) Is it 15% off the lower price of the two
endpoints or just 15% off the end?
You see, even with moderate volatility, the 'lower of two endpoint' rule
will give you a chance at buying at a greater discount, at least half
the time. And to jIM's point, it may be 1.5% bonus, but it's better than
a 15% return on the invested money.
Say the plan is annual, and you put in $100/month. Over 12 months it's
$1200, but the average time you are out that money is 6 months (Maybe
even 5.5) as you went from $0 to $1200 over the year. And the return is
not 15%, it's 100/85 (as you bought at 15% discount) or 17.6%.

So your potential is 17.6% in an average 6 months holding time VS the
risk you stock drops 15% before it hits your account so you can sell. Do
stocks drop that much ever? Of course. You have to judge for yourself
based on volatility and your own risk tolerance.

Joe
www.blog.joetaxpayer.com

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Apr 8, 8:53 am, Bill Woessner <woess...[at]gmail.com> wrote:

- quote -

Actually it can be better than this. One company I was with set the
discount
at the beginning or ending price at each six month period,
whichever was lower.. So in practice it was more like a 25-30%
discount.
So assuming a 30% short term gain hit for fed and state,
you start out free 2% money if you max out. Thats a free
week's pay.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Apr 8, 10:53*am, Bill Woessner <woess...[at]gmail.com> wrote:
- quote -

My opinion is that as you have termed your strategy, you are taking on
a lot of risk for a 1.5% annual gain.

I would hold the stock longer in hopes of getting upside appreciation
and improving the return. I would then counter this by diversifying
other portions of portfolio.

Is the new employer a large cap, mid cap or small cap?
If a large cap, my suggestion is to reduce overall large cap exposure
in portfolio. If normal allocation to large cap is 30%, maybe reduce
to 25% and hold company stock as other 5%. Most large caps move in
tandem with each other, there is little additional risk taken relative
to what you do now.

If new employer is a mid cap or small cap this is much harder. You
are effectively overweighting a sector within that asset class. My
suggestion would be to add a bond position equal to position in
company stock. I would not reduce mid or small cap exposure (in
mutual funds) because of where my company stock trades.

I would plan to hold for some time. As Ernie pointed out, company
stock can be highly profitable if you hold it long enough (and company
is a good company).

I work for a mega cap (we are world's 12 largest employer). Much of
our revenue comes from overseas. I hold 4% of my 401k in company
stock and dropped my large cap by 4% and foreign holdings by 4%. and
added a 4% bond position. IMO this covers my asset allocation
enough. I want to take this risk to get higher returns-maybe 20% when
rest of portfolio only gets 8% type thing.

I think if you have enough assets (already invested), taking a risk
with a small position makes sense.

If whole portfolio was 200k and gained 8% you made $16,000.
If company stock was 20k (10% of above) and gained 20% you made
$4000. Took 10% more risk and received 25% of the overall gain. IMO
this is much easier to stomach with a small position in company stock.

Make sure you are rewarded for the risks you take.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

As others have mentioned, I just sell the stocks as soon at the end of
the period when I get the stocks. It nets about 10% in profits and I
use it to fund my children college fund and some annual expenses, such
as property taxes, homeowner and car insurance.

The period varies from company to company and in some it may not be
possible to cash them in at the end of the period, but only after a
while. I wouldn't purchase stocks through such a plan if I couldn't
cash out immediately at the end of the period, because then I'd be
subject to market fluctuations, when the 15% (or about 10% net)
discount could easily vanish; not worth 2% in tax advantages. If the
period were longer than 6 months I wouldn't either, because then it'd
be just too long a time without liquidity.

HTH

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Bill Woessner <woessner[at]gmail.com> writes:

- quote -

I used to work for a Big Chip Manufacturer :-) that had such a
program. They collected your money from payroll deductions and then
twice a year traded the money for stock at the 15% discount. You
could sell your shares immediately, if you wanted, and they even had
their employee stock program set up so that you could choose this
option in advance. That's what I did; I didn't want any of my own
money invested in company stock. I already had a pile of stock
options from my compensation package, annual bonuses were based on
company profitability, and given that it's what I do for a living as
well I didn't even want any more investment exposure to the tech
industry in general, thank you very much. I also note that Big Chip
Manufacturer's stock price has declined something like 30% since the
time I started work there 7 years ago.... you might save a few bucks
on taxes by holding the stock for a year, but you might lose a pile of
money by holding it, as well.

-Sandra the cynic

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

In article
<c3357f3c-5a18-4bb8-8f4d-9e9312d7b611[at]m71g2000hse.googlegroups.com> ,
Bill Woessner <woessner[at]gmail.com> wrote:

- quote -

crystal ball is.

It worked for me when I took part in such a plan from 1962-1966 (then
the company discontinued the plan). I received stock at a 15% discount
and have never sold it and have reinvested all dividends, the stock and
it's derivatives are worth over $250,000 today. I just wish the company
had continued the plan longer.

YMMV.

--
-Ernie-

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Bill Woessner <woessner[at]gmail.com> writes:

- quote -

If you're buying 10% of your salary into it, and you can
unload it piecewise (say, quarterly purchases) after a
year, you shouldn't end up with more than 10% of your
salary in it at any time. The question is what multiple
of your salary you already have saved otherwise. If
you have no savings whatsoever and you put 10% of your
salary into this, you're way way overweight the company.
If you have, say, twice your annual salary already saved
up, then you're putting no more than 5% of your assets
into the company (on top of your pay) - which is a level
of risk that's not terrible.

It really depends on a variety of factors unique to
your own situation - how risky the company itself is,
how your financial situation is otherwise, etc.

- quote -

I participated in just such a plan until I'd accumulated
assets through it which added up to as much of a concentration
in my employer's stock as I was comfortable with. Then I
stopped. I didn't go and cash it out and then start again,
though. I just sat on that stock, watched it appreciate
even more, and sold it off around the same time I left
that company. It wasn't a home run, but it was a decent
and easy investment to make.

I'd recommend it as not a bad idea - *if* your situation
and other assets make it not too risky. I'd definitely
not make it my only savings, and I'd not let my investment
in my employer build up to more than a small percentage
of my overall investments - just like I'd limit my exposure
to any single stock.



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Hi all. I'm seeking advice on whether or not to participate in my new
employer's stock purchase plan. I haven't started the job yet so I
don't have all of the details. But the benefits crib sheet they gave
me spelled it out like this: You can contribute up to 10% of your
salary toward the plan and you purchase the stock at a 15% discount.
It does not mention how long you are required to hold the stock.

On the surface, this seems like a simple way to get a 1.5% (= 10% *
15%) bonus. Of course, that assumes the stock stays level.
Normally, I'm adverse to holding that much stock of a single company.
So I'd want to sell it ASAP. But there is the incentive to hold on to
it for a year to get long-term capital gains treatment.

So basically, I'd just like to hear what other people have to say
about such programs. If you have personal experience, so much the
better!

Thanks in advance,
Bill

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.