Navigating Employee Stock Purchase Plans

Oct 08

A classic investment strategy is “Buy What You Know” – in other words, invest in companies and brands that you are familiar with and believe in. Investing in the company you work for can be part of a solid equity allocation, particularly when your company has an Employee Stock Purchase Plan (ESPP) that allows you to buy shares of company stock at a 5%-15% discount with after-tax dollars.

There are also advantages included in some plans, such as a lookback, that can let employees get an even better deal. We break down what you need to know before adding your company stock to your investment plan.

A Breakdown of the ESPP Cycle

Enrollment/Offering Date

An ESPP is a benefit extended at some publicly traded companies that grants employees the ability to buy their employer’s stock at a discount. Employees usually can enroll twice a year in the plan and choose the percentage of salary... ...