Should I Participate in My Company's ESPP?

I don't know.  Do you like free money?   Then yah - you should probably participate in your company's ESPP.

ESPP stands for Employee Stock Purchase Program.   It allows employees to buy their company stock at a discount.

It works like this:

  1. Each pay period your company deposits part of your paycheck into a separate brokerage account.

  2. Every 6 months, your company uses that money to purchase company stock at a discount (usually at least 15%).

So for instance, every 6 months you give your company $8500 and they give you back $10,000 worth of stock. 

It's like exchanging $85 for a Benjamin Franklin.  (Only ESPP's and grandparents will give you that type of deal!)

And after the stock is purchased, then you SELL! SELL! SELL!

You just made a 6-month, risk-free 15% return.  Take the money and run!

Your company stock is going gangbusters?  Mazel tov!!!   All those unvested RSU's will be worth a lot more once they vest.

But in the meantime don't roll the dice with your guaranteed 15% return.  Sell the stock the same day it's purchased and put it in one of your financial buckets. 

All ESPP's max out at $25,000 for the year.  So that's a guaranteed $3750 you can make every year.

So max out your ESPP contribution immediately!  I mean unless you don't like free money.