Posted: 6/6/2005 6:08:30 AM EDT
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Okay , I would like to know if this is some thing I should become involved with . I am getting older and have not started saving for retirement. It is open enrollement for us . I work for United health Care and I was wondering if this is some thing I should do and how much I should contribute ? They are goingto give us a 15% discount on the purchase of the stock we can contibute up to 10% and we will get the lower of the closing share on price either the 1st day or the last day of the purchase period. Our stock just split a couple of weeks ago so I figure right now would be a good time to get in. Any advice ??? |
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Usually a guy is a fool not to. Its always wise to take advantage of any investment vehicles offered by your employer. You get to take advantage of the stock at a reduced rate. Thats always a good thing as well. Assuming you could sell as soon as you buy your already in for a 15% gain (This isnt how it generally works however). For the most part, I think ESP Programs are a wonderful thing that everyone should take advantage of. Just check to make sure you can opt out of it before the end of the year in case you were to have some unforseen emergancy which suddenly required that little bit of extra money. |
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IMO splits rarely have anything to do with the timing or wisdom of stock purchases. Sometimes they go up after a split, sometimes down. In the long run it makes no difference unless the company is being positioned for an acquisition. Look at the history of Intel, which has split four times in the 10 years I've owned it (triangles indicate splits): The 15% discount is like a free insurance policy against the stock price going down. If it does any better than losing 15% of its value, you win. Keep in mind those are post-tax dollars. I don't know anything about your company. Mine also offers the same kind of ESPP deal. I have been taking advantage of it, just $50 per month and it's been growing nicely. If you think your company is stable this could be a good way to jump-start your savings. |
| Participate in those plans prudently, because I was in one of those plans years ago, and they dropped so much that I lost the company's contribution and all of my contribution. The company went out of buiness 10 years later. Many long-time employee lost 50-100grand of real money. |
| how long till you can resale the stock?? does it have to go into a retirement account or is it straight stock ?? if its straight stock thats great buy it and sell as often as possible for gain. be careful of how long you have to hold it also make sure that you are diversified. do NOT put all the eggs in one basket, remember enron??? ya good |
It looks like a straight purchase . Once its purchased there is no holding time / vesting period . and I can cancel it at anytime |
if thats the case then it is pretty low risk just make sure to sell it on a pretty regular basis that way your not stuck holding worthless stock and with no job like happened to enron. if you think about it the stock you should own the least of is at the company that you work for. |
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My thoughts are like purchasing any other stock. Do your home work. If all looks good then 15% off is gravy. Buy in, but keep your holdings less than 25% of your retirement holdings. That way if it goes south then it will sting but not wipe you out. Standard disclaimer here. I'm not a planner nor have any professional involvement in the market. Just my own thoughts. 
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Besides other investments (401k, Roth IRA), I participate in ESSP just like you describe as much as I can afford. The 15% is FREE MONEY! TAKE IT! Now here's the important part: DIVERSIFY! Do not hang onto all the stock you purchase. If your plan works like mine, once the sale executes you have to hold the stock for 18 months or else you trigger a Disqualifying Disposition. This means you have to declare the 15% discount as ordinary income. This is OK. Typically, I alternate between holding the stock from one sale for at least 18 months, and selling the stock from the next sale immediately. It's like a nice 4-figure bonus program that I control. If you're nervous about the stock taking a dive, sell it ASAP and take the hit for the DD. Remember, don't get ENRON'd. Those people who lost their asses were idiots who did not diversify. |