UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Next Thread
Author: memarcit Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75626  
Subject: Another ESPP Question (long) Date: 6/26/2000 1:53 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Hi all:

I've worked for almost three years for a major business news publisher and just now am eligible for the ESPP. It's a typical plan, 15% deduction off fair market value. I can't afford lump sum payment now, I'd do payroll deduction.

I'm just wondering if I should do it - i'd just be able to afford about 36 shares or $50+/wk - for the following reasons:

1. Am contributing 5% of salary to 401K - more than enough to get total employer match, but obviously not maxing it out. I get 5% each week from employer.

2. Fully funding Roth IRA each year in hopes of using $10,000 to help purchase home in min. of 3 years.

3.Looking to save more $$ in relatively liquid instruments for emergency savings. Looking to save more in taxable (equity, i guess) investments for home downpayment.

4. No high-interest debts, car payments, etc. Just $3,000+ low-interest student loan left to finish up.

Employer is solid, has been around for 100+ years.

Any thoughts? Should I forgo ESPP and increase 401K witholding? Increase emergency savings? If I did the ESPP I'd hold the stock for at least the two-years necessary to avoid the tax hit and then probably sell to raise cash for home purchase.


Any thoughts?

Thanks in advance,

MM
Print the post Back To Top
Author: OldToad One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22885 of 75626
Subject: Re: Another ESPP Question (long) Date: 6/26/2000 3:57 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
memarcit: You asked: I've worked for almost three years for a major business news publisher and just now am eligible for the ESPP. It's a typical plan, 15% deduction off fair market value. I can't afford lump sum payment now, I'd do payroll deduction.
I'm just wondering if I should do it - i'd just be able to afford about 36 shares or $50+/wk - for the following reasons:...Any thoughts? Should I forgo ESPP and increase 401K witholding? Increase emergency savings? If I did the ESPP I'd hold the stock for at least the two-years necessary to avoid the tax hit and then probably sell to raise cash for home purchase.


Ten to twenty years ago the fact that your company had been around for 100+ years would have been a selling point. Not as much in today's economy. Just talk to the buggy whip makers around the turn of the century.

I'd personally avoid putting my savings, my retirement and my job all in the same pot.

If you want to use the funds to purchase a home within three years, you may want to consider something other than the equity market, but that depends on your tolerance for price swings. I'd use either a bond/GNMA fund or even a money market fund, again based on your tolerance to price swings.

I'd consider paying off the loan first because anything you owe and are paying interest on, especially non-deductable interest, is a rathole (as in pouring money down.)

Otherwise I think you're doing just fine.

That's my $.02.

Have a Great Day.

OldToad

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: foolperron Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22892 of 75626
Subject: Re: Another ESPP Question (long) Date: 6/26/2000 6:54 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
MM,

I personally feel that you should max out your 401K before you do anything else as it is the best tax shelter. The Roth is great for you as well. Once you've maxed those, that's when I would do the stock purchase plan as it is a good deal as long as the company is solid which sounds like the case here. I bought a house too early using my stock purchase money, so I suggest saving as much as you can until you NEED a house.

Matt

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Next Thread
Advertisement