Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
At 56 years old, I have a few years left before I can retire. I plan to change employment next year for the better. During my years at my current company, I have been given and bought large amounts of company stock. Our company went public this year. I feel the new investors plans are to sell out in the next year or so. My questions is: Should I sell my company stock and pay off my home mortgage while the stock is worth something? Our mortgage is the only debt we have.
Thanking you for you opinions!
Print the post Back To Top
No. of Recommendations: 6
I would certainly sell a large portion of it and diversify if not pay off the mortgage. My one big financial regret is that I hung on to large amounts of company stock at one point - and watched it tank. I lost about $100K probably. Still was worth something, but not what it would have been if I had sold it at the time I got it and had a more broadly-diversified portfolio.
Print the post Back To Top
No. of Recommendations: 1
Consider anybody in your position (age, lots of company stock, etc.) who happened to work for a Bank. Most are down 50% or more in the last last 12 months. When bank stocks are selling at prices not seen since the early 1990s, there is no way the price will recover in 2 or 4 or maybe even 10 years if inflation is taken into account.

Gordon
Atlanta
Print the post Back To Top
No. of Recommendations: 0
This is my concern. After the private owner sold to investors, I see their mission is to get the stock to the highest and sell. Although I can not see the future, I feel the stock at the current price would serve me better now by selling and paying off mortgage. The rest I will research to invest.
Thank you again for your help and advise.
Print the post Back To Top
No. of Recommendations: 0
That is exactly right. And that is what I am afraid will happen here. Paying off our mortgage will make a huge difference in our retirement. Selling my company stock while it is going up or at the high will make a huge difference also!!
Thank you for your help and opinion!
Print the post Back To Top
No. of Recommendations: 1
We sold a lot of company stock in 2000 and that enabled us to retire early. By the end of 2000 the stock had already lost 2/3 of its value. By the middle of 2001 it was down around 95% and has never come back.

A good rule of thumb is to not hold more than about 5% of your portfolio in any one issue, possibly 10% if it's something you're close to and know quite well. Even after our sale, we still had 22% of our investment assets in the company stock. It wasn't fun watching the value disappear but we were fortunate to have sold enough before that happened.

You also want to be mentally prepared for the stock to skyrocket after you sell it. It will be important to realize you made the best choice given your situation and the information available to you and that it could easily have gone the other way.

--fleg
Print the post Back To Top
No. of Recommendations: 0
That is exactly right. And that is what I am afraid will happen here. Paying off our mortgage will make a huge difference in our retirement. Selling my company stock while it is going up or at the high will make a huge difference also!!


pretty much an echo --

• if company stock is a big part of your retirement assets --*i* recommend selling just to diversify

• if you feel company stock is near high -- sell to take profit.


• paying off mortgage is entirely separate issue

( maybe think about taxes regarding first two )


=
..... a maybe better than Banks example is Enron.
Print the post Back To Top
No. of Recommendations: 0
And then there is taxes!!! Yes, this is also a matter to take in consideration. Not sure about this at all but will need to check it out. So much comes into play. I hope I can remember to move all the games pieces in the right directions.
Print the post Back To Top
No. of Recommendations: 0
Random thoughts:

1. What's the company? We could tell better if it's known.

2. How much of an mortgage interest deduction do you get? I'm guessing low, in which case paying it off is recommended.

3. The peace-of-mind of owning your home free and clear is worth a lot. Do try to save and invest what you had been paying on the mortgage.

In any event, I agree with selling the company stock and diversifying.
Print the post Back To Top
No. of Recommendations: 0
"At 56 years old, I have a few years left before I can retire. I plan to change employment next year for the better. During my years at my current company, I have been given and bought large amounts of company stock. Our company went public this year. I feel the new investors plans are to sell out in the next year or so. My questions is: Should I sell my company stock and pay off my home mortgage while the stock is worth something? Our mortgage is the only debt we have. "

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Generally, paying off debt frees up funds you are paying and is a good
plan. An exception might be argued if the company earnings growth
rate exceeds the interest rate charged for you mortgage - however,
paying down the mortgage should allow you to have funds available to
save in an emergency fund - or invest in either your company or
another investment which might have either better returns or
less risk in your eyes.

Everyone has unique situations which tend to make a generic response
questionable to downright silly. Health situations, family
needs, and other things may push you to keep the mortgage but
still sell some or all of the stock to put the funds in CDs or
some other less risky and more liquid form. Sometimes cash-flow
issues will drive you to pay off the mortgage as soon as possible.
Debt is something that can be useful - and can provide flexibility
if used carefully. If your only debt is your mortgage, you know
how to handle debt responsively - and your judgement is pretty
good.

Good luck.
Howie52
Print the post Back To Top
No. of Recommendations: 0
another consideration should be, is this stock held in a pre-tax account such as a 401(k) or IRA? If so be sure to figure in the tax consequences of an early withdrawal. I'm not saying don't do it, just be advised.

In my case I lost over $120,000 in company stock that tanked, by not cashing it in and moving to money to an IRA. OUCH!
Print the post Back To Top
No. of Recommendations: 0
At your age I would suggest you get involved with a good finanical planner. I happened onto one thru my credit union. This was back in 1999. He has helped me navigate to turbulent times of the tech bubble burst and of course 9/11. I have not ever regretted getting involved with him. I found him by just plain ole dumb luck.

If I was looking for one today, I would interview several and ask for references from current clients. In the final analysis you will have to go with your gut feeling on who to pick... just pick wisely or you may regret it.
Print the post Back To Top
No. of Recommendations: 0
Another way to look at this is to remember that you are not losing an asset. You are simple transferring value of one asset to another. By doing so you make the second asset that much more secure.
Print the post Back To Top
No. of Recommendations: 0
This is my very thought for selling the stock. It is not in a pre tax account and most was given to me. I will still have to pay some capital gains on the sell but not like I would if it was in a 401k. Shifting our investment out of the stock while it is going up or at the high to pay off our home would be a huge peace of mind. I feel I would rather do this then watch it go down the drain and end up with nothing. I understand that the stock might continue to climb after the sell, but I will have our home paid for and that is huge being that it is the only thing we owe. I did speak to my accountant and he agreed that this plan makes since, but did remimd me of the taxes. I will look into finding an advisor, but money can not buy all the experience that the retired fools have. Thanks you all again for any comments.
Print the post Back To Top
No. of Recommendations: 0
This is my very thought for selling the stock. It is not in a pre tax account and most was given to me. I will still have to pay some capital gains on the sell but not like I would if it was in a 401k. Shifting our investment out of the stock while it is going up or at the high to pay off our home would be a huge peace of mind.

Then do it.

Phil
Print the post Back To Top
No. of Recommendations: 3
Shifting our investment out of the stock while it is going up or at the high to pay off our home would be a huge peace of mind.


There is your answer right there.
Peace of mind is worth a lot. A LOT.

I read somewhere a while back that people already know the answer to their questions/problems even when they think they can't make up their minds.

What you do is decide "Heads" I do this, and "Tails" I do that. Then flip the coin. Then pay very close attention to how you really feel about the answer in the coin-toss and you will know what you really want to do.

It sounds simple, but there is a large grain of truth in it.

AM
Print the post Back To Top
No. of Recommendations: 0
Peace of mind is worth a lot. A LOT.

Right on! Some might say it's worth almost everything, and something we all should strive to achieve.
Print the post Back To Top
No. of Recommendations: 0
In general it is not good to have a large proportion of your savings in your employer's stock.

If something goes wrong, you can lose your job and your savings at the same time. Double whammy.

Therefore, if you can sell the stock, or most of it, the probability that that is a good investment decision is very high.

What to do with the money is a different subject. We don't know the interest rate you are paying, whether fixed or adjustable.

Best wishes, Chris
Print the post Back To Top
No. of Recommendations: 0
<<In general it is not good to have a large proportion of your savings in your employer's stock.

If something goes wrong, you can lose your job and your savings at the same time. Double whammy.

Therefore, if you can sell the stock, or most of it, the probability that that is a good investment decision is very high.
>>


While I'll agree that that's good, standard advice, I'd take a good hard look at the prospects for the company before selling out.

Young people especially can afford to take some risks, and the stock of a promising company may be an outstanding investment.


The Seattle area has something like 10,000 Microsoft Millionaires when someone counted years ago.

Yes, you are taking some risks. But they may be worth taking if you have confidence in the prospects of the company for which you work.

That's especially true if you are likely to spend the money if you liquidate the stock. A book about Home Depot related stories of employees who had "million dollar couches" ---- employees who had promptly liquidated their company stock to buy consumer junk when it would have been worth a million or more had they held it.



Seattle Pioneer



Seattle Pioneer
Print the post Back To Top
Advertisement