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Almost a year ago I wrote an article on Employee Stock Purchasing Programs. Here’s a link: Employee Stock Purchasing Program.
I defined an Employee Stock Purchasing Program as:
A company-run program in which participating employees can purchase company shares at a discounted price. Employees contribute to the plan through payroll deductions, which build up between the offering date and the purchase date. At the purchase date, the company uses the accumulated funds to shares in the company on behalf of the participating employees. The amount of the discount depends on the specific plan but can be as much as 15% lower than the market price. -Investopedia.com
I discussed how much I was going to start contributing, and how I excited I was on starting on this journey to build my wealth. My company matches every share you buy three years after maturity. I started contributing to my ESPP shortly after.
Now, I’m seriously considering, and probably, will stop contributing to my ESPP.
- I feel like I have no control over my investment. Dividends are automatically reinvested to the company. I asked about getting dividends in cash form so I could reinvest it elsewhere, and my program doesn’t work that way.
- Three years is a really long time. I don’t know where I’m going to be in 3 years. Maybe I’ll be laid off? Maybe I would have moved on? Maybe my company would have suffered a downturn? The truth is I’m beginning to not see a long term future with my company.
- I’m not diversified with my investments. My salary comes from my employer. I think having another part of my investment coming from my employer does not allow me to be diversified. I shouldn’t have all my eggs in one basket.
Gone are the days when companies cared about you. I cannot risk a part of my future on my company.
I have, also, done some thinking on my investment strategy, and think it would be wiser for me to allocate the after-tax ESPP contribution to my 401K. It would be more in line with the direction of our goals.
Do you have an ESPP? What has been you strategy?
- Comment below, share your ideas, and thoughts -
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