Should I participate in an ESPP?

This is the question that I have been pondering on lately. Should I participate in my company’s ESPP? What is an ESPP you might ask? It is short for Employee Stock Purchase Plan. I have read a lot of people’s opinion on this subject and the opinions cover the full spectrum between yes and no.

One of the biggest points that stood out to me was against participating in an Employee Stock Purchase Plan because you already count on the company for one source of your income. So why would you want to count on it for another source of your income? Well I am going to lay out my plan in regards to this matter.

I have decided that I am going to participate in my companies Employee Stock Purchase Plan because it is a great company. Now I am currently collecting a check for earned income from them but why shouldn’t I earn more from them while I can? I mean I already maximize the income from them in the fact that I contribute 5% of my income to my 401k and they do a 100% match on that, I also contribute money to my HSA which they also contribute to on an annual basis, so why shouldn’t I also buy stock in the company?

My plan starting out will be to deduct $25-$50 per week from my paycheck to apply toward the Employee Stock purchase. Each quarter that will allow me $300-$600 to purchase company stock. As part of the plan I will be able to obtain these shares at a 15% discount of the daily average at the end of the quarter. Now during the accumulation stage there are no fees included but once I go to sell my shares the broker does require like a $15 trade commission plus a small amount per share. Now while I’m not a huge fan of paying these fees, I do believe that the 15% discount on shares of a great company will make up the difference.

Even though I am electing to participate in this plan I am also well aware of the fact that I don’t want it to allow my portfolio to get too overweighted in shares of this particular company. Since the money will be deducted from my paycheck before I ever see it, I will still continue to save money and buy stock in my personal account so that it helps maintain the balance of the portfolio.

This will allow me to save some money while investing in a good company and to continue on my journey of accumulating wealth. As always I welcome any comments. Thanks and have a great day!

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