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If you can buy and sell immediately then there is no downside and you should max it out as it's free money.

If you're required to hold for some period or there are strings then it depends on what those strings are.

Not seeing a holding requirement, just that there are tax implications to selling! It sounds like I can enroll then just sell via Fidelity when the purchase goes through in February. Nice!

The major downside is risk. A single stock can easily tank and you could lose most or all of your investment.

Whether it's worth it often depends on how much of a discount or match they offer, and whether you believe the company is stable enough to maintain or grow its stock price.

My company has a 50% match for all stock purchases, which is amazing, so I bought a bunch over the last 10 years. It had gone up and all was well....then Covid hit and my industry went to shit and the stock went from $60 to $8 overnight. I lost over $20k just like that. It's back up a bit now, but even with the match factored in I've still lost money.

That is a good consideration, thank you! I’ll say I don’t have the budget to do more than ~$100 per paycheck so at least I wouldn’t be losing a ton if it goes south. If it helps offer any insight, the company is stable and growing and in the finance sector.

Double check that. I've never seen a company stock scheme that didn't have a holding requirement. Otherwise you can just buy as much as possible at the discounted rate and then sell right away and make bank. My company has a 2-year hold requirement in order to get the discount/match.

The biggest downside is the restrictions. If you have to hold it for a certain time it's a larger risk then if you can sell it immediately.

Also if there's any costs. Pretty much every brokerage has 0 fees for buying stock, but my ESPP has a selling fee even though it's with a firm that otherwise is 0 fees. So it cuts a bit into the upside and only make sense if I'm getting enough to offset the fee.

You’re right—I may have misunderstood the language. The only mention of a holding period says: the tax consequences to you depend on whether or not you meet the special holding period requirements: two years from the start of the offering and one year from purchase.

In addition to taxes, most have restrictions saying you can't sell right away (or that you lose the discount if you do). I'd triple check your documents and make sure there isn't that in there somewhere.

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I will also add that our stock is doing very well and has for the past year. I’m hesitant because I’m not sure how much higher it realistically can go so I’m wondering if I missed my window

Holding requirements are common but by no means ubiquitous. My last company did not have one. Granted the purchases were done quarterly and I don't know how the money is held in escrow for the three months leading up to the purchase date (presumably they benefitted somehow), but once the purchase clears you were free to sell immediately. The discount was garbage there though, but free money is free money.

There are a lot of them that don't have sale restrictions, but if it's a qualified plan selling it immediately is a disqualifying disposition and takes the tax favorability away.

There are many plans that allow you to sell right away. It's not unusual but yours is referring to a DD disqualifying disposition which makes you lose the tax favorability if sold before the respective dates.

Assuming you can sell the stock immediately after it vests (usually every 6 months), there is not a downside. Basically you're putting money in an account to buy company stock at a 15% discount at the end of the 6 month period. So when you sell it, you should see an immediate 15% profit on that by selling it immediately. The exact amount may be slightly higher or lower depending on the specific stock price it was bought at vs the price when you sell, but if you sell the stock the day you get it at market open then that difference will usually be very negligible.

Yes you have to pay some taxes on that 15% profit, but that just makes it a 12% net profit. If you can deal with the cash flow reduction for the first 6 months then it's absolutely worth it because it's free 1.5% bonus (assuming 10% of salary with a 15% stock price discount). After the first 6 months then you can just use the previous money to "pay yourself" to make up the gap, and then there's not even a reduction in your income. It's also a nice enforced savings mechanism.

Most of the negatives are only pertinent if you're required to hold the stock for some period of time before you can sell it. Or if you just decide to hold the stock for some reason and don't sell immediately.