Call For Help / Request For Comments

The company I work for offers an Employee Stock Purchase Plan. We get a substantial discount on purchasing company stocks. They also offer a 401k plan, though they haven’t said anything about any kind of matching (probably because they want us to take part in the ESPP). Should I invest in both simultaneously to take advantage of the tax benefits of the 401k and diversity, or should I invest all into the ESPP to get the benefits of the discount. I know that most people suggest being wary of putting all of your stock into your employer’s company, and I don’t intend to. My idea is to participate in the ESPP and then after the purchase, sell the stock, and then re-invest it into something with higher growth and diversity.

3 thoughts on “Call For Help / Request For Comments

  1. It may depend on what company you work for ;)

    PFBlog buys his MSFT stock through ESPP and sells as soon as he can. Of course, if you worked for a small pharma company or something, that might be pretty risky. I’ll let other weigh in on the other aspects.


  2. This is a no brainer. Max out both your 401K and ESSP plan. In the ESPP plan, you can do next day sale (no risk). I max out my 401K and ESPP, but I take additional risk by holding onto my ESPP stock purchases. So far it has paid off nicely…

  3. Thanks for the feedback! I’m not for certain about maxing them both out right now though. I am thinking of starting with close to 10%, perhaps I’ll split it across both.

    I’m actually a contractor, and I hope to be hired full time soon so I might not be with the same company for long. I of course will plan to carry it over to the hiring company if I do though.

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