Welcome to professrsavings.com, we teach finance basics.
Today we will teach you EMPLOYEE STOCK PURCHASING PLAN
in about two minutes.
You should know since this may be a great way to increase your investments with the company you work with.
An Employee Stock Purchase Plan or ESPP is a company-run program that allows eligible employees to purchase company stock at a discount to fair market value.
Let’s go through the basics.
Enrolled employees can choose to have 1% to 20% of each paycheck automatically deposited into their brokerage account. This can be a great way to force you to save.
SO, at the end of each offering period, the company uses the accumulated funds to purchase stock for the employee at a discount of up to 15% below fair market value.
ESPPs are offered to give employees a form of ownership often with the intention to motivate them to work harder and contribute to the growth of a company.
Now, let’s talk about the possible downside.
Investing in your company stock can be risky if you allocate too much of your portfolio to it.
Many factors such as global economic or political issues can affect you’re company stock value and many of these things maybe out of your control.
Like they said, “don’t put all your eggs in one basket.” So make sure you diversify.