is it smart to invest in your companys stock?

What /u/winstonjpenobscot is trying to say is that, your company is offering 15% off the stocks you buy. So lets do the math. (I am not going in to tax part, might get to confusing.) I will be looking at the six months you are holding to the stock.

Say if you get paid $1000 every two weeks. Now you can put a max if 10% of that which is... $100. Now lets say each stock cost a $100 on the market right now, and for employees that stock cost $85. If you put that $100 towards that stock you will basically be buying 1.17 stocks. You get a 1 stock plus the 17% of a whole stock due to the extra $15. (This isn't really how buying stocks work. But the math will be there.)

There are two scenarios with that 1.17 stock. The market can either go up or down. If the market goes up, you will make a profit. If the market goes up to $120 per stock in six months, you investment is (120+(120*.17))=$140.4. You gain $40.40 from your investment. Now you can sell that stock immediately and capitalize on that earning. So now you have $140.40 to invest in other accounts.

Now with investing the stock, each time you buy stocks (each pay period), those stocks have they're 6 month time limit. If you buy 1 stock every pay period for 6 months, assuming 2 pay periods per month, you now have 12 stocks. But after 6 months you can only sell the 1st stock you bought on your first pay period. It doesn't mean you can sell all 12, I hope you get that part.

The market can also go down. In which case you wouldn't want to sell since you are losing money.

I would call it the 6 month poker game. You hold the stock for 6 months, then after 6 months you see the flop to see if you have won.

Now you really don't have to invest in the stocks. But the incentive of the 15% off gives you more stocks for your money vs if you bought the stocks by other means. With the 15% off you gain more if the market goes up, since you are paying less and getting more stocks. Or you lose less when the market goes down, since you are paying less for each stock

/r/personalfinance Thread Parent