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Buying company stock

Started by Ricky, December 23, 2019, 08:10:38 AM

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Hello all,

I am hoping for some opinions or guidance on buying company stock. My wife works for a blue chip company that historically pays a great dividend. Her company offers the option to buy common stock for a 15% discount. You must hold it for 1 year before selling and 2 years in order to transfer to a new brokerage. (bought through fidelity and we use Vanguard). Also, she can max out buying the stock at 10% of her salary.  From my understanding it wouldn't be taxed until the stock is sold.

Some background for us: both 28 years old. Max out 401ks. Recently sold our primary residence and moved to a living situation that lets us live for virtually free (won't be a long term situation). We both make low 6 figures. And no debt.

With that in mind- with a built in 15% discount for the stock would you contribute to the maximum limit? If so, would you sell right at the 1 year sale period and reinvest or let it grow? I personally favor index funds but perhaps there is a reason some would hold onto this one stock I'm not thinking of, such as tax implications.

Thanks in advance for your time and advice.


I would take full advantage of the 15% discount. With a 10% max buying power of salary, you're unlikely to be overallocated to your company stock.

That said, I always reinvested 100% of my year-end bonus AWAY from equities and into real estate, since I worked in equities and didn't want my career, pay, and net worth all tied to my job and equities.

I'd keep total company stock exposure to no more than 25% of net worth.



Thanks so much for the reply and advice Sam. I was wondering what a good % of net worth was appropriate for one stock, so that helps a lot. I really enjoy and appreciate the knowledge you provide on this blog. Great stuff!