Espp hold/sell

Box
fPKQ77

Go to company page Box

fPKQ77
Oct 19, 2020 9 Comments

If your company offers ESPP 15% discount, 2y look back, 15% max of your salary. You can sell right after vest. What your strategy sell (right after vest) or hold to meet qualifying sale ( tax favor) ? or what else you can do regarding trade off between risk vs diversify ?
notice that company stock not a lot of volatile but also not a lot of growth per historic data.
#box #personalfinance #investment

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TOP 9 Comments
  • Intel
    BreadPitt

    Go to company page Intel

    PRE
    Hewlett Packard Enterprise
    BreadPitt
    I've always sold Intel ESPP stocks and RSU as soon as they were available to sell because of the bad outlook (worked out extremely well for me). If I was working at AAPL and they offered ESPP, I would hold on them as I personally expect Apple to beat the market.

    There is no correct answer. If you expect your company to beat the market, hold. If not, sell. If unsure, sell.
    Oct 19, 2020 0
  • Autodesk
    🥜 peenuts

    Go to company page Autodesk

    🥜 peenuts
    If your company is a low growth stock, then sell immediately and invest in something else. If your company has had decent growth and has a further potential, then hold.

    Don’t worry too much about taxes on ESPP. You’ll have capital gains tax when you sell, short term or long term. Holding long term (more than 1 year) saves you some taxes. But if you’re in a state like California where capital gains get the same treatment, long or short, you’re not saving a ton of money by holding long. You’d rather invest in something that has a higher growth potential and covers for the additional taxes you owe by selling immediately.
    Oct 19, 2020 2
    • Visa
      blacknoir👽

      Go to company page Visa

      blacknoir👽
      Just wondering How are they treated same? If its short term isnt it half of your taxrate. So if you are in 30 percent bracket, you will pay 15 perc for long term
      Oct 20, 2020
    • Autodesk
      🥜 peenuts

      Go to company page Autodesk

      🥜 peenuts
      For the state of California, there is no special treatment of long term capital gains. “California does not have a lower rate for capital gains. All capital gains are taxed as ordinary income.” - taken from FTB. On a fed level you could save some money, because the long term rates are either 15% or 20% based on your income. But yeah, if your stock isn’t growing that much, you’d better not try to save that fed tax, and just sell to invest in something that grows.
      Oct 20, 2020
  • Apple
    pj5

    Go to company page Apple

    pj5
    I'm holding. Apple stock has a good growth potential.
    Oct 19, 2020 0
  • Kabbage
    fNEM38

    Go to company page Kabbage

    fNEM38
    Sell and buy something you want to hold.
    Oct 19, 2020 0
  • Amazon
    stand7up

    Go to company page Amazon

    stand7up
    Depends on your outlook on it... there's no right answer.

    Note: I'm not familiar with look backs so my bad if this is inaccurate.

    If you believe the company will grow (to your satisfaction) in x months/years, hold it. If you want to reinvest the money in another stock because you believe it will grow faster, do that. If you're risk averse and don't want to deal with individual stocks, reinvest in an index fund/ETF.

    Holding doesn't give any tax benefits at the price you receive the shares at. You are still paying all income/short-term tax for your the difference between market and strike price. The only difference with holding is that if you hold long-term, you will get taxed at the long term capital gains rate. But selling immediately, reinvesting in another stock/fund, and selling that a year later is the exact same thing.
    Oct 19, 2020 1
    • Box
      fPKQ77

      Go to company page Box

      fPKQ77
      OP
      Per this calculation https://espp-calculator.com/index.html I think the basis is different when we hold it with the case stock price increase in between first date of subscription period and FMV on purchase date. However if the stock down..it is actually bad to hold it for qualify sale regarding discount (ordinary income).
      2y look backs - the lowest fmv price will be locked for last 2y etc..
      Oct 19, 2020