I was under impression that ESPP is a good benefit and was purchasing max limit 25k every year from past 5years. When I did actual calculation realized that I would have made more money by directly buying stock instead of keeping in company account and get stocks at 10% discount quarterly....Either it is loss to both employee and company or just to employee.. its not a benefit at all to employee as we have to leave money in account for a quarter without investing and have to pay tax on discount if we sell early....
How is that even possible? You are getting stock (not stocks — stop misusing that word) at x% off the lower of two prices. Unless your stock has two peaks during the start and end of the offering period and a big valley in the middle, you’ll do better if your stock is growing, which MSFT has been for the past five years. Obviously it depends on the nuances of the program, but ESPP is always an employee benefit designed to allow all employees to become owners of the company.
Microsoft (unfortunately) got rid of lookback, so the discount is always off the end price. Also it used to be 15% discount, now it's 10%. Still an unbeatable deal, but it used to be better.
That sucks about eliminating lookback. Still, stock would have to rise faster than 10% per quarter to make ESPP a bad deal. (Probably more like 15 or 20%. Too lazy to do the math right now.)
Hi I don’t understand your reasoning. You are saying buying a stock at market value (e.g. $90) is cheaper than buying the same stock at 10% discount (e.g. $81)? These benefits cost the company money to run and to give away to employees.
The price of stock was $80 at the time of money I gave to company.
I think I understand your point now. You don’t want to complain that the company stock is doing so well do you? If you can always time the market so well, just get out of ESPP and do your own trading. Take the risk and get the reward.
You don’t ‘have’ to, it’s an option. Essentially, it’s a medium risk/reward investment if you wait a year to sell to avoid short-term taxes. Low risk/reward investment if you sell immediately. You choose.
Over a five year period I'm certain your math is wrong. You might have had a couple quarters where you could have beat ESPP, but (a) those quarters are rare and (b) ESPP's discount had zero risk.
See the details I provided in the end.... I lost money in all quarters in last year...
Right, you didn't "lose" money, you just had the opportunity to make more money if you had invested differently. That's only true because MSFT was on a tear, but that investment carries significant risk. ESPP carries exactly no risk.
OP: You did your math wrong. If your plan lets you buy quarterly and get a ten percentage discount each quarter then that works out to an annualized: ((1+10/90)^4 - 1) * 100 = 52 percent return. You are supposed to sell the stock each quarter and invest the annualized 52 percent profit in the s&p 500. I sure wish my employer's plan worked quarterly. No good deed by Msft as an employer goes unpunished. Sad!
OP, care to explain the math? I think the only way you are better off buying outside is when on the 2 dates your stock price is more than 10% higher than rest of the year
It’s never a loss to the employee. U can still trade at regular time & find a lucky spot, but if anyone gives you 15% of something that has real cash value, you take and say thank you & can i have another.
Compare price in cols 5 and 8. Is it not loss to me?
The picture shows that you’ve gotten a great deal, compare fair market value & what you paid
Compare 4 to 5 ignore 8, that's your value. You made money every quarter with espp
You are CONFUSING market performance or lack of action on your part w a discount. Would you be saying the same thing if the market had tanked during this period? It’s no different than saying I lost $300M because I didn’t buy a $1 winning lotto ticket
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Depends on the program and growth of the stock.