The stock purchase plans at the two non-FAANG companies I worked for that offered them were amazing.
One of them took money out of each paycheck for a quarter and then gave you the better of the price of the stock at the start or end of the quarter. So you got a chance at risk free profits if the stock jumped. I was told that some people put their entire paychecks into it until they put a limit on the percentage of the paycheck you could put in.
The other one was a 15% discount off the stock price, again, done quarterly. Which doesn't sound huge until you calculate the annualized return. The annualized return on the first paycheck of the quarter was around 80%, the annualized return on the last paycheck of the quarter was around 3,000%. No lock up period and the smart thing to do would be to sell immediately and pay the short term capital gains tax.
I'm not smart, I still have the stock from that one. It keeps going up but it could also go to zero at any time. I don't want to pay the capital gains tax though. I should probably look at put options. First world problems.
ESPP programs are great, and I encourage everyone to participate. But do keep in mind that the IRS limits how much you can gain from them. My company allows you to put 15% of your paycheck into them, and almost everyone I know hits the limit. Which means the company is withholding 15% of your pay, but only using about 7-10% in purchasing the stocks. They simply refund the rest at the end of the cycle.
The company where people were supposedly putting their whole paycheck in was before that. Some people have to ruin things for everyone. Both of the ones I participated in limited withholding to 10% of your net pay.
Here's a less stressful alternative as a counter of sorts... How about, live frugally, try to get a house in a not super expensive area, overpay the mortgage to get monthly payments down. Then work somewhere that's not super stressful or demanding, possibly public sector which can be very fulfilling, earning not as much as you might otherwise have, but having a nice enough life. Trying to accumulate millions so you never have to work seems to me something that's hard to do and stressful and won't necessarily make people happy because while having a job that sucks is no good, having no job doesn't necessarily being joy either. In fact just having a nice job seems to me the best option, and one can pick and choose if one doesn't need huge income. Motivation for this post = trying to steer people away from stuff that mightn't make them happy, and offer alternatives :). (My life is somewhat like that described above, despite having a family to support. Over the years maybe I could've earned far more. Not at all sure I'd be "happier" if I had)
I agree. I didn't mean to imply you need to have millions. More that the effect of money for an individual is non linear. It may affect how you invest though. Is X stock good? Well X is good but what about your risk profile?
For most people that is why a pension makes sense. You can accumulate a lot over 40 years there but paying into it will make zero difference to your happiness, but it might make a big difference once you hit an age where you can't earn as much.
Living frugal also helps there. Like calories in calories out there are two ends of the stick.
One of them took money out of each paycheck for a quarter and then gave you the better of the price of the stock at the start or end of the quarter. So you got a chance at risk free profits if the stock jumped. I was told that some people put their entire paychecks into it until they put a limit on the percentage of the paycheck you could put in.
The other one was a 15% discount off the stock price, again, done quarterly. Which doesn't sound huge until you calculate the annualized return. The annualized return on the first paycheck of the quarter was around 80%, the annualized return on the last paycheck of the quarter was around 3,000%. No lock up period and the smart thing to do would be to sell immediately and pay the short term capital gains tax.
I'm not smart, I still have the stock from that one. It keeps going up but it could also go to zero at any time. I don't want to pay the capital gains tax though. I should probably look at put options. First world problems.