4 Reasons to Invest in Your Employee Stock Purchase Plan

Investing in an employee stock purchase plan can provide you with a number of benefits when you are saving for retirement. If your company offers this type of plan, there are a few reasons that you might want to consider getting involved.

1. Discount

One of the biggest advantages of investing in an employee stock purchase plan is the discount that you can get on stocks. With this type of plan, you will essentially be able to purchase stock in your company cheaper than anyone in the market could. This gives you a competitive advantage over the rest of the marketplace from the very beginning. In some cases, the discount might not be very substantial. In other cases, you can get a discount of as much as 15 percent from what the stock is currently worth. Although 15 percent might not sound like much, when you are talking about large sums of money, this could be substantial. When it comes to your retirement, you could definitely use all of the help that you can get.

2. A Stake in the Company

When you purchase stock in your company, you will have a stake in the success of the company. Many employees look at their jobs as nothing more than a steady paycheck. Because of this, they may not put their full efforts into work. When they do not have anything to gain by working harder or helping the company, they tend to coast by. However, when you have a stake in the success of your company, you are much more likely to enjoy your work and give it your best effort. You can directly influence the success of your company by going the extra mile, and it will also help your retirement.

3. Tax Benefits

By investing in an employee stock purchase plan, you will also be able to take advantage of certain tax benefits. For example, you will not have to pay taxes on the stock gains until you sell your shares. This allows you to keep the stock in your purchase plan without ever having to sell any of it to pay taxes. Over time, this can make a substantial difference in the amount of stock that you are able to purchase and how much money you can save for retirement. In addition to that, you will be able to pay the capital gains tax rate on your stock sales if you wait at least one year after purchasing a stock and two years after it is initially issued.

4. Transfers

Another benefit of investing in an employee stock purchase plan is that you can potentially transfer your shares to your children. If you decide that you want to leave some of the stock to your kids, you should be able to do so without any problems as long as your plan allows for this option.

blog comments powered by Disqus