My job offer stock option. should i go for it?

[Kroze]

My job offer stock options at a 15% discount. the plan works like this...

they take money away from your checks and depost it in a money market account for 2 years. after 2 years, they will buy the stock for you at the price when you first sign up (2 years ago) plus the 15% discount.

if the price of the current stock is cheaper than it was 2 years ago, they will give you your money back. ...


should i do it?

i'm already contribute my money to the 401k, health/dental, and it's stretching me thin with all the monies going everywhere.

 

[spidey07]

depending on the company, probably.

Just check vesting times and any rules against selling it.

-edit- although that isn't really a good plan. I'm used to them giving it to you or you have the option to puchase X amount at a discounted rate. Not "well take money from you"

 

[mchammer187]

i would

1. you are not losing anything because the money is in a MMA
2. you get 15%
3. you do not have to buy it if it sinks

sounds like a winning situation to me


but how long do you have to hold it before you can sell?

If you can sell immediately after you acquire it than it would be a great investment imo

 

[bigrash]

it all depends on the company.

 

[randomlinh]

eh, depends... i've been told it's not that good of an idea to invest in stocks at the company you work for... should it tank.. your investments are gone. But of course, I'm paranoid about the stock market Might be a good idea, just don't rely on it.

 

[sixone]

Originally posted by: Kroze
My job offer stock options at a 15% discount. the plan works like this...

they take money away from your checks and depost it in a money market account for 2 years. after 2 years, they will buy the stock for you at the price when you first sign up (2 years ago) plus the 15% discount.

if the price of the current stock is cheaper than it was 2 years ago, they will give you your money back. ...


should i do it?

i'm already contribute my money to the 401k, health/dental, and it's stretching me thin with all the monies going everywhere.

That moneymarket thing seems odd - do you earn anything while they're holding on to your money?

If you're already stretched thin, this isn't really an option.

 

[xSauronx]

if you can afford it and think the companys going to be in a place in 2 years where youd wish youd done it

wanna tell us where you work? maybe you could get some better advice that way

 

[zephyrprime]

Yes. You're guaranteed to not lose money with terms like that. Sell the stock right away when you get it.

But on the other hand, you'll be stretched pretty thin. You should probably figure out where the money is coming from before you commit.

 

[Kroze]

you can sell it right away i think.



it's SLM financial. sallie mae.


currently it's at $53.xx a share. what do you guys think?

 

[Mayfriday0529]

My job offered me something similar with two options.
option one offered me 200 shares at a certain price, i would then be offer certain amount of shares again at some point at the same price i signed up for.

option two, would be take a % of my check and on the next quarter buy shares using that money at the lowest price between quarters, minus 15%.

I deciced not to do it.

 

[Kroze]

i guess i'll have to work here for a while and have better salary before i sign up for it. $22.5. y/r aren't good enough eh?

 

[flashbacck]

One thing you should be aware of, is that by taking stock or stock options in the company you work for, you're not diversifying yourself financially. I mean, you're tying your income (job) and your savings to this one company. Should something happen to Sallie mae you might take a big hit financially (i.e. lose your job and have your options rendered worthless). This might not be such a big deal if you're young and you're capable of bouncing back.

 

[BurnItDwn]

Originally posted by: mchammer187
i would

1. you are not losing anything because the money is in a MMA
2. you get 15%
3. you do not have to buy it if it sinks

sounds like a winning situation to me


but how long do you have to hold it before you can sell?

If you can sell immediately after you acquire it than it would be a great investment imo

Certainly, that sounds good to me.

 

[tfcmasta97]

sounds like a winwin to me. put as much as you can in

 

[spidey07]

Originally posted by: tfcmasta97
sounds like a winwin to me. put as much as you can in

But as others have said its a REALLY bad idea to invest heavily in the company you work for. I think the rule of thumb is no more than 20% of your portfolio.

 

[Stifko]

portfolio, portshmolio who has enough stock postions to call it a portfoilio? I know I don't.

I worked for a company for a few years and had 10% of my salary going towards stock options. After I left the firm they got bought out and my $3500 investement became worth over $50K. Sadly I did not sell in time and the stock tanked. Today I still own the shares and they are worth only slightly more than what I paid for them.

You should divest though, if thats the right word.

 

[flashbacck]

Originally posted by: Stifko
You should divest though, if thats the right word.

diversify?

 

[AgentEL]

You have to weight it against your other options. How is matching in 401k for your company? The money is taken out pre-tax (saving $) and may beat 15% in the long term.

 

[MrColin]

I would go for it if I could afford it assuming these are the terms:
You pay now .85*53/share.
You get the shares in 2 years with no selling restrictions.

don't cut into your 401k contributions for it though.

Take a look at this: http://finance.yahoo.com/q/hp?s=SLM

 

[NogginBoink]

Originally posted by: flashbacck
One thing you should be aware of, is that by taking stock or stock options in the company you work for, you're not diversifying yourself financially. I mean, you're tying your income (job) and your savings to this one company. Should something happen to Sallie mae you might take a big hit financially (i.e. lose your job and have your options rendered worthless). This might not be such a big deal if you're young and you're capable of bouncing back.

Re-read the scenario. I don't think that's the case here.

For 2 years, his money will be in a money market account (presumably generating interest). At the end of 2 years he's able to buy stock at the strike price, and able to immediately sell it (unless I missed something).

This is a good deal, provided the money is held by an independent and creditworthy institution for those 2 years. If your employer holds the money for those 2 years and goes belly up, you'd likely lose that money. That corner case aside, it sounds like a very attractive plan to me.

 

[Kroze]

yes the money would be held in a money market acct earning interest. it would be managed by "the bank of new york." anyone here heard of it?

 

[Britboy]

Originally posted by: Kroze
yes the money would be held in a money market acct earning interest. it would be managed by "the bank of new york." anyone here heard of it?

Looks like a fly by night operation to me

Bank of New York


There's another web site you may be interested in:

Ever heard of google

 

[arcas]

they take money away from your checks and depost it in a money market account for 2 years. after 2 years, they will buy the stock for you at the price when you first sign up (2 years ago) plus the 15% discount.

My company used to offer a 15% discount but the thing was the shares vested immediately. That is, you owned the shares immediately but there was a restriction that if you sold shares bought within that offering period, you were effectively barred from buying more shares until the next offering period. It was a good program. Now, since options are expensed, the discount is only 5% and it's no longer worth participating.

Your case is a little different. It appears that you're locking in your buy price today (with a 15% discount) and paying your money but you don't have access to the shares for at least 2 years. Presumably during this period you do not have access to this money in the meantime. On the surface this seems to be a little dodgy. Personally, I would not participate.

 

[Nerva]

how long do you have to hold it? if you can unwind right after, do it. but i would be very care about your firm's finances. probably do a valuation model on my own and look at their earnings quality and management

oh yeah, non of the above answers are satisfactory