Forgive me as I’m not the smartest when it comes to stock purchasing. Would it be smart to consider not participating at this point? We have 3 days to decide, and for the first time I feel like not contributing. For all I know, I won’t be an employee in a few weeks.
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Add to that the 5% matching of 401k....
It’s an automatic 15% return. You’re an id--t if you DONT participate.
US short term stock sale tax rate is 12-35% depending on your income. Long term capital gains tax rate (1-year +) is 15% for most people.
Then there’s state, county, and sometimes city tax on top.
Oregon’s tax rate is roughly 9%. If you’re well off Multnomah county taxes you at 1.5%. And if you’re really well off Portland taxes you at 3%.
I realize most people don’t make hundreds of thousands annually but it is possible to approach European tax rates if you’re wealthy, live in Portland, and do absolutely nothing to protect yourself.
Realistically the average American employee’s ESPP tax bill is a little over $600 annually. My last post was built to show just how little reason there is to hold ESPP stock for the whole year. Many people incorrectly believe they owe taxes on the entire sale amount instead of just the gains
Interesting, here (EMEA) the discount (so FMV -/- purchase price) gets an immediate 50% income tax hit, next to the currency exchange costs (hence the 5-7% profit instead of 15%).
Oh well, maybe I also should move to WHQ living the american dream..
In the US you only pay taxes on your gains (which includes the 15% discount). The difference between long and short capital gains is 10-15% depending on your income bracket.
Given the $25,000 annual limit for ESPP we’re talking about a measly $3,750 tax bill in a flat year (only owing on the 15% discount).
Our personalfinance slack channel is filled with bag holders that were trying to min/max their way out of a <$400 difference on their taxes. And that $400 is the most extreme example! You would need to earn nearly $300,000 to hit the ESPP limit.
Today, we’re down 20% compared to 1 year ago. That’s an unrealized loss of $5,000 for our example!
Participating in the ESPP is a basic intelligence test, but so is diversifying immediately.
Maybe good to add some nuance on the 15% ‘guaranteed’ profit; 5% - 7% is more realistic (at least in EMEA) upon income tax and FX translation, which doesn’t make the ESPP any better than investing in an ETF.
@1xdl+1rGC61A1 if you’re gonna try to make a lazy, bullsht, uninformed argument ESG and DEI causing the demise of Nike, at least get the acronyms right.. the G in ESG stands for Governance, not Global. D-mba*.
Anyone who ever nodded in a DEI (Diversity, Equity and Inclusion), ESG (Environmental, Social, Global) or CSR (Corporate Social Responsibility) seminar whilst simultaneously employed by Nike should 100%, absolutely gobble up Nike shares like there's no tomorrow.
Buy, buy Nike if you're Woke! You need it and want it, very much.
And the rest of the world very much wants you to have it.
Since you mention worrying about "not being an employee" if you sign up and get terminated, or just decide to change your mind, you will still get paid back the money you put into it. It's not like Nike just decides to keep your cash.
The ESPP is the “Nike employee intelligence test.”
The test is simple: Are you smart enough to invest every penny you reasonably can into an investment with a guaranteed, 6-month return of 15%?
It’s really one of the best benefits employees receive. Which makes it all the more remarkable that many employees don’t take maximum advantage of it.
You can’t sell until that period closes, so if you’re just signing up, that is September after psp (if we get one).
Regardless two choices, immediate profit at 15% but pay Short Term Cap gains on it (which likely won’t be too much but something to consider if you’re selling a bunch of stuff for gains).
Or hold it until it becomes long term cap gains, both has pros and cons.
You can’t sell before the period ends. I’m no longer at Nike but when I was there… have made lot more than 15% when starting price is low. I think stock will go up during upcoming period.
Leadership change will be coming in next 3-4 months, coinciding with end of FY which will give it good bump up.
Just my opinions.
You contribute towards it at whatever percentage you chose for the offering period. As soon as it gets purchased at the end of the offering period, you can sell immediately for a 15% profit. There is little risk involved. I don’t know why anyone who had the means to participate wouldn’t do so. Many folks choose to hold it for longer and those are the folks exposed to a risk if the stock ends up falling lower (the opposite can happen too in which case profit potential is higher).
You can’t sell until the period closes in September.
@yxn+1rGC61A1 Yes you can.
Can we buy and sell instantly? It will be 15% profit
If you’re ok on basically giving up on instant 15% profit… lower the better at this exact moment. Any bounce is a double dip.
buy it sell it you make a profit