My current employer offers employees a chance to purchase company stock at a guaranteed discount. You enrol in 6 month periods and allocate a certain percentage (2% and up) of your salary towards purchasing stock. While there is a maximum number of stocks that you may purchase at one time (it’s a very high number…), the stocks are yours without restriction and you can sell them at any time you wish. The deadline for signing up was this past Friday.
I debated for a while, but ultimately, decided not to sign up. What!?
It wasn’t an easy choice. There are obvious financial benefits:
- You get the stock at a discount
- You can sell the stocks at any time, likely for a profit
- The money is taken right out of your paycheque – Easy!
However, sometimes (even for me!) the choices that seem to make the most sense are motivated by reasons other than pure numbers.
- My current budget would have allowed me to use 1% of my salary each paycheque towards stock purchases, but the minimum contribution was 2%. It doesn’t seem like a big difference, but the amount adds up. I would have had to re-do my budget in order to accommodate the additional deduction. I’m pretty happy with my current budget and did NOT want to re-do it.
- I have my yearly employee review coming up in April. At this time, I expect to receive a small raise (I’ve only been here 4 months so far, after all!) and would need to re-do my budget at this point anyways.
- I already max out my employee RRSP plan, which takes up 6% of my salary and gives me a company match.
Even though it was tempting to sign up and make a quick buck, in reality, I would have only accumulated a handful of shares by the end of the 6 month purchasing period. There is not really enough potential for profit to justify reworking my budget ahead of schedule. Instead, I think I will wait until the next enrolment period. At this point, I should have received my raise and be able to easily cover the 2% contribution. Perhaps even more!
Have you ever chosen to walk away from a potential investment or income opportunity? What would you have done in my situation?
