Choosing NOT to participate in my employee stock plan

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!?

Photo Credit: lumaxart via Flickr

Photo Credit: lumaxart via Flickr

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?

Posted in: Money

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