Employee Stock Programs
Thursday, November 30th, 2006
Most large corporations have programs for employees to invest in company stock. If you’re a novice to investing, this can be a good place to start.
Typically, these programs involve
- Sign up for a monthly deduction from your paycheck; it’s usually limited to around 10% of your gross pay.
- Your savings from the monthly deduction above are accumulated and used to buy the company stock
- Typically, this happens every quarter or half year, and at a price that’s discounted to the share price; discounts vary from 5% to 20% of the prevailing price.
These combine two good strategies - regular savings, and dollar cost averaging - together with a discount, and can be an extremely good investment option. If your employer offers such a scheme, check it out!
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