Monday, October 29, 2007 11:18 AM
Should I participate in my company's stock purchase plan?
Don’t let what happened at Enron scare you away from a potentially good investment in the company where you work. An employee stock purchase plan (ESPP) is not about your retirement savings, but allows you to invest your earned income in company stock at a discount. This is totally different from whatever options you may have in your 401(k) to invest in company stock or the matching contributions your company might hand out in stock or even the similarly named employee stock ownership plan (ESOP), which allows you to invest your pre-tax retirement savings in company stock.
No, the ESPP is more like a stock option, where you will have a window of opportunity to buy stock at a particular price. The whole transaction may take place through payroll, so there could be little paperwork. Depending on how well your company performs, your financial rewards may vary, so you could profit a little or a lot.