Although it was first announced in 2005 to begin in 2006, my company’s employee stock purchase plan was not finalized until a few months ago, and scheduled begin this month. On Friday, I’ll receive my first paycheck with 10% of my salary automatically deducted and transferred to a holding account at E*Trade. There it will collect minimal interest until the end of the quarter, at which point there will be an automatic purchase of company shares at a 15% discount of the stock’s price from either the beginning or the end of the quarter.
I’m already deducting a large amount from my paycheck, including a 16% 401(k) investment and savings. In order to cover the shortfall in cash flow, I’ll transfer the 10% of my salary from the side income. Once I purchase and immediately sell the shares at the end of the quarter, I can pay back my savings account with the proceeds.
Updated September 2, 2011 and originally published January 4, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.