Recommendations on why or why not invest in ESPP vs using the money to buy index funds?
Company does 15% match so, kind of conflicted. Asking for my younger sister.

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In my perspective, you're making a bet. Our company ESPP program is over 6 months. If you think you can get a better return than the discount (usually 15%) in the market over that period of time, it would make sense to not invest in ESPP and instead invest in the market. Not sure how your program is structured, ours comes out of paycheck withdrawal over the 6 months so from that perspective it is like an interest free loan (which i don't like), but the guaranteed 15% keeps me contributing my full eligible amount.

Our program also does a "look-back" so the 15% discount is off the stock price either at the beginning or end of the offering period (Whichever price is lower you get the discount on). Therefore, you could potentially get your stock at an even greater discount depending on market conditions.

Honestly it depends on some of the nuances of your specific ESPP program, but most of the time they are hard to beat.

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Thanks C1 and MD1. She can sell right away if she wants.

What are the terms of the plan? I would not want to hold a ton of my company stock for long personally. If you can buy at a discount and sell relatively soon, it probably makes sense.

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So why not just sell some percentage of it and invest in index with proceeds.

Thanks all for your responses.

In summary this is what I’ll suggest to her - Get the full 15% match and sell or keep depending on the company outlook.

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Is it a 15% match? Or 15% discount?

15% match sounds way too good to be true…

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That’s a good point MD1. Thanks for clarifying!

Contribute to get the full match. Sweep stock annually to a self directed brokerage account and sell company stock to buy index funds or other stocks to diversify.

I always try to get every bit of free money / benefits from my employer as possible. No point leaving it on the table.

Thank you!

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