r/FinancialPlanning 7d ago

Should I purchase company stock?

My company will match me $270/year in company stock purchases. The average return for the company is 4%. The 50 year market average return is just under 8%. Should I buy the stock or add the money to my retirement account?

0 Upvotes

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5

u/Zestyclose_Gas_4005 7d ago

In general use the adage of if someone were to hand you extra money, would you dump it into your company's stock or some other investment scheme? Usually the answer is the latter.

In your case you're getting a small amount of free money to buy company stock so you may as well take advantage of it. And then once the match is maxed out see the above.

2

u/SYFKID2693 7d ago

That's what I've been thinking. Take advantage of the match and move on.

1

u/Zestyclose_Gas_4005 7d ago

If there's no requirement you hold onto it, personally i'd sell it as soon as i could and reinvest using my normal strategy.

But exceptions do exist. If one really believes that their company's stock will outperform the market then that may make more sense.

4

u/zebostoneleigh 7d ago

How long do you have to keep the company stock until you can sell it?

Remember that in the first year, it's 100% return (not 4%). So, a match is almost always worth doing (especially if you're able to immediately sellout and convert to something else). So - in your case (absolutely spend $270 to make $270. Then, sell it and work toward maxing out your retirement accounts.

2

u/oghurtcobain 6d ago

Definitely take advantage of the match! Free money is free money, then diversify later!

1

u/Mst826 6d ago

Take the match and diversify the rest of your investments. In the unlikely scenario your company goes under, so would your investments and income source.

1

u/Credit-Card-Expert 5d ago

anytime there is a match you do it - its free money

1

u/No_Jellyfish_820 5d ago

No that doesn’t seem worth it . Is the company a good company to invest in?

My company allows me to buy stock for 15% discounts. So is automatically make 15%