On Apr 8, 7:16 pm, "Elizabeth Richardson" <erich...@[EMAIL PROTECTED]
>
wrote:
> "jIM" <noreplysoc...@[EMAIL PROTECTED]
> wrote in message >
> > My opinion is that as you have termed your strategy, you are taking on
> > a lot of risk for a 1.5% annual gain.
>
> I don't get this math. He buys a stock for 15% less than the ticker
price.
> If there is no price fluctuation, why isn't his gain 15% when he sells?
>
> Elizabeth Richardson
>
> --------------------------------------
I would expect the return to be closer to 17.5%. I participated in a
similar plan in which my employer offered company stock at a 10%
discount. If there was no price change between purchase and sale, the
gain was actually 11.11% (minus transaction costs and taxes). For
example, if the stock was selling for $10/share, I could buy at $9.
If I sell for $10, the gain is 1/9 (11.11%).
I could not sell for about 3-4 days after the purchase date.
Therefore, my actual gains varied somewhat. It netted pretty close to
the 11%. The transactions costs to sell where fairly low. I was
buying $5,000 per quarter (max allowed), so the transaction costs were
not a big impact. You also have to do some extra work when filing
your taxes.
I used the gains to purchase a diversified mix of stocks/bonds, rather
than concentrating an investment with my employer.
Steve
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