If you are employed by a public company, there is a chance that you will be offered the option to invest in company stock in your 401(k) or purchase company shares at a discount. This can be a nice perk for employees, and a possible incentive for them to work hard and remain loyal to the company just like the gamers are for https://www.stellarspins.live/en/ when it comes to their favourite games.
But investing in company stock is not without its pitfalls. You may recall stories about workers from Enron, Lehman Brothers, and other firms who lost much of their retirement money when those companies went bankrupt.
If you have the chance to purchase company stock, consider taking advantage of it. But also be aware of some of these key pieces of information beforehand just like the research you make before you play some games at best online casino nz.
Sometimes you get company stock for free or at a discount
Companies distribute stock to employees in several different ways. Sometimes, it’s simply given to workers as part of compensation plans. Other times, it’s in the form of options that allow workers to buy shares at a certain price. (For example, you may be able to lock in shares at $45 per share even if they are selling at $60 on the open market.) This can be a nice benefit to employees beyond the normal salary, and it’s often designed as an incentive to make them feel more invested in the company’s success. If the company does well and share prices rise, employees can benefit financially. But the flip side is also true. If the company performs poorly, you could lose.
Companies that offer stock aren’t necessarily stronger
You should not assume that a company’s stock will perform well just because they are offering shares to you. There is some evidence to suggest that companies that dish out a lot of stock to employees perform worse than companies that don’t. You may feel like you are cheating if you invest in companies other than your own, but your future self will thank you.
Company stock should not be your sole retirement strategy
Many people have found themselves in trouble when they’ve decided to put all of their retirement plan contributions into company stock. Or, they’ve accepted company stock as compensation without contributing their own money to a diverse set of investments. This is dangerous because it places all of your retirement money into a single company that could go bust at any time.
This is what happened with many Enron employees, who were left with nothing for their retirement when the company collapsed. Company shares should only be viewed as one component of a broader investment portfolio that includes a healthy mix of stocks from various industries and asset classes.
There may be tax implications
Unless your employer allows you to buy company stock as part of a tax-advantaged retirement plan, you will be asked to pay taxes on any dividends you earn, and on capital gains when you sell. So keep this in mind at tax time.
If you own a large amount of company stock, those shares could represent a sizable tax bill that you will have to plan for. And if you decide to sell shares shortly after acquiring them, remember that capital gains could be taxed at the normal income rate rather than the long-term capital gains rate, which is lower.