Enrolling ESPP

[ice712]

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I just received a postcard about enrolling ESPP from CVS. I have no idea on buying stocks. Can someone simplify this for me? (eg. process, when I can release holdings, minimal I have to buy etc)

I know they are gonna deduct certain amount from my paycheck, does anyone know how much they are deducting? I am a full-time student so I work only 2 times a week; therefore, I earn very little.

I am a dummy on buying stock so I want to buy minimum amount allowed first. If someone who has this experience can work me through this would be great! Thanks a lot!

 

[mnoble]

They buy cvs stock with your money post-tax, but they buy it at either the start date of the offering period, or the end date. Whichever is lower. In addition they knock off 10% (which used to be 15% but looks like they are lowering it). I believe you can elect up to 15% of your pay not to exceed 22k to go towards stock purchase. Its essentially a free stock option contract plus discount, I'd say the current value is about 2.50 per share.

You have to hold the shares for a year after they are purchased. No minimum number of shares has to be purchased.

 

[sosoo]

if u hold for a year, u will be taxed more heavily than if u hold for 2 years.... also i notice the discount is 10%. if u have student loans, mortgage payment, you're better off paying those first.. as the interest will beat any profit u think u will have. cvs stock price is not going much higher. just hovering around 100$ range.

 

[deleted723470]

They buy cvs stock with your money post-tax, but they buy it at either the start date of the offering period, or the end date. Whichever is lower. In addition they knock off 10% (which used to be 15% but looks like they are lowering it). I believe you can elect up to 15% of your pay not to exceed 22k to go towards stock purchase. Its essentially a free stock option contract plus discount, I'd say the current value is about 2.50 per share.

You have to hold the shares for a year after they are purchased. No minimum number of shares has to be purchased.

This is true. It's a decent deal if you believe that the company will continue to do well. 3 years ago, I bought it at a 15% discount at roughly just $45/share. When I resigned as an intern, they locked it in for 18 months, and I kept it there since. I am leaning towards selling it soon.

 

[ice712]

if u hold for a year, u will be taxed more heavily than if u hold for 2 years.... also i notice the discount is 10%. if u have student loans, mortgage payment, you're better off paying those first.. as the interest will beat any profit u think u will have. cvs stock price is not going much higher. just hovering around 100$ range.

true, student loans...... I almost forgot about it 🙁

 

[ice712]

This is true. It's a decent deal if you believe that the company will continue to do well. 3 years ago, I bought it at a 15% discount at roughly just $45/share. When I resigned as an intern, they locked it in for 18 months, and I kept it there since. I am leaning towards selling it soon.

I think it will do well but I guess I will better pay off my student loans first.....