[chug]

It's important to remember that this is putting all of your eggs in one basket to a certain extent though.

Your income, your 401k match, and your ESPP are all tied to your employer, so as long as things are good, ESPPs can be a great way to make easy money, but if things take a stark downturn, you can find yourself with ESPP you lost money on, a slouching 401k, and no job. The chances of that happening are fairly low, but still something that makes me a little uncomfortable about ESPPs.

Obviously your advice to max our 401k/IRA contributions first should mitigate a lot of this, but I think it's important to mention the risk too since there's a certain temptation for younger engineers who think it sounds like easy money and don't realize the full implications of it.

[irrational]

That's true, but I always sell my ESPP as soon as it is purchased. That is an immediate 15+% return. Our ESPP is 15% off of the lower of either the beginning or the ending of the offering. Of course the hope is that it will be the lower at the beginning of the offering so that the sell will be 15% + the amount the stock has risen since the beginning.

[chug]

The only company I've worked at with an ESPP required you to hold the stock for 1 year before selling--not in the sense of tax incentives unfortunately, but you literally cannot sell before 1 year. I didn't realize there were ESPPs where you sell immediately. In that case, woo free money!

[hobonumber1]

Well it is 15% but you are paying income tax on it because you aren't holding it for a year. So depending on your tax situation, it may be closer to 7-10%. Still good though.

[findjashua]

The income tax on the profits. If you sell the espp instantly, there isn't much profit, so I'm guessing there isn't much tax?

[irrational]

Well, according to this guy: https://thefinancebuff.com/employee-stock-purchase-plan-espp... it is closer to a 90% return. The example he gives is exactly how my company's ESPP works.