My company IPO'd this year and we just had our first ESPP purchase this past week. I sold ASAP after shares settled in my brokerage to lock in the gains, and this will continue to be my strategy since I vest RSUs quarterly as well. What I want to get all of your thoughts on: as an investment strategy, should I continue putting money into my ESPP when the stock only continues to dip?
*For role transition purposes, I intend on staying through at least the first half of 2022 even though I am concerned about our long-term growth potential. That said, I don't think we're in danger of going belly up or my job being in danger as I'm a consistently high performer relative to my peers. It just isn't the rocket ship we were promised.
Background investments:
I currently max out my 401k and (backdoor) Roth IRA, and contribute 40% of my post-ESPP paycheck to my taxable brokerage (SCHB). No interest in a HSA since we have great PPO and I frequent the doctors. I max out my ESPP contributions.
Some numbers to put things into perspective:
- Contributing about $700 after-tax per paycheck to ESPP (ouch, about 24% of my after-tax paycheck)
- 15% discount off the lower stock price, which would either be the beginning of offering period or on the plan purchase date
- Allowed to sell (disqualifying disposition) as soon as shares settle in our brokerage account, 1-2 days after purchase
- FMV purchase date = $28.34
- Discounted price (15%) = $24.6415; total purchased $3375.89
- Sold @ $27.50/share; total sold $3767.48
- Effective capital gains = 11.6%
Questions:
1. Knowing my current investments and investment strategy (index funds, slow but steady growth), should I continue contributing to the ESPP and selling immediately after?
2. If not, what are other investments I should consider with the extra money?
3. Any blinds spots I'm not seeing?
Many thanks to the community! It's been an anxious period at work because of the volatility.