3 ms·
> You made $882.35 in "profit". Not bad at all, but not much in the grand scheme of things either. But! That's a return rate of 882.35 / 5000 = 18% in just 3 mo
by BeetleB 4y ago
> You made $882.35 in "profit". Not bad at all, but not much in the grand scheme of things either. But! That's a return rate of 882.35 / 5000 = 18% in just 3 months. If you could turn around and reinvest that money in the ESPP 3 more times (4 investment periods, each 3 months long, for a total investment period of a year), you would get a yearly return of (1 + 18%)^4 = 94%. 94%! Risk free!
First rule of finances: When comparing options, never compare rates. Compare absolute amounts (i.e. Dollars).
Yes, it's a great rate, but there are other investment schemes that can make you a lot more money at a lower rate.
(Of course, I participate in ESPP and am not trying to dissuade anyone).