Thinking of enrolling in UPS stock (DESPP)

[nystripe96]

I currently contribute 5% to a Roth 401k. A number of people have told me to purchase UPS stock as well, specifically (DESPP). I'm hesitant to do so considering it's the same company I work for. Thinking of starting slow at $50 week, or should I even bother at all? Am I better off just increasing my 401k contributions rather than purchasing UPS stock?

 

[PiedmontSteward]

Are you hourly or management?

I wouldn't sacrifice 401k contributions for stock purchases. Index funds are almost always going to be safer/better investments.

It's also a bad idea to put all your eggs in one basket -- if you're hourly, your employment/pension/stock holdings will all be held by one company which would make any financial adviser have a stroke.

 

[nystripe96]

I'm a driver

 

[PiedmontSteward]

I know a few FT'ers that basically use the stock purchase as a vacation fund. Buy $100 in shares per month then sell it off when it reaches $X/share then buy a jet ski/vacation somewhere/etc.

Roths are great but any reason why you're not contributing to a traditional 401k to lower your taxable income?

 

[Brownslave688]

I know a few FT'ers that basically use the stock purchase as a vacation fund. Buy $100 in shares per month then sell it off when it reaches $X/share then buy a jet ski/vacation somewhere/etc.

Roths are great but any reason why you're not contributing to a traditional 401k to lower your taxable income?

Yeah I kind of consider my ups stock my savings account.


No savings account is gonna give me 5%.

To the op you'd be much better of upping your 401k than buying stock.

 

[watdaflock?]

Until UPS matches dollar for dollar what you invest, don't bother. You can invest your money much more wisely than UPS stock.

 

[MendozaJ]

A lot of factors to consider: age, income, goals. After expenses, I put my money into 401ks (3:1 Roth/regular respectively), mutual funds, and a savings account (Barclays offers 1% and if anyone knows a better rate let us know). You should increase your 401ks to a minimum 13% before considering other investments.

 

[Richard Harrow]

Its a waste of your money and time.

They're only giving you a 5% discount per share and they have the option to buy back stock - and they conveniently do so on the last day of the quarter right before your order goes in - and it lessens your purchasing power.

Direct it to your 401k or do your own investing research and then download a free stock brokerage app like Robinhood and buy stocks that way.

 

[Catatonic]

I currently contribute 5% to a Roth 401k. A number of people have told me to purchase UPS stock as well, specifically (DESPP). I'm hesitant to do so considering it's the same company I work for. Thinking of starting slow at $50 week, or should I even bother at all? Am I better off just increasing my 401k contributions rather than purchasing UPS stock?

Go for 401k
UPS stock is ok but you are right to not invest in the company you work for.

 

[Cementups]

I should have my mom read this. She gives me hell because I don't purchase any stock. I try and tell her it's not worth it anymore but as her son I obviously have no idea what I'm talking about. The days to make money on our stocks are long gone.

 

[Catatonic]

I should have my mom read this. She gives me hell because I don't purchase any stock. I try and tell her it's not worth it anymore but as her son I obviously have no idea what I'm talking about. The days to make money on our stocks are long gone.

Certainly not like before UPS went public.

 

[Cementups]

Certainly not like before UPS went public.

no doubt. And I was a dummy for not buying back then. Especially since I lived at home.

 

[SmithBarney]

If the discount is still valid, it's not a bad investment, but you have to hold it for 2yrs right? anything can happen in that time. It doesn't hurt to buy a little, but I wouldn't hedge my retirement on it.

Now if the market takes a dump again which I think it might in the next 5 yrs... when the stock drops buy like crazy for 6months...

 

[UpstateNYUPSer(Ret)]

If the discount is still valid, it's not a bad investment, but you have to hold it for 2yrs right? anything can happen in that time. It doesn't hurt to buy a little, but I wouldn't hedge my retirement on it.

Now if the market takes a dump again which I think it might in the next 5 yrs... when the stock drops buy like crazy for 6months...

Yes, the discount is still valid, but 5% off of the last price of the quarter is not nearly as good as 10% off of the lowest price of the quarter.

How can you "buy like crazy for 6 months" when the DESPP is done through payroll deduction and shares are automatically purchased once you have enough to do so?

 

[Jackburton]

Open a brokerage account and wait for a crap day in the overall market and buy it for the same discount. Or wait till Amazon announces it bought 2 planes to move volume and a bunch of analysts say UPS is going BK, buy the fear.

This is of course if you want UPS stock. Not that I do this for a living but look at O&G, Biotechs, and healthcare sector ETF's, most are hovering around 10-20% above their 52 week lows.

 

[barnyard]

I have always felt that the 5% discount made it worthwhile to include as part of a savings plan. UPS does not match any of our savings (we get a pension, so there is that... maybe), so stock is the only thing that we are getting any kind of a company match (in the form of a discount.)

I do a 401k deduction (14%, I think), a set amount into a savings account ($200/week, I think) and $40/week for stock. At that amount, the stock purchase is a small part of my savings strategery. I have never sold any of my stock and have not done a drip, I give the dough to my wife and had not thought about selling any of it until this thread. If I sold now, I could pay cash for a used RV that I have been looking at.

Hmmmmm.

 

[brett636]

Its not a terrible program to enroll in, but its not as good as it used to be. In the past the discount was 10% off the stock price from the first day of the quarter or the last day of the quarter, whichever was lower. Now its 5% off whatever the stock price was on the last day of the quarter and there is a 2 year hold on all stock purchases made through the DESPP(does not apply to dividend reinvestments). I still participate in it, as I have for the last 13 years or so off and on. I only do $25 a week and would consider increasing my 401k contributions before I would increase my stock purchases. Not quite sure what I want to do with the money, but its there if I need it and it still makes up less than 10% of my total networth incase it ever crashes. UPS is a pretty safe company to invest in, but given your situation as you laid out maybe putting in less into the DESPP and more into your 401k would be a wiser decision.

 

[nystripe96]

Thanks for the insight. Yeah, I'm just going to up my 401k instead

 

[LeddySS98]

I started off as a preloader buying $25/week stock and 25% 401k... I've changed the amounts and percentages up and down during my 10 years as a driver... I have somewhere around 330 shares today, and I have sold stock twice now (200 shares)... I would probably say increasing your 401k would be my first choice but the stock purchasing has worked out as well for me... I have the dividends set to reinvest and I'm buying 1000 bucks a year in stock now from just dividend reinvesting.

 

[Catatonic]

Yes, the discount is still valid, but 5% off of the last price of the quarter is not nearly as good as 10% off of the lowest price of the quarter.

How can you "buy like crazy for 6 months" when the DESPP is done through payroll deduction and shares are automatically purchased once you have enough to do so?

You can change your deduction to a very high percent and then back to a lower percent.
Some months my take home would be less than a $1000.

But as you said 5% discount on the last day of the quarter and must be held for 2 years per IRS regulations is not good at all.
I quit buying via the DESPP once UPS made this change.
You can do better by buying at lower prices during the quarter.
.
This approach is similar to UPS Management MIP which is based on a given date (typically in late October).
I would track prices and graph them and the stock price always jumped 2 - 3 days right before that date.

Honesty is not one of UPS attributes when it comes to distributing funds to their employees.
And this one was not some individual out in the boonies.
This was a strategy implemented by Corporate management and approved by the UPS Management Committee and Board.