USA ESPP with 1 month offering period, sell every month?


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My company has been offering an ESPP for quite few years. I enrolled when program was first offered and have been participating ever since.

I tried researching ESPP's when I enrolled and most online resources recommended selling the stocks immediately after purchase. This seemed crazy to me, mainly because my company's offering period is only one month. (I am thinking this might be intentional to help prevent immediate sales) Monthly I am only purchasing maybe $100 to $200 of stock.

Needless to say, I never sold the stock until I had an expenses I needed to cover. Well last year was a bad year and I sold stock 4 times. Not the entire number of stocks, I still have some 60 shares currently trading around $54. With the down market I knew I was selling at a loss, so I thought the loss would offset gains come tax time. Now I am entering the 1099-B and I noticed this "wash sale disallowed" column. Researched that and yup, because the offering period is every 30 days, there is no way to avoid wash sale violations. Unless I stop the purchase before I make the sale, wait 60 days then restart.

Finally my question, should I sell the remaining holdings, then sell the little amount each month that I purchase? Take the 15% and run?

Any advice?
 
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bklynboy

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Most advisors will tell you to sell your ESPP since it can create an overwhelming concentration of risk on your portfolio. So if this is the only invested asset you have then you need to decide if its worth that risk. The risk is doubled because you are also employed by the company so if they go bankrupt, you not only lose your job but also the major asset in your investments. Think Enron when thousands of people were let go and they found out their shares were also now worthless and they had nothing to show for it.

Without knowing all your details, its hard to say what you should do. But as noted above, in general you want to keep no more than 25% of your investments in your company stock and even less as you age over time.
 

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