HeavyJet

You are better off sticking extra money in the B plan. We have the option to defer up to 5% each month into our plan which can be used for any investment that Fidelity offers through the Brokerage Link account. This money is considered retirement money and can't be touched during a personal lawsuit against you or your family. UPS stock is dog ugly!!!

Good 7

Just a little extra insight for your consideration as you consider whether the Direct Employee Stock Purchase Plan is good for your overall portfolio:

After the 2 year required holding period, you might need to sell some of that stock. Because you held it for over one year, you would be subject to long term capital gains (assuming there was a gain). What you need to be aware of is that at the time you sell, the the first portion of your profits that account for the discount you were given at the time of purchase will be taxed as ordinary income.

So buying UPS stock in the employee purchase plan doesn't provide an automatic 10 percent gain, it mostly protects you against a 10 percent loss. It isn't a true 10 percent discount in the sense that not all of your profits (again, assuming a gain) would be taxed at long term capital gains rates. That combined with the mandatory 2 year holding period, and the fact that a UPSer probably already depends on UPS for most of the their income (via paycheck) it might not be the best investment for all UPSers. It does have the benefits of getting you the stock at the lowest price over a 3 month period and it is another mechanism to help people invest (the word save isn't really appropriate for a stock purchase) for the future by having it automatically deducted from your paycheck. It also keeps the control of UPS essential in UPSers hands because each share you by is an A share with 10 votes versus the B shares the general public can buy with only 1 vote each. And an approximately 5-10 percent discount depending on your tax rate.

For example, if your 10 percent discount was worth a 10 dollar difference when you purchased the stock in the plan. If you were in the 25 percent tax bracket, when you sell you will be taxed at 25 percent on the first 10 dollars in gains which brings the over discount to 7.5 percent. Still not bad, but I think it is important to understand the program as best one can.

Just be careful to not let UPS become too much of your total financial picture. Most of already have our pay checks (from UPS) make up a large part of our overall financial picture.

⌐ AV8OR WANNABE

Great post Good 7, thanks for your insight. I'll try to buy the max limit allowed but not until I max out my Roth 401K...

Brown

Also, keep in mind that UPS is buying back a lot of stock this year. Anyone think that it's a coincidence that they are getting it back at a good price?

MoosePileit

Try and avoid your aviation urges- it's simply buy low and sell high. Historical Low and 10% discount. Duh! Jokes aside- the ups and downs of the idea are nicely covered in the above. The stock pays a dividend, and yes, capital gains are possibly getting nastier rates soon... 5% tops was the advice I was given as a percent of total investments. The stories of the hypos and conversions from private to public in years past are pretty cool to hear about, but not my bag...

TheBaron

No brainer,

UPS...
10% discount on $60 shares that pay annual dividends of $1.80 (3% gain).

FedEx...
No discount on $80 shares that pay annual dividends of $0.44 (1/2 % gain).

Even if your stock stays flat, you still have a decent return after taxes. I wish we had the stock deal you guys have.

Slice

I put 5% of my annual pay in there. No more, no less. I won't put all my eggs in one basket but a few extra Brown one's are ok I think.

CactusCrew

Did you really mean to say that ?

Slice

What, you a racist? I treat my white and brown eggs equally...both get scrambled.

CactusCrew

Not a racist yet ...

You missed (or ignored) the "brown ones" ... good for you !

At my age, nevermind !