Feb 21 2011

What in the world to do with a company stock bonus?


Last week, Shane received 18 shares of his company’s stock as a bonus compensation for his extremely hard work on a project last year.

This is the first time we’ve owned stock in this form. It’s just a piece of paper with the details of the stock on it. So we’re like…!?!? What in the world do we do with this?

The stock is at an all-time high and pays quarterly dividends. Right now, it’s about $40/year in dividends.

We could sell it right now by taking it to a brokerage (our bank could probably help us with this).

I think we’re going to hold it, though. There’s nothing we want to buy right now. It probably will continue to grow somewhat, so that when we are ready to spend it, hopefully it will be more.

But it’s an amount that if it does go down, it wouldn’t be a devastating blow. It’ll probably just make me cranky for a day.

So for now, we’ll leave it alone and watch and see what it does. Maybe we can maximize his bonus this way.

Many financial advisors say that owning individual stock isn’t the best idea — there’s just too much risk involved and you’ll probably do better owning mutual funds where things are more balanced.

We’ll pay taxes on it this year, and taxes on the dividends and taxes on the (hopeful!) gains when we do cash it out.

What would you do in this situation? Do you own individual stock?

Posted under Uncategorized | 5 Comments »

5 Responses to “What in the world to do with a company stock bonus?”

  1. If you’re worried about the risk, would it be better to sell the stock and invest the profit in your retirement accounts? It might not do very well in the short term, but the money will earn a lot more in the next 40 years!
    Karen´s last post ..Cloth diapers 101- Caring for cloth diapers

  2. I think we’ll want to use the money in a shorter term than that — maybe for the car/house fund or a vacation? We’re already contributing 19% to retirement counting the company match and while the bonus could grow a lot by the time we’re 59.5 years old, that’s no fun. Hmm…yeah we need to go on a vacation.

  3. We own individual stocks and some mutual funds. I look at the individual stocks as kind of a “bonus” type investment after the “safer” investments are funded. The reason I developed that practice is because I did very well by owning mostly individual stocks and sold right before the .com bubble burst in the late 90’s. If I had not sold at that time I would’ve lost all those “paper profits”. That really kind of scared me into making sure the bulk of our investments were spread out over several mutal funds and then owning a few well chosen individual stocks for the longer term.

    I think it is tremendous that you are saving for your retirement now. So many people wait until much later in life and even though they might be able to save more dollar wise, it doesn’t have the same effect because they don’t have time on their side to help grow the money.
    Trixie´s last post ..Menu Plan Monday

  4. I would probably keep the stock, too. I wouldn’t keep it in paper certificate form, though. If I were you, I’d take it to a brokerage that doesn’t charge to put it into firm name. That way, if there are stock splits, mergers, etc., the brokerage company will keep everything up-to-date for you.

    I used to work at Edward Jones, and people were always bringing in stock certificates that were a pain to track down where the money actually was and it was time consuming for the customer, sometimes requiring extra paperwork and extra weeks of time. If it’s in firm name, you can call your broker and have him/her sell it and you’ll have the money in a week.

    Of course, if you only plan to keep it for a short time, you shouldn’t have too much trouble with splits and mergers and name changes, etc. :)
    Becky´s last post ..No More Braces!

  5. I invest in my company’s stock through their employee stock purchase plan, but always sell it exactly a year later (so it’s a long term capital gain). If something horrible happens to the company, I will have already lost my job, I don’t want to lose my money too! (Check out Enron if you want some good examples…)

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

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