brokerage/stock account questions

[Flashcb]

The company I work for has given me some stock/shares. Now I need to figure out what to do with them. what are your recommendations for learning about brokerage account, places to go for advice etc.? I am a total noob to all of this, just now getting used to balancing my checkbook, so please only entry level stuff in plain Engrish.

 

[peeps]

Is the company publicly traded?

 

[AustinN4]

http://dbmanagement.info/Books/Others/Stock_Investing_For_Dummies.pdf

 

[Flashcb]

Is the company publicly traded?

Public on the London stock exchange.

 

[Recoil45]

Companies generally put them into a brokerage account for you. If they are not hitting you with fees you can just leave them there. If they have some unusual fees (they shouldn't) you can transfer them to a discount brokerage like ETrade or Schwab.

If you believe in your company you generally hold them so they can appreciate. If you don't you could consider selling them, but you will have to pay taxes on the profit on your income taxes.

 

[oldag]

If you now own the shares, someone is holding them for you. Talk to your company's HR department and find out what is the current situation.

If you just want to hold the shares, you may not need to do anything.

Many financial advisers do not recommend holding stock in your employer. Too many eggs in the same basket (e.g., source of salary and savings). If something goes south, you lose it all.

If you are not restricted from selling the stock, you might want to consider selling and using the proceeds to buy some mutual funds.

 

[Flashcb]

http://dbmanagement.info/Books/Others/Stock_Investing_For_Dummies.pdf

Thanks, this is along the lines of what I am looking for.

 

[Mreed911]

Question: If you hadn't been granted them and had been handed their current value in cash, instead, would you spend the cash to buy them?

If the answer is no, I wouldn't spend cash to buy these shares on the open market, the right action is to sell them and use whatever you'd use the cash for otherwise, even other investments.

 

[mroper]

Most companies have an arrangement with broker that is holding them for you ,where they will purchase the stock for the option price sell the stock and give you the proceeds after their fees of course. I am assuming that the option price is a discount on the actual stock price. You need to check your douments you might have to hold the option for a certain time before you can exercise them.

 

[Mreed911]

Most companies have an arrangement with broker that is holding them for you ,where they will purchase the stock for the option price sell the stock and give you the proceeds after their fees of course. I am assuming that the option price is a discount on the actual stock price. You need to check your douments you might have to hold the option for a certain time before you can exercise them.

He didn't say option, he said stock, as in a stock grant of actual shares. Not that they couldn't be options and he's not describing them, but either scenario is as likely.

 

[Flashcb]

Question: If you hadn't been granted them and had been handed their current value in cash, instead, would you spend the cash to buy them?

If the answer is no, I wouldn't spend cash to buy these shares on the open market, the right action is to sell them and use whatever you'd use the cash for otherwise, even other investments.

We are an Oil and Gas based service provider, so right now "NO" I wouldn't buy these stocks. I am trying to learn a little bit about things to diversify, and maybe have something besides SS, and My meager 401K when I retire.

Most companies have an arrangement with broker that is holding them for you ,where they will purchase the stock for the option price sell the stock and give you the proceeds after their fees of course. I am assuming that the option price is a discount on the actual stock price. You need to check your douments you might have to hold the option for a certain time before you can exercise them.

I have the option to leave them with the company in the UK, but I kind of am looking to control my own destiny.

 

[Mreed911]

We are an Oil and Gas based service provider, so right now "NO" I wouldn't buy these stocks. I am trying to learn a little bit about things to diversify, and maybe have something besides SS, and My meager 401K when I retire.

My advice stands. If they're stock, and not options, sell them, account for the taxes and reinvest in a more diversified portfolio (an IRA with mutual funds, index funds, etc.). It's what I'd do.

Depending on the AMOUNT ($1,000 vs. $100,000) it might be wise to have an initial conversation with a FEE ONLY financial advisor (vs. someone who sells you stuff and earns commissions, influencing what they sell you to what pays them the most).

 

[JD9305]

If you do sale them I would look at investing into an IRA, buying tax free coupon bonds or just purchase land. Land around Texas is appreciating at a higher percent than just about anything else right now. Of course like MREED said, it also depends on how much money that they are worth. The cheapest Tax free bond that I have bought this year was for 15K but in 15 years it is worth 50K, seems like an easy way to make a guaranteed check for retirement for me and it doesn't mess with the amount of money I can actually put in my IRA.

 

[peeps]

We are an Oil and Gas based service provider, so right now "NO" I wouldn't buy these stocks. I am trying to learn a little bit about things to diversify, and maybe have something besides SS, and My meager 401K when I retire.



I have the option to leave them with the company in the UK, but I kind of am looking to control my own destiny.

Why would oil and gas be an industry not worth investing into, currently?

 

[AR1911]

The cheapest Tax free bond that I have bought this year was for 15K but in 15 years it is worth 50K, seems like an easy way to make a guaranteed check for retirement for me and it doesn't mess with the amount of money I can actually put in my IRA.

Would you share details on that?

 

[peeps]

If you do sale them I would look at investing into an IRA, buying tax free coupon bonds or just purchase land. Land around Texas is appreciating at a higher percent than just about anything else right now. Of course like MREED said, it also depends on how much money that they are worth. The cheapest Tax free bond that I have bought this year was for 15K but in 15 years it is worth 50K, seems like an easy way to make a guaranteed check for retirement for me and it doesn't mess with the amount of money I can actually put in my IRA.

IF interest rates don't rise. If they rise, you aren't getting 50k...I do like your land idea though

 

[AustinN4]

The cheapest Tax free bond that I have bought this year was for 15K but in 15 years it is worth 50K, seems like an easy way to make a guaranteed check for retirement for me and it doesn't mess with the amount of money I can actually put in my IRA.

If it doesn't default. To return 3X+ in 15 years it has to be junk or near junk.

 

[TheDan]

We are an Oil and Gas based service provider, so right now "NO" I wouldn't buy these stocks.

Interesting... Do you think the company can survive the slump? I think most of the ones that are going to fold have probably already done so. I'd say now is a great time to buy oil and gas stock while they are cheap.

 

[Texas42]

Question: If you hadn't been granted them and had been handed their current value in cash, instead, would you spend the cash to buy them?

If the answer is no, I wouldn't spend cash to buy these shares on the open market, the right action is to sell them and use whatever you'd use the cash for otherwise, even other investments.

+1. Great advise.

Im a fan of Dave Ramsey's financial principal. Too much risk in single stocks. Sell it, don't forget about taxes, and put the money where you need it based on your financial life point.

 

[Mreed911]

Dave Ramsey espouses it but it's really about an economic/behavioral theory related to "regret." What would you regret more: investing in something else and making a possibly lower return (you're not likely to regret making MORE money if it's a better return) or leaving the investment alone and having is lose value (again, you're not likely to regret it going up in value).

For me, I'd regret losing the money more than I would not making quite as much, so it indicates my risk tolerance is lower and I should be in the investment I'm least likely to regret.

I used that decision tree when selling some stock last year. There was a chance it could go WAY up and a chance it could trickle down. I figured I'd regret trying to time the up/down more than ensuring a decent profit over time and ended up selling the stock in batches each quarter. The first quarter it went up, the second quarter stayed the same, the third and fourth quarters it declined. I didn't make as much as if I'd sold it all in the first quarter, but I was less unhappy than if I had and it had gone way up more than once and was willing to play for the upside if it happened... just less and less each quarter.

Strictly following Dave's advice I should have sold it all in the first quarter.