How much percent of my salary should I use to invest in company stock?
You're talking about ESPP? For ESPP it makes sense to utilize the most the company allows, i.e.: in your case - 15% of the paycheck (if you can afford deferring that much, I assume you can). When the stocks are purchased, I would sell them immediately, not hold. This way you have ~10% premium as your income (pretty much guaranteed, unless the stock falls significantly on the very same day), and almost no exposure. This sums up to be a nice 1.5% yearly guaranteed bonus, on top of any other compensation. As to keeping the stocks, this depends on how much you believe in your company and expect the stocks to appreciate. Being employed and dependent on the company with your salary, I'd avoid investing in your company, as you're invested in it deeply as it is. I would not hold any company stock for the company that provides your income.   This is a too many eggs in one basket kind of problem. With a discounted stock purchase plan, I would buy the shares at a 10% discount and immediately resell for a profit.   If the company prevents you from immediately reselling, I  don't know if I would invest. The risk is too great that you'll see your job lost and your 401k/investments emptied due to a single cause. One such strategy I have heard for those who have this opportunity is to purchase the maximum allowed. When the window to sell opens, sell all of your shares and repurchase the most you can with the amount you gained (or keep an equivalent to avoid another transaction fee). This allows you to buy at a discount, and spread out the risk by investing elsewhere.  This way you are really only exposing yourself to lose money which you wouldn't have had access to without the stock discount. "Does your company offer a 401k? or similar pre-tax retirement plans? Is your company a publicly traded company? These questions are important, basically the key to any of your investments should be diversification. This means buying more than one kind of investment, amongst stock(s), bonds, real estate or more. The answer to ""How Much"" of your salary should go to company stock, is subjective. I personally would contribute the max toward a retirement plan or even post-tax savings, which would be invested in a variety of public companies.  Hope that helps." I agree with the other comments that you should not buy/hold your company stock even if given at a discount. If equity is provided as part of the compensation package (Options/Restrictive Stock Units RSU)then this rule does not apply. As a matter of diversification, you should not have majority equity stake of other companies in the same sector (e.g. technology) as your employer. Asset allocation and diversification if done in the right way, takes care of the returns. Buying and selling on the same day is generally not allowed for ESPP. Taxation headaches. This is from personal experience (Cisco Systems). I had options issued in Sept 2008 at 18$ which vested regularly. I exited at various points - 19$,20$,21$,23$ My friend held on to all of it hoping for 30$ is stuck. Options expire if you leave your employment. ESPP shares though remain. What most respondents are forgetting, is when a company allows its employees to purchase its shares at a discount with their salary, the employee is usually required to hold the stock for a number of years before they can sell them. The reason the company is allowing or promoting its employees to purchase its shares at a discount is to give the employees a sense of ownership of the company. Being a part owner in the company, the employee will want the company to succeed and will tend to be more productive. If employees were allowed to purchase the shares at a discount and sell them straight away, it would defeat this purpose. Your best option to decide whether or not to buy the shares is to work out if the investment is a good one as per any other investment you would undertake, i.e. determine how the company is currently performing and what its future prospects are likely to be. Regarding what percentage of pay to purchase the shares with, if you do decide to buy them, you need to work that out based on your current and future budgetary needs and your savings plan for the future. There is Free employer money on both sides of the tax fence for some employees.   On the pretax side, your employer may provide you a match.  If so, invest the maximum to get 100% of the match.   On the after tax side, many companies offers a 15% discount on ESPP plans and a one year hold.  My wife has such an employer.  The one year hold is fine because it allows us to be taxed at Long Term Capital gains if the stock goes up which is lower than our current income bracket.  After creating a seasoned pool of stocks that we could sell after the one year hold, we are then able to sell the same number of stocks purchased each month.  This provides a 17.6% guaranteed gain on a monthly basis.  How much would you purchase if you had a guaranteed 17.6% return.  Our answer is 15% (our maximum allowed). The other trick is that while the employer is collecting the money, you will purchase the stock at the lowest day of the period.  You will usually sell for even more than the purchase price unless the day purchased was the lowest day of month.   The trick is to reinvest the money in tax free investments to balance out the pretax investing.  Never leave the money in the plan.  That is too much risk.
"If you sold the stock for a profit, you will owe tax on that profit. Whether it is taxed as short-term or long-term capital gains depends on how long you held the stock before selling it. Presumably you're going to invest this money into mutual funds or something of that sort. Those may pay dividends which can be reinvested, and will grow in value (you hope) just as the individual stock shares would (you hope). Assuming the advice you've been given is at all reasonable, there's no need for buyer's remorse here; you're just changing your investing style to a different point on the risk-versus-return curve. (If you have to ask this question, I tend to agree that you should do more homework before playing with shares in individual companieS ... unless you're getting thess shares at employee discount, in which case you should still seriously consider selling them fairly quickly and reinvesting the money in a more structured manner. In a very real sense your job is itself an ""investment"" in your employer; if they ever get into trouble you don't want that to hit both your income and investments.)" At this stage of the game your best investment is yourself. Rather than putting it in stocks, use any spare money you have to get yourself the best education you can. See if you can drop that part-time job and give yourself more time to study. Or maybe you can go to a better, more expensive college. Or maybe college will give you some opportunity to travel and learn more that way. You don't want to exclude yourself from those opportunities by not having enough spare cash. So in short, spend what you need to get yourself the best education you can, and keep any spare money you have somewhere you can use it to take advantage of any opportunities that come your way. such analysis helps you keep track of the percentage of income that you invest You could apply 1:1:1 ratio. i.e spend 1/3, save 1/3 and invest 1/3. Hope that helps My employer matches 1 to 1 up to 6% of pay. They also toss in 3, 4 or 5 percent of your annual salary depending on your age and years of service. The self-directed brokerage account option costs $20 per quarter. That account only allows buying and selling of stock, no short sales and no options. The commissions are $12.99 per trade, plus $0.01 per share over 1000 shares. I feel that's a little high for what I'm getting. I'm considering 401k loans to invest more profitably outside of the 401k, specifically using options. Contrary to what others have said, I feel that limited options trading (the sale cash secured puts and spreads) can be much safer than buying and selling of stock. I have inquired about options trading in this account, since the trustee's system shows options right on the menus, but they are all disabled. I was told that the employer decided against enabling options trading due to the perceived risks. In Switzerland you should have access to many brokers with fair rates, e.g. Interactive Brokers. Going through them you then put the money in various Swiss stocks like Roche, Novartis, Swisscom, Credit Suisse, Logitech, etc. No stock should be more than 10% of the total. Since you pay 0% taxes on investment profits, you really should invest.  By going through a broker instead of your bank, you can cash out at any time without losing outrageous fees for the stock commissions (often 2% for banks, around 0% for brokers).  If you're employed you can also ask your employer to increase the amount of your salary that goes to the pension (2. Säule), which is not limited like the 7000 you mentioned (3.Säule). With a 1/4 million you should  be looking at staying fully invested and doing income draw down you can safely take 3 or 4 %   Basing your retirement income 100% on cash investments is very risky I can remember when inflation hit 15% in the UK and it has been at similar levels in the usa around 14% in 79. Too much fiddling with your portfolio if the difference is 3-4% or less (as it's become in recent months).  Hands off is the better advice.  As for buying shares, go for whichever is the cheapest (i.e. Goog rather than Googl) because the voting right with the latter is merely symbolic.  And who attends shareholders' meetings, for Pete's sake? On the other hand, if your holdings in the company are way up in the triple (maybe even quadruple) figures, then it might make sense to do the math and take the time to squeeze an extra percentage point or two out of your Googl purchases.  The idle rich occupying the exclusive club that includes only the top 1% of the population needs to have somethinng to do with its time.  Meanwhile, the rest of us are scrambling to make a living--leaving only enough time to visit our portfolios as often as Buffett advises (about twice a year). "No, the stock market is not there for speculation on corporate memorabilia.  At its base, it is there for investing in a business, the point of the investment being, of course, to make money.  A (successful) business earns money, and that makes it valuable to its owners since that money can be distributed to them.  Shares of stock are pieces of business ownership, and so are valuable.   If you knew that the business would have profit of $10,000,000 every year, and would distribute that to the owners of each of its 10,000,000 shares each year, you would know to that each share would receive $1 each year.  How much would such a share be worth to you?  If you could instead put money in a bank and get 5% a year back, to get $1 a year back you would have to put $20 into the bank.  So maybe that share of stock is worth about $20 to you.  If somebody offers to sell you such a share for $18, you might buy it; for $23, maybe you pass up the offer. But business is uncertain, and how much profit the business will make is uncertain and will vary through time.  So how much is a share of a real business worth?  This is a much harder call, and people use many different ways to come up with how much they should pay for a share.  Some people probably just think something like ""Apple is a good company making money, I'll buy a share at whatever price it is being offered at right now.""  Others look at every number available, build models of the company and the economy and the risks, all to estimate what a share might be worth, more or less.  There is no indisputable value for a share of a successful business. So, what effect does a company's earnings have on the price of its stock?  You can only say that for some of the people who might buy or sell shares, higher earnings will, all other thing being equal, have them be willing to spend more to buy it or demand more when selling it.  But how much more is not quantifiable but depends on each person's approach to the problem.  Higher earnings would tend to raise the price of the stock.  Yet there are other factors, such as people who had expected even higher earnings, whose actions would tend to lower the price, and people who are OK with the earnings now, but suspect trouble for the business is appearing on the horizon, whose actions would also tend to lower the price. This is why people say that a stock's price is determined by supply and demand." If you are an entrepreneur, and you are looking forward to strike on your own ( the very definition of entrepreneur) then I suggest that you don't invest in anything except your business and yourself. You will need all the money you have when you launch your business. There will be times when your revenue won't be able to cover your living costs, and that's when you need your cash. At that point of time, do you really want to have your cash tie up in stock market/property? Some more, instead of diverting your attention to learn how the stock market/property works, focus on your business. You will find that the reward is much, much greater. The annual stock market return is 7% to 15%. But the return from entrepreneurship can be many times higher than that. So make sure you go for the bigger prize, not the smaller gains.  It's only when your business no longer requires your capital then you can try to find other means of investment. The question is for your HR department, or administrator of the plan. How long must you hold the employee shares before you are permitted to sell? Loyalty to your company is one thing, but after a time, you will be too heavily invested in one company, and you need to diversify out. One can cite any number they wish, 5%, 10%. All I know is that when Enron blew up, it only added insult to injury that not only did these people lose their job, they lost a huge chunk of their savings as well. It appears your company is offering roughly a 25% discount on its shares.  I start there as a basis to give you a perspective on what the 30% matching offer means to you in terms of value. Since you are asking for things to consider not whether to do it, below are a few considerations (there may be others) in general you should think about your sources of income. if this company is your only source of income, it is more prudent to make your investment in their shares a smaller portion of your overall investment/savings strategy. what is the holding period for the shares you purchase. some companies institute a holding period or hold duration which restricts when you can sell the shares.  Generally, the shorter the duration period the less risk there is for you.  So if you can buy the shares and immediately sell the shares that represents the least amount of relative risk. what are the tax implications for shares offered at such a discount.  this may be something you will need to consult a tax adviser to get a better understanding.  your company should also be able to provide a reasonable interpretation of the tax consequences for the offering as well. is the stock you are buying liquid. liquid, in this case, is just a fancy term for asking how many shares trade in a public market daily. if it is a very liquid stock you can have some confidence that you may be able to sell out of your shares when you need. personally, i would review the company's financial statements and public statements to investors to get a better understanding of their competitive positioning, market size and prospects for profitability and growth. given you are a novice at this it may be good idea to solicit the opinion of your colleagues at work and others who have insight on the financial performance of the company. you should consider other investment options as well.  since this seems to be your first foray into investing you should consider diversifying your savings into a few investments areas (such as big market indices which typically should be less volatile).   last, there is always the chance that your company could fail.  Companies like Enron, Lehman Brothers and many others that were much smaller than those two examples have failed in the past.  only you can gauge your tolerance for risk. As a young investor, the best place to start is to use index funds which track a broader universe of stocks or bonds as the first step in building an investment portfolio.  once you own a good set of index funds you can diversify with smaller investments. "Check how long you have to hold the stock after buying it. If you can sell reasonably soon and your company is reasonably stable, you're unlikely to lose and/or be taxed and/or pay enough in fees to lose more than the 30% ""free money"" they're giving you.  Whether you hold it longer than the minimum time depends partly on whether you think you can better invest the money elsewhere, and partly on how you feel about having both your salary and (part of) your investments tied to the company's success? The company would like you to ""double down"" that way, in the theory that it may make you mors motivated... but some investment councelors would advise keeping that a relatively small part of your total investments, basically for the same reasons you are always advised to diversify." I think it depends entirely on your risk tolerance. Putting money in individual stocks obviously increases your risk and potentially increases your reward. Personally (as a fairly conservative investor) I'd only invest in individual stocks if I could afford to lose the entire investment (maybe I'd end up buying Enron or Nortel). If you enjoy envesting and feel 10% is an acceptable loss I think you have your answer Even with a good investment strategy, you cannot expect more than 8-10% per year in average. Reducing this by a 3% inflation ratio leaves you with 5 - 7%, which means 15k$ - 21k$. Consider seriously if you could live from that amount as annual income, longterm. If you think so, there is a second hurdle - the words in average. A good year could increase your capital a bit, but a bad year can devastate it, and you would not have the time to wait for the good years to average it out. For example, if your second year gives you a 10% loss, and you still draw 15k$ (and inflation eats another 3%), you have only 247k$ left effectively, and future years will have to go with 12k$ - 17k$. Imagine a second bad year. As a consequence, you either need to be prepared to go back to work in that situation (tough after being without job for years), or you can live on less to begin with: if you can make it on 10k$ to begin with (and do, even in good years), you have a pretty good chance to get through your life with it. Note that 'make it with x' always includes taxes, health care, etc. - nothing is free. I think it's possible, as people live on 10k$ a year. But you need to be sure you can trust yourself to stay within the limit and not give in and spent more - not easy for many people. "In the UK, one quirky option in this area (OK, admittedly it's not a passive) is the ""Battle Against Cancer Investment Trust"" (BACIT).  Launched in 2012, it's basically a fund-of-funds where the funds held charge zero management charges or performance fees to the trust, but the trust then donates 1% of NAV to charity each year (half to cancer research, investors decide the other half)."