Based on your other replies, the ESPP gives you a 15% discount with a six-month lookback, and no holding period. So yes, this is practically guaranteed return of roughly 15%, even after taxes. As long as you can cashflow your expenses to account for the money going into the ESPP instead of your bank account, then this is a good way to get extra benefit from your employer.

The worst case scenario would be from the fact that there's usually a small window between when the buy executes and your subsequent sale, since it can take a few days for everything to settle. So it's possible that during that window your employer's stock price plummets below even your discounted price. But unless it's an extremely volatile stock that's generally not likely.

The best case scenario is that the stock price rises dramatically between Jan 1 and Jun 30. You buy at the Jan 1 price (minus discount) and sell at the July 1-3 price and pocket the profit.

One thing to be aware of is how you'll need to report this on your tax return for purposes of properly calculating short-term capital gains. When you do an immediate sale, the "discount portion" of the transaction gets reported on your W-2 as part of your compensation. Using that "buy stock worth $100 for $85" example, your employer essentially pays you that $15 difference, it just went straight into the stock purchase instead of your paycheck. The IRS taxes that $15 along with the rest of your pay.

But on the 1099-B you get from the brokerage, the "basis" of those shares will be the discounted $85 price that you paid. If you use that number as-is, then it'll look like you realized a $15 capital gain, which the IRS will tax. But that $15 was already reported on your W-2, resulting in you double taxing yourself.

The fix is to do a "basis adjustment" to bring the stock's basis up to the fair market value as of the date of purchase, basically adding back the dollars already reported on your W-2 so they don't get included again when calculating gains. There are steps on the Schedule D to do that. Most tax prep software is getting better about walking you through the adjustment if you tell it that these shares were obtained through an ESPP.

There is an IRS limit but other than that, technically yes. 15% gain which people recommend going max every time if you can.

Be very mindful of when the prices are set. It's possible that your guaranteed 15% return can represent a net loss.

But yes in general this is a gold mine, gives you all kinds of options to either liquidate cash immediately or hold for tax purposes or because you've bought a performing stock at a low price and a discount.

If you have a lookback provision, 100% do this.

The only two risks are - if you sell immediately - the following:

1. Stock falls of a cliff between when you purchase the shares and when they settle and are made available for sale;

2. You have a theoretical opportunity cost that exceeds the 15% discount

For an example of (2), if you have CC debt at 30% interest, you'd probably be better off just paying it down than contributing to an ESPP; while the ESPP does offer a significant gain, if you're indebted elsewhere this may be a problem.

You're also subject to the 25k annual cap.

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