Stock option strategy

A classic investment strategy is “Buy What You Know” – in other words, invest in companies and brands that you are familiar with and believe in. Investing in the company you work for can be part of a solid equity allocation, particularly when your company has an Employee Stock Purchase Plan (ESPP) that allows you to buy shares of company stock at a 5%-15% discount with after-tax dollars.

Whether you’re at a pre-IPO start-up, a growing public company, or a blue chip that just developed a life-saving vaccine, stock options can provide a boost to your current and long-term wealth.

Employees or company founders that receive equity compensation often must cope with complex tax rules. Utilizing the 83(b) election is a valuable method of reducing tax liabilities, though there are some important caveats.