Let me tell you kids a story about the only person who regularly reads this blog, my mom.
Hi Nelson’s Mom!
Are you hitting on my mom, Italics Man?
Really? That’s the first thing you think?
Sorry, that was uncalled for.
Is she hot?
Come on, dude.
Back in 2006, my mom was working in the produce department of a local grocery store, a job that she enjoyed. The only problem was her immediate supervisor, who was 14 different kinds of useless. Mom would have to work a few overtime hours every week to ensure there was still enough lettuce on the shelf. Time and a half, baby!
The problem was overtime screwed up the department’s budget. So instead of getting paid for her overtime, the hours were banked. Rather than time and a half, Mom was supposed to be getting periodic days off while still getting paid as compensation. These hours were recorded, adding further legitimacy to the whole exercise.
Until one day, when they just disappeared. Discussions with management yielded no results, so she started looking for another job.
It didn’t take long. A new grocery store opening in town was having a hiring fair, so she showed up. Let me tell you kids about small town grocery stores. If they can poach someone from a competitor, you bet your ass they’re gonna do it. They lust for that stuff more than I look forward to lunch. It’s my favorite part of the day.
So they hired her.
Her new job
I still worked for a competing store at this point (there were a total of three stores in town), so that made things awkward. My boss found out, and we had this conversation:
“Nelson, does your mom work at [unnamed competitor]?
“Why would she do that? I told her she could work here. I just asked her a couple of months ago.”
“She told me. But I told her she’s not allowed to work here. That’s weird.”
Right after she got hired, they told her about a program the company offered all its workers, the employee share purchase plan.
Most of these work pretty similarly, but here’s the gist of her plan. The company would match 25% of her contributions, and she was allowed to invest a maximum of 4% of her pay. So, in total, she’d be throwing 5% of every paycheque towards new shares.
She didn’t really understand the thing, so she brought it home for me to look it. I was definitely more of a financial dumbass in 2005 versus what I am today, but even I could see the benefits of her employee share purchase plan. I told her that buying shares at a 25% discount was almost always a good idea, and that she’d never miss the small amount deducted from her cheque.
So she signed up for it and pretty much forgot about it. She would check out the company’s share price when it scrolled at the bottom of the screen on BNN, but that was about it. She never kept track of how many shares she owned or anything like that. It wasn’t something any of us thought about.
The power of an employee share purchase plan
After about a decade of slowly putting money to work in this thing, her employer’s stock was hitting a new all-time high. My dad asked me what I thought of the stock and I said it was at least fully-valued, if not overvalued. It might be a good time to cash out some gains.
(This was about a year ago now, and shares are only up marginally since. Looks like I called it about right. FINALLY, NELSON GETS SOMETHING RIGHT.)
She called up Compuserve, the company that does almost all of these plans, and requested a payout. They processed it quickly and about five minutes later it was done. She had a cheque for more than $31,000 coming her way.
My mom didn’t have a fancy job. She didn’t even run a department in the store. She remained a cashier for 10 years, getting nothing more than merit-based raises the whole time. And she was still able to invest 4% of her income and turn it into $31,000+.
She didn’t even pick the right stock, either. Looking back on it, the company underperformed the TSX over the whole time she worked there. It’s done better lately, but it was a dog for a number of years.
Despite those errors, she still made money without any inconvenience whatsoever.
The bottom line
$31,000 might not seem like a life-altering amount of money, but it’s goes to show that saving small amounts over time can add up. An employee share purchase plan are one of the easiest ways for regular folks to do just that.
If you work offers one of those, take that bad boy. Even if you cash out periodically to avoid putting all your eggs in one basket. Free money is good.