If you have an ESPP through work, you should be using it.

Your company is offering you free money with no risk.

First off, WTF is an ESPP?
It’s basically an employee discount store. Let’s say you work at Nike and you get 15% off all Nike shoes. Cool. Discounted shoes are great. But what if you don’t want any additional Nike shoes? Well, I’d tell you to buy the discounted shoes anyway and then sell them at full price to someone else. This is how an ESPP works. But instead of shoes, it’s your company’s stock.

Let’s say you work at Slack and the value of Slack’s stock is $100/share. As a Slack employee, you are allowed to purchase that $100 share for 15% off. So you only pay $85 for something that’s worth $100. Now that you’ve bought the discounted stock, you have 2 options:

Option 1: You hold onto the Slack stock. Maybe it goes up or maybe it goes down. It’s risky.

Option 2: You immediately turn around and sell the stock and make $15. Risk free.

I want you to go with Option 2. Sell that stock and make some risk free cash baby.

SO HOW DO I USE THIS ESPP THINGY?

1. If your company has an ESPP, there are only certain times every year you can enroll in it. You’ll probably get an email from the company telling you when you can enroll.
2. When you are eligible to enroll, sign up. Contribute the maximum amount (usually 15%) of your salary.
3. Once you’re enrolled in the ESPP, your company will begin automatically grabbing money from your paycheck and automatically buying discounted stock for you.
4. Once the stock arrives, sell it. Boomshakalaka! You just made some risk free money.

The Fine Print
You can contribute up to 15% of your salary to the ESPP. But, the IRS won’t allow you to contribute more than $22,500 per year. Most companies will give you 15% off but some only do 10%.