How To Get Free Money From Your Employer?

free money
401k optimizer
Co-Authored and Reviewed by Gagan Sandhu, MBA - The University of Chicago Booth School of Business, CEO of Xillion
Posted on . 2 min read

💵 Do you want free money?

1️⃣ Get the maximum 401k match from your employer.

2️⃣ Enroll in your company’s ESPP program.

401k Match: Most employers match a portion of your 401k contributions. For instance, Microsoft matches 50% to employee contributions with no upper limit. If a Microsoft employee maxes out their 2023 401k contribution of $22,500, then Microsoft will contribute $11,250 to the 401k account. This is free money! But if you only contribute $10,000 to your 401k, Microsoft will only contribute $5,000, which means you will leave more than $6,000 of free money(!) on the table. Here’s the best part: all this money is pre-tax, so when you contribute $22,500 into your 401k, you are also saving taxes by reducing your taxable income!

🎯 You can then use Xillion 401k Optimizer to find the right funds for your 401k account that get you to financial independence.

ESPP: Some companies, especially in tech, let employees purchase company stock at a discount, typically 10%-15%. If you work at say, Square, you can contribute up to $25,000 a year. Square will purchase company stock on your behalf at a discount twice a year, and every six months is called the offering period. It gets even better: the company purchases the stock at the lower of the first day or the last day of the offering period. If the stock was at $50 at the beginning of the offering period and rises to $60 at the end, you get a 15% discount on $50, and the company purchases stock for you at $42.50. You can decide to keep the stock as a long-term investment. Or you can sell the same day and pocket $17.50/share profit. This profit is free money. You don’t have to do anything, other than fill out a form with your HR department.

🔑 If you decide to sell your ESPP stock, you can use Xillion Invest to explore what other investments to buy with this money.

💰 In both these cases, you need to first save and invest by making your contribution, and then you get free money as a consequence of this saving. In my experience, this process of saving is a huge benefit in itself because this money doesn’t hit your regular savings or checking account and doesn’t get spent right away. 💰

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