Why Stock May Be Better Than Cash When It Comes To Work Bonuses

If your employer offers you a bonus with the choice between cash and company stock, you feel as though you’re on Let’s Make a Deal and don’t want to get stuck with the llama.

Choose the money and you get immediate gratification along with the dread that colleagues who chose the stock will get rich and laugh in your face. Pick the stock and you’re delaying any instant benefit while risking losing much of your bonus if the company takes a dive. Adding further confusion to the equation is the unspoken assumption from higher-ups that those who choose cash are irresponsible or aren’t enthusiastic about the company’s future.

In a recent post, Upendilife tangles with the issue, suggesting reasons that stock might be the smarter pick despite the draw of cash. Reasons include the lack of immediate tax liability on the stock — along with not having to pay taxes on the stock if it’s held for five years — its discounted price and the company’s history of strong performance even amid the sour economy.

If you’re lucky enough to receive a bonus offered in this manner, you’ll only find the right answer in retrospect. The decision you make reflects your willingness to gamble.

Take The Shares Or Take The Cash? [Upendilife]