An employee has opted to invest in his/her company's share purchase plan with following criteria:

  1. Shares are held in an RRSP account.
  2. If emplyee contributes x% of her base salary from every paycheque to purchase shares, then employer will contribute 0.5x%, (i.e 50% matching). But 0.5x <= 3, i.e employer will contribute a max of 3% of her base salary.
  3. The company is a big stable company, and share prices grow an average of 10% every year.
  4. If employee decides to convert part or whole of her shares into cash, then employer will stop paying the 0.5x% for the next 3 months.

Using this information, is it possible to determine under what conditions it is profitable to convert into cash, even considering the penalty? i.e if the share drops by a certain % or rises by a certain %?

  • If you are having financial difficulties and need the cash, take a very low interest loan against it or trade against it. Commented Jan 3, 2014 at 23:06
  • When you say "convert part or whole of her shares into cash", do you mean the employee intends to withdraw the proceeds from the RRSP, or merely sell the shares within the RRSP, but keep the cash in the RRSP (or reinvest the proceeds within it)? Commented Jan 4, 2014 at 1:32
  • I mean sell the shares and keep the cash in the RRSP,not withdraw it
    – Victor123
    Commented Jan 5, 2014 at 15:55

1 Answer 1


The cost to you for selling is 3/8% of a years salary, this is what you won't get if you sell. Tough to calculate the what-if scenarios beyond this, since I can't quantify the risk of a price drop. Once the amount in he stock is say,10%, of a years salary, if you know a drop is coming, a sale is probably worth it, for a steep drop.

My stronger focus would be on how much of your wealth is concentrated in that one stock, Enron, and all.

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