Case Study – ESOP Buyback

Let me tell you a little story about how a simple decision made me closer to early retirement.

What’s an ESOP Buyback Anyway?

So, back in 2022, my company did this thing called an ESOP buyback. Basically, they offered to buy back some of the company shares they had given me as part of my Employee Stock Ownership Plan (ESOP). It’s like the company saying, “Hey, thanks for all your hard work! Here’s some cash for your shares.” It’s a great way to get some liquidity without waiting forever for the company to go public or for me to leave.

The Big Decision:

I suddenly had Rs 5,000,000 in my bank account. Now, here comes the classic dilemma—spend it or invest it?

A few of my colleagues didn’t think twice. They went straight to the car dealership and drove off in shiny new cars. And I get it—nothing beats that new car smell. But I couldn’t shake off the thought that a car is a depreciating asset. You know how it goes: the moment you drive it off the lot, it’s already worth less. In fact, most cars lose about 10-20% of their value instantly and can drop by 50% in just a few years.

Playing the Long Game

I decided to play the long game. I took the entire Rs 5,000,000 and invested it into a diversified mix—equities, mutual funds, some fixed-income stuff. I wasn’t expecting miracles, but I figured patience would pay off.

Fast forward three years to 2025, and my investment had grown to Rs 11,228,594. Yeah, I had more than doubled my money. It felt amazing to see the numbers climb, all thanks to smart asset allocation, market gains, and the magic of compounding.

Meanwhile, Back at the Dealership…

Now, let’s check in on my colleagues. That Rs 5,000,000 car they bought? It’s now worth about Rs 2,500,000, maybe even less, depending on the brand and how much they’ve driven it. Sure, they enjoyed the ride, but financially, it was like watching half their money vanish.

Lessons Learned:

1. Spend or Grow? Sometimes, holding off on immediate gratification can really pay off. Investing that ESOP buyback turned out to be one of the smartest money moves I made.
2. The Cost of Choices: While I saw my money more than double, my friends saw their car’s value get cut in half. That’s a hefty opportunity cost.
3. Know Your Assets: Cars are fun, but they’re money pits. Investments? They can grow and set you up for a better future.
4. Patience Pays: It wasn’t easy watching my friends cruise around in new cars while I stuck with my old ride, but seeing that Rs 1.1 crore now? Totally worth it.

The Bottom Line:

This whole experience taught me that sometimes, the less flashy choice is the smarter one. While my colleagues have memories of road trips and a depreciated car, I now have a solid investment that gives me more freedom and options for the future.

So, next time you come into a windfall like an ESOP buyback, just pause for a second and think—do I want something shiny now, or something even shinier later?