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How would y’all grow 300k cash to 1M in a year?
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If you work for a listed company then swapping out for a mutual fund is likely the best option.
Unless you would/are actively buying your company stock with your salary there is no reason to keep your RSU’s after vesting
It increases your risk for no real benefit
+1 for VP1
This one is simple!
What would you do if, instead of an RSU grant, it was a cash bonus for the same dollar value?
Would you invest a cash bonus into your company? Would you invest it elsewhere? Would you quickly spend it?
Whatever you would do with cash is what you should do with the RSU. If you wouldnt invest excess cash into your company, you should sell.
Long term option is to diversify. You can cash it out as they vest , pay taxes and reinvest it in a diverse portfolio. That way you will only pay income tax .With that said, I personally hold the stock if it vests at a lower price (I should not) and wait until 1 year to reinvest (to avoid short term tax).
You can hold on, if you think the stock will go up (specially startups , mag 7 or relatively newly IPOed companies). A growth stock will grow at a much higher rate than a portfolio. But then it will also fall much harder. Remember it is part of your overall comp, so if you are planning to buy a house or another big purchase, keep it accessible
There are no taxes for selling immediately.
You are taxed on the vest date as income regardless of whether you sell or hold.
As an insider and employee of the company, you have the opportunity to know the growth prospects of the company better than outsiders. As an investor, if you are confident that the company will grow X times in Y number of years, and that works well for you, let them vest and hold the vested stock. If anything drastically falters in the future, free up some of that vested stock. This will require you to keep an eye on how the business is doing and to stay tuned in.
When you say buying based on insider knowledge, you mean ESPP? Buying in the open market it will come up as insider trading as most will be tempted to sell on news and will also increase risk exposure to one stock.
For employees: cash comp >>>
For a company, RSUs are just a way to pay a higher salary while reducing cash outlays by the company itself, but employees should look at everything in cash: cash can be diversified - anything else is too risky or not liquid
Thanks for sharing the info AWS. Not relevant to whats discussed but good for you nonetheless
I didn’t sell at the beginning for a little and accumulated some shares. Now I sell at every vest. I feel comfortable holding the amount that I’m currently holding. If you feel good about the company and want to hold some stock, build up to an amount that’s reasonable for you and then sell everything after that. Everything I sell goes straight to VTI.
Let it sit on
I always look at my total exposure to the company. This includes the fact that I work there, though chances of an Arthur Andersen are extremely unlikely. It also includes both vested and unvested stock grants. Since I have a lot unvested, generally I am pretty heavily invested in the company anyways. Obviously if I were thinking I’d leave soon maybe I would not consider that.