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Yup, solid advice re: waiting. Generally, I've heard it as "don't do anything drastic with the money for a year". That gives enough time to let the emotions coo
by hugs 10y ago
Yup, solid advice re: waiting. Generally, I've heard it as "don't do anything drastic with the money for a year". That gives enough time to let the emotions cool down.
- ska 10y agoIt's not even just the emotions. The money isn't real until it settles.
- technofiend 10y agoAnd you owe taxes on it, regardless. I heard some sob stories from the brokers at Charles Schwab after Enron went under - energy traders who had borrowed heavily (on margin) against positions that were now worthless. Oy.
- hugs 10y agoYes, "wait a year" fixes most of these problems.
- hueving 10y agoWell no, it depends on what you are waiting on. Some of the worst horror stories are from people that exercised their options and then waited a year to sell the stock to qualify for long term capital gains. Then the stock subsequently crashed so they owed a massive AMT tax for the difference between strike price and price on exercise and got almost nothing from the actual stock sale.
- tedunangst 10y agoBetter to have a huge AMT tax bill than a huge AMT tax bill and a $2000/month Lamborghini payment.
- sulam 10y agoYou are talking past hueving. The huge AMT tax bill could literally follow you around the rest of your life. It is a much higher order problem than blowing money on a car. The last several years I have had 7-figure tax bills due to AMT calculations on options. Good problem, right? Maybe, maybe not. If I had exercised and held, I would be bankrupt. Instead I exercised, sold enough to pay taxes right then, and didn't get hosed when the stock dropped steadily just before every open trading window. I also didn't buy a Lamborghini, but that's beside the point.
- hugs 10y agoI guess I'm trying to say "wait a year... after actually having the cash in hand". But yeah, AMT sucks.
- retube 10y agoUS tax law is bonkers
- briandear 10y agoA consumption tax solves it. Someone buys a Lamborghini, they pay tax on it. They save the money, they pay nothing. But taxation is power, government can play favorites by using tax laws to reward contributors.
- rohamg 10y agoConsumption taxes are regressive and disproportionately hit the poor (who spend all their money) much more than the rich (who save most of it).
- ChuckMcM 10y agoexactly this.