3 ms·
This is especially true to people who get paid in RSUs or do ESPP through their employer. Even FAANG employees should not really sit on these to get the maturat
by _huayra_ 5y ago
This is especially true to people who get paid in RSUs or do ESPP through their employer. Even FAANG employees should not really sit on these to get the maturation of these stocks to cap gains, as they'll likely go down by a larger margin in a year.
This is gonna be a wild few years ahead of us one way or another.
- ChuckMcM 5y agoMy take on it is that every new generation has to learn this lesson the "hard way" if only because they are pumped by people saying "Yeah, this time it is different."
- hef19898 5y agoI don't know, the two hardware As in FAANG, Apple and Amazon, are doing quite well on the stock markets. But yes, RSUs and stock options shouldn't be treated as part of your salary. Instead it's best to treat them as a bonus you don't necessarily need.
- bagacrap 5y agoAmazon has traded sideways for a year and a half. F, N are cratering, Amzn is sideways, Aapl is still way up yoy (seems vulnerable this earnings season though), MSFT has been good historically but worse this year and seems vulnerable. Google has had a good run recently but is weak this year, however P/E is already in a better place than its competitors so it has room to run I'd say.
- hef19898 5y agoHa, didn't track my AMZN stock since I thought they might go down to around 1k early in the pandemic to rebuy some. They never did. Well, trading sideways isn't too bad, so, considering how other tech stocks developed.
- philjohn 5y agoSomewhat lucky that in the UK it's no less tax efficient to sell straight away, which is what I always do. I know of a non-zero amount of people though in the US hit by the low withholding on RSU's and then having a big tax bill, based on their value at vest before a stock drop.
- bagacrap 5y agothere shouldn't be a low withholding on RSUs if your settings are correct, e.g. "I expect to make more than 400k this year". it shouldn't matter if stocks drop after vest since the withholding is taken out of the RSU vest amount.
- mrep 5y agoReally? Mine defaults to 22% on morgan stanley and I have to manually withhold extra from my salary. It also does not withhold any for state taxes which I also have to do with my salary. I don't think I can withhold either from the RSU sale.
- _huayra_ 5y agoYeah I think the standard is to sell some percentage of the RSU grant each time there is a distribution (to cover the taxes of getting it as income). Unfortunately this is usually insufficient in most companies and one will likely still owe a big chunk of change to the IRS each year as a result. One can ask for extra withholding, but it's a bit tricky to figure out until one has worked for a given company / comp level for a given year.
- philjohn 5y agoYes - it's different in the UK, I have the full 47% sold before disbursment of stock (well, 48.25% from next vest).
- mrep 5y ago> Even FAANG employees should not really sit on these to get the maturation of these stocks to cap gains Why do people always mention this? You pay income taxes at vesting as if the entire stock was income. cap gains is only for the difference between vest price and selling if you hold it for a year.
- bagacrap 5y agomaybe because the vesting happens during a trading blackout, and by the time the window opens there have been gains which would be short term if sold immediately.