4 ms·

Tech base salaries are so high that it's easy to keep RSUs. Also, IME, within the last ~18+ years it's been extremely beneficial to hang onto them.

AYBABTME 4y ago
There's literally no advantage to hang onto them, versus selling them on vest day and reinvesting in a wide set of tech stocks (if that's what you want to invest into).
- hedora 4y ago
  There is an advantage if you are in the middle of a tech rally, and the other option is the investing in whole market. All you need to do is time the next downturn... I have (and continue to) err on the side of diversification. Without fail, I have simultaneously regretted it and done better than colleagues that held and tried to time the market. I could have realisitically made 2x what I did. However, I also could have made half as much (and know people that did halve their income playing these games). Halving my income would have had a much bigger impact than doubling it.
  - time_to_smile 4y ago
    There's still no advantage in a tech rally, you'd be far better of reinvesting highly correlated companies, where you have much more liquidity (since you're not only allow to sell during trading windows) and you also are allowed to perform better hedging in the case the market does start to get shaky, plus your portfolio will not drop based on the possible misstep of a single company. > I have (and continue to) err on the side of diversification I'm in the same camp as you, and the point I always make is that: If I'm wrong and our company stock sky rockets, beating everyone else in the market, then great! I still have unvested RSUs, we'll get larger bonuses, plus my job security has increased, sure I missed out on even more gain but I'm in a good place! If I'm right, and something bad happens to my employer, at least my loses will be reduced by my other investments. I don't have to worry about everything falling apart at once. Which I suppose is the entire point of variance reduction in the first place: it makes the great times a bit less great, but also makes the worse times not so bad.
- breput 4y ago
  I generally agree with selling as soon as possible but there are some significant capital gains tax advantages for holding vested RSUs for a year. 15 to 20% vs. 32 to 37%.
  - ryanwaggoner 4y ago
    They’re taxed as ordinary income when they vest, and only gains and losses from that point are considered capital gains or losses. And your cost basis is the value they vest at, so it’s no different than getting cash and buying those shares immediately. No special advantage to holding for a year vs any other stock you acquire with cash.
    - breput 4y ago
      > They’re taxed as ordinary income when they vest That's correct, whether you sell them immediately or hold them. > and only gains and losses from that point are considered capital gains or losses That is also correct and was my original point. If you sell immediately, you've already paid the (personal income rate) tax and you're done. But if you don't sell immediately, waiting a year is preferable so you are able to claim the long term capital gain rate instead of paying the short term/income rate.
      - ryanwaggoner 4y ago
        But those benefits and trade-offs have nothing to do with RSUs, it’s just how all stocks are treated. And thus not relevant to a consideration of whether to hold RSUs or sell immediately on vest.
      - yibg 4y ago
        There is no difference between holding them for a year compared to selling when they vest and then buying another stock and holding that for a year.
  - AYBABTME 4y ago
    Actually there isn't, other commenter explains why.
- bombcar 4y ago
  Selling them instantly also protects you from selling based on insider knowledge later (most employees won’t really hit this but who knows).

AYBABTME 4y ago

There's literally no advantage to hang onto them, versus selling them on vest day and reinvesting in a wide set of tech stocks (if that's what you want to invest into).

hedora 4y ago
There is an advantage if you are in the middle of a tech rally, and the other option is the investing in whole market. All you need to do is time the next downturn... I have (and continue to) err on the side of diversification. Without fail, I have simultaneously regretted it and done better than colleagues that held and tried to time the market. I could have realisitically made 2x what I did. However, I also could have made half as much (and know people that did halve their income playing these games). Halving my income would have had a much bigger impact than doubling it.
- time_to_smile 4y ago
  There's still no advantage in a tech rally, you'd be far better of reinvesting highly correlated companies, where you have much more liquidity (since you're not only allow to sell during trading windows) and you also are allowed to perform better hedging in the case the market does start to get shaky, plus your portfolio will not drop based on the possible misstep of a single company. > I have (and continue to) err on the side of diversification I'm in the same camp as you, and the point I always make is that: If I'm wrong and our company stock sky rockets, beating everyone else in the market, then great! I still have unvested RSUs, we'll get larger bonuses, plus my job security has increased, sure I missed out on even more gain but I'm in a good place! If I'm right, and something bad happens to my employer, at least my loses will be reduced by my other investments. I don't have to worry about everything falling apart at once. Which I suppose is the entire point of variance reduction in the first place: it makes the great times a bit less great, but also makes the worse times not so bad.
breput 4y ago
I generally agree with selling as soon as possible but there are some significant capital gains tax advantages for holding vested RSUs for a year. 15 to 20% vs. 32 to 37%.
- ryanwaggoner 4y ago
  They’re taxed as ordinary income when they vest, and only gains and losses from that point are considered capital gains or losses. And your cost basis is the value they vest at, so it’s no different than getting cash and buying those shares immediately. No special advantage to holding for a year vs any other stock you acquire with cash.
  - breput 4y ago
    > They’re taxed as ordinary income when they vest That's correct, whether you sell them immediately or hold them. > and only gains and losses from that point are considered capital gains or losses That is also correct and was my original point. If you sell immediately, you've already paid the (personal income rate) tax and you're done. But if you don't sell immediately, waiting a year is preferable so you are able to claim the long term capital gain rate instead of paying the short term/income rate.
    - ryanwaggoner 4y ago
      But those benefits and trade-offs have nothing to do with RSUs, it’s just how all stocks are treated. And thus not relevant to a consideration of whether to hold RSUs or sell immediately on vest.
    - yibg 4y ago
      There is no difference between holding them for a year compared to selling when they vest and then buying another stock and holding that for a year.
- AYBABTME 4y ago
  Actually there isn't, other commenter explains why.
bombcar 4y ago
Selling them instantly also protects you from selling based on insider knowledge later (most employees won’t really hit this but who knows).