4 ms·

> my stock income My investment portfolio profits (or RSU vests or bonuses) never make their way to my checking account. Are people really dipping into their

by itake 3y ago

> my stock income My investment portfolio profits (or RSU vests or bonuses) never make their way to my checking account. Are people really dipping into their investment accounts to cover living costs? Maybe for home or car purchases?

paulcole 3y ago
Your investment portfolio profits will make it into your checking account at some point right? Otherwise why bother? Maybe this person has reached that point.
- hiddencost 3y ago
  Keep up with inflation until I need to draw the money down during retirement? Dividend investing underperforms the market, and pulling that money into your spending budget typically underperforms inflation.
- itake 3y ago
  > Otherwise why bother? If I lost my job, then I would definitely use the money for my living costs. Until then, I prefer any bonuses, RSUs, Dividends, and interest stay in my investment account for further compounding.
maxlamb 3y ago
Just saw an article about that a few days ago: https://fortune.com/2023/08/09/401k-hardship-distribution-borrow-loan-americans-dipping-into-retirement-fund-credit-card-debt/ https://fortune.com/2023/08/09/401k-hardship-distribution-bo...
- itake 3y ago
  I see articles like that every one to three months for the last 10 years. I remember in 2010 there was an investigation reporting about how how shocking amount of credit card debt Americans have or etc. I’m sure there is basis in reality, but I think these “X-type of person is having financial issues” blog articles are popular because people identifying with that problem (as small of a number of people that maybe) love sharing and pointing to the article to justify their own troubles. This creates more ad revenue for the producer.
01100011 3y ago
My paycheck is quite small due to the massive tax withholding I need to pay the taxes on my RSUs. I don't currently spend more than a fraction of my shares but I certainly use some of the proceeds to pay monthly expenses. I also sell company stock as soon as I get it and diversify(currently just buying T-Bills) because keeping all your eggs in one basket(i.e. keeping your wealth in the stock of the company that pays your salary) is bad risk management.
- scarface_74 3y ago
  You don’t have the option for the company to just sell enough stock to pay the taxes on the RSUs once they vest?
  - 01100011 3y ago
    No. Max withholding on RSUs is something like 22% so I have to make up the difference or owe tens of thousands at the end of the year.
    - scarface_74 3y ago
      When I was at Amazon (ie until last Friday). We had three options - sell all, sell enough to cover taxes, or sell none of it and pay taxes - some other kind of way that I never looked into. Even if that’s not the case, what’s stopping you from selling enough stock yourself once they vest and make quarterly payments? My tax rate was 22%+7.3% FICA near the end when I moved to Florida - a state with no state income tax.
      - 01100011 3y ago
        Nothing stops me. I just don't do that.
scarface_74 3y ago
I definitely never kept my RSUs after they vested. I always diversified them over the six months. I wouldn’t have used 25-30% of my cash income to invest in my company stock. Why would I keep my RSUs instead of selling them? While I could live off of my base income working remotely in the burbs of Atlanta, there is no way that my friend who had to relocate to Seattle and had two kids and a wife could have managed on the same $160K base.
- itake 3y ago
  I always sell my RSUs as soon as I can, but the proceeds never touch my checking or savings account. I directly purchase ETFs. When my base salary was $150k in SF, I worked a side contracting job to cover lifestyle costs so I could max out ESPP and 401k. Certainly if you have a family, you may not have the time to do that.
  - scarface_74 3y ago
    I promised myself since I got (re)married in 2012 that I would never work two jobs. Whatever I couldn’t do with one job, wouldn’t get done. The reason I’m not at Amazon is for the same reason. I don’t work more than 40 hours a week on a normal basis and that’s what my new manager wanted me to do to show “improvement”. Don’t cry for me. I saw it coming two months ago and I already had a few feelers out and I am 99% sure that one will come through within the next two weeks ago.
    - itake 3y ago
      As you probably know, working multiple jobs doesn't mean you have to work more than 40 hours per week. There are a many jobs that only require 20-30 hours per week. You can still limit yourself to 40 hours per week of work, but enjoy the benefits and security of multiple jobs.
sangnoir 3y ago
> My investment portfolio profits (or RSU vests or bonuses) never make their way to my checking account That's your choice[1]. Some people sell upon vesting, and others liquidate periodically or to make down payments on property or health emergencies instead of going into debt. I suppose if one had a rainy day fund and the value of their RSUs doubled over one year, they may be tempted to spend the emergency fund since their net worth has gone up. That said, I suspect you holding onto RSUs means you end up not saving as much for an emergency from your checking account, so you get an extra bit of liquidity. 1. I held onto RSUs too until I realized its indistinguishable from being paid extra cash and choosing to buy shares in my employer. I prefer rebalancing my portfolio with my preferred diversification mix.
- ghaff 3y ago
  Living through dot-bomb made me very conservative about holding options/RSUs. I won't say I haven't held them at all (and more recent history I'd have been better holding more) but in general better to take the cash.

by itake 3y ago

paulcole 3y ago

Your investment portfolio profits will make it into your checking account at some point right? Otherwise why bother? Maybe this person has reached that point.

hiddencost 3y ago
Keep up with inflation until I need to draw the money down during retirement? Dividend investing underperforms the market, and pulling that money into your spending budget typically underperforms inflation.
itake 3y ago
> Otherwise why bother? If I lost my job, then I would definitely use the money for my living costs. Until then, I prefer any bonuses, RSUs, Dividends, and interest stay in my investment account for further compounding.

maxlamb 3y ago

Just saw an article about that a few days ago: https://fortune.com/2023/08/09/401k-hardship-distribution-borrow-loan-americans-dipping-into-retirement-fund-credit-card-debt/ https://fortune.com/2023/08/09/401k-hardship-distribution-bo...

itake 3y ago
I see articles like that every one to three months for the last 10 years. I remember in 2010 there was an investigation reporting about how how shocking amount of credit card debt Americans have or etc. I’m sure there is basis in reality, but I think these “X-type of person is having financial issues” blog articles are popular because people identifying with that problem (as small of a number of people that maybe) love sharing and pointing to the article to justify their own troubles. This creates more ad revenue for the producer.

01100011 3y ago

My paycheck is quite small due to the massive tax withholding I need to pay the taxes on my RSUs. I don't currently spend more than a fraction of my shares but I certainly use some of the proceeds to pay monthly expenses. I also sell company stock as soon as I get it and diversify(currently just buying T-Bills) because keeping all your eggs in one basket(i.e. keeping your wealth in the stock of the company that pays your salary) is bad risk management.

scarface_74 3y ago
You don’t have the option for the company to just sell enough stock to pay the taxes on the RSUs once they vest?
- 01100011 3y ago
  No. Max withholding on RSUs is something like 22% so I have to make up the difference or owe tens of thousands at the end of the year.
  - scarface_74 3y ago
    When I was at Amazon (ie until last Friday). We had three options - sell all, sell enough to cover taxes, or sell none of it and pay taxes - some other kind of way that I never looked into. Even if that’s not the case, what’s stopping you from selling enough stock yourself once they vest and make quarterly payments? My tax rate was 22%+7.3% FICA near the end when I moved to Florida - a state with no state income tax.
    - 01100011 3y ago
      Nothing stops me. I just don't do that.

scarface_74 3y ago

I definitely never kept my RSUs after they vested. I always diversified them over the six months. I wouldn’t have used 25-30% of my cash income to invest in my company stock. Why would I keep my RSUs instead of selling them? While I could live off of my base income working remotely in the burbs of Atlanta, there is no way that my friend who had to relocate to Seattle and had two kids and a wife could have managed on the same $160K base.

itake 3y ago
I always sell my RSUs as soon as I can, but the proceeds never touch my checking or savings account. I directly purchase ETFs. When my base salary was $150k in SF, I worked a side contracting job to cover lifestyle costs so I could max out ESPP and 401k. Certainly if you have a family, you may not have the time to do that.
- scarface_74 3y ago
  I promised myself since I got (re)married in 2012 that I would never work two jobs. Whatever I couldn’t do with one job, wouldn’t get done. The reason I’m not at Amazon is for the same reason. I don’t work more than 40 hours a week on a normal basis and that’s what my new manager wanted me to do to show “improvement”. Don’t cry for me. I saw it coming two months ago and I already had a few feelers out and I am 99% sure that one will come through within the next two weeks ago.
  - itake 3y ago
    As you probably know, working multiple jobs doesn't mean you have to work more than 40 hours per week. There are a many jobs that only require 20-30 hours per week. You can still limit yourself to 40 hours per week of work, but enjoy the benefits and security of multiple jobs.

sangnoir 3y ago

> My investment portfolio profits (or RSU vests or bonuses) never make their way to my checking account That's your choice[1]. Some people sell upon vesting, and others liquidate periodically or to make down payments on property or health emergencies instead of going into debt. I suppose if one had a rainy day fund and the value of their RSUs doubled over one year, they may be tempted to spend the emergency fund since their net worth has gone up. That said, I suspect you holding onto RSUs means you end up not saving as much for an emergency from your checking account, so you get an extra bit of liquidity. 1. I held onto RSUs too until I realized its indistinguishable from being paid extra cash and choosing to buy shares in my employer. I prefer rebalancing my portfolio with my preferred diversification mix.

ghaff 3y ago
Living through dot-bomb made me very conservative about holding options/RSUs. I won't say I haven't held them at all (and more recent history I'd have been better holding more) but in general better to take the cash.