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> Again, if you believe the stock is going to go up, and you want the stock, go ahead and keep these RSUs. I would caution against this and just say: sell your

> Again, if you believe the stock is going to go up, and you want the stock, go ahead and keep these RSUs. I would caution against this and just say: sell your RSUs and ESPPs immediately upon vesting. There's an argument against doing so for ESPPs—especially ones that have appreciated—due to reducing your tax bill. But for most cases, the difference in your tax bill just isn't worth the additional exposure of your net worth to your company's volatility. I would further caution that it is far too easy to overweight what you think you know about your company when projecting its performance and severely underweight factors that you don't have any clue about. Your company's tech stack might be incredible and the product is a hit, but the sales team is nonexistent and your biggest competitor is two months away from eating your lunch. Or your product is complete shit but the CEO has been quietly negotiating a deal with Google on the side for 25% over market price. Or your company is executing at the top of its game and is completely unbeatable… until an unforeseeable market correction puts it out of business six months later. As much as you think you know, you have absolutely no idea what your company's stock price is going to do over the next month, quarter, or year. If you happen to be in a position where you actually know, you're going to be bound by significantly stricter insider trading policies than just your company's standard trading windows.

01100011 3y ago
100% agree. Don't put all of your eggs in one basket. That said, by following this advice, I've now got $800k post-tax cash vs $4-5 million in stock, assuming I would have held on to my shares. Oh well.
- eloisant 3y ago
  "Don't put all of your eggs in one basket" doesn't mean "stay away from that specific basket". There is a middle ground between holding everything and selling as soon as it vests.
  - stouset 3y ago
    Your income is already tied to your employer. For most people in most situations, attaching a significant fraction of your net worth to that same employer is an extremely risky position to be in. Of course you don't have to sell everything always all the time the moment you can. As always, use your own judgment. But your default tendency should be to divest and diversify.
- stouset 3y ago
  > I've now got $800k post-tax cash vs $4-5 million in stock Of course that's true of any investment though. With that $800k in cash, you could have bought any stock. Including your employer's! And if someone is going to beat themselves up over not holding RSUs ("I knew it was going to go up!") that same logic would warrant putting even more money into company stock. On the flip side, I was holding on to some ISOs that were very nearly bringing me to my retirement stretch goal. I just wanted to squeeze out 5% more. That was December 2021. Within a month or two they'd dropped to less than 25% of their value, and I lost well over six figures. The rest of the market recovered, my company didn't. If I'd sold instead of holding on for just a little bit more, I'd be retired today. C'est la vie!
  - jebarker 3y ago
    I'm also in the position of feeling regret over selling stock to diversify that I would have been much better off holding on to. Even though I understand why logically I shouldn't feel bad, it feels like I made a mistake. I assume Kahneman and Taversky could tell me the particular mental bias that makes this happen whether you sell and it goes up or hold and it goes down, i.e. it feels more like a loss because you already held the key to the gain. Loss aversion maybe?
    - stouset 3y ago
      I feel like there's some structural similarities to the trolley problem. With hindsight, inaction (not pulling the lever) would have had the better outcome but you explicitly intervened. This is more painful than a similar situation where the default was reversed and where you would have explicitly had to act to buy those same shares with cash.
- GaryNumanVevo 3y ago
  I'm on the flip side, I have around $3 million in stock from my former employer that I'm trying to sell off as tax-advantaged as I can. It's tough
eloisant 3y ago
My approach is to sell ESPP right away (as they come out of my pay check and I still get a nice bonus out of it) however I usually keep my RSU and progressively sell to limit the risk. That worked well, I made a lot of money from sell at $100 stocks I got at $25.
- AdamN 3y ago
  That gain is just 'resulting'. More likely odds of success to sell 100% of RSUs and invest that money in some other company (or fund).
- kyteland 3y ago
  I do it the opposite way myself. If the stock is increasing there's a nice tax bonus on most ESPP plans by holding it 2 years from the start of the plan. If you have a lookback provision, by holding 2 years you shift more of your gains from ordinary income into long term capital gains (LTCG). So a common example is a 6 month buying period with a lookback and a 15% purchase discount. Say the stock was $10 at the start of the period and ended at $12. The lookback period takes the lower of those two for purchase. A common misconception is that it is the lowest price anywhere in the 6 month purchase period, but no it's just the start and end values. So if you sold right away you'd end up buying at min($10,$12)x85% = $8.50. You'd sell at $12 (so that's your cost basis) and have $3.50 in ordinary income tax per share. Now say you waited 1 year to get the LTCG. In that time it went up to $13 a share. You sell and now you have $4.50 in gains. But you're still before the 2 year period so your cost basis is $12 and the split is $3.50 in ordinary income and $1 in LTCG. Now say you waited 2 years. This is where the tax advantage happens. Your cost basis is adjusted to the min($10,$12) value. Even if the price is still at $13 when you sell your tax split is $1.50 ordinary income and $3 LTCG, because your new cost basis is $10. Keep in mind when the stock declines over the purchase period this advantage completely evaporates. Another thing to note on the timing. The clock starts ticking on LTCG when the stock is purchased into your account. But for the tax benefit is it from the start of the plan, when they start taking money out of your paycheck. Where I work the plan is annual, with purchases every 6 months. So on the first purchase of the period 6 months have already elapsed and I need to wait 18 months to get the tax benefit. On the second purchase 12 months have passed so I only need to wait 12 more months, which aligns with the LTCG period.

01100011 3y ago

100% agree. Don't put all of your eggs in one basket. That said, by following this advice, I've now got $800k post-tax cash vs $4-5 million in stock, assuming I would have held on to my shares. Oh well.

eloisant 3y ago
"Don't put all of your eggs in one basket" doesn't mean "stay away from that specific basket". There is a middle ground between holding everything and selling as soon as it vests.
- stouset 3y ago
  Your income is already tied to your employer. For most people in most situations, attaching a significant fraction of your net worth to that same employer is an extremely risky position to be in. Of course you don't have to sell everything always all the time the moment you can. As always, use your own judgment. But your default tendency should be to divest and diversify.
stouset 3y ago
> I've now got $800k post-tax cash vs $4-5 million in stock Of course that's true of any investment though. With that $800k in cash, you could have bought any stock. Including your employer's! And if someone is going to beat themselves up over not holding RSUs ("I knew it was going to go up!") that same logic would warrant putting even more money into company stock. On the flip side, I was holding on to some ISOs that were very nearly bringing me to my retirement stretch goal. I just wanted to squeeze out 5% more. That was December 2021. Within a month or two they'd dropped to less than 25% of their value, and I lost well over six figures. The rest of the market recovered, my company didn't. If I'd sold instead of holding on for just a little bit more, I'd be retired today. C'est la vie!
- jebarker 3y ago
  I'm also in the position of feeling regret over selling stock to diversify that I would have been much better off holding on to. Even though I understand why logically I shouldn't feel bad, it feels like I made a mistake. I assume Kahneman and Taversky could tell me the particular mental bias that makes this happen whether you sell and it goes up or hold and it goes down, i.e. it feels more like a loss because you already held the key to the gain. Loss aversion maybe?
  - stouset 3y ago
    I feel like there's some structural similarities to the trolley problem. With hindsight, inaction (not pulling the lever) would have had the better outcome but you explicitly intervened. This is more painful than a similar situation where the default was reversed and where you would have explicitly had to act to buy those same shares with cash.
GaryNumanVevo 3y ago
I'm on the flip side, I have around $3 million in stock from my former employer that I'm trying to sell off as tax-advantaged as I can. It's tough

eloisant 3y ago

My approach is to sell ESPP right away (as they come out of my pay check and I still get a nice bonus out of it) however I usually keep my RSU and progressively sell to limit the risk. That worked well, I made a lot of money from sell at $100 stocks I got at $25.

AdamN 3y ago
That gain is just 'resulting'. More likely odds of success to sell 100% of RSUs and invest that money in some other company (or fund).
kyteland 3y ago
I do it the opposite way myself. If the stock is increasing there's a nice tax bonus on most ESPP plans by holding it 2 years from the start of the plan. If you have a lookback provision, by holding 2 years you shift more of your gains from ordinary income into long term capital gains (LTCG). So a common example is a 6 month buying period with a lookback and a 15% purchase discount. Say the stock was $10 at the start of the period and ended at $12. The lookback period takes the lower of those two for purchase. A common misconception is that it is the lowest price anywhere in the 6 month purchase period, but no it's just the start and end values. So if you sold right away you'd end up buying at min($10,$12)x85% = $8.50. You'd sell at $12 (so that's your cost basis) and have $3.50 in ordinary income tax per share. Now say you waited 1 year to get the LTCG. In that time it went up to $13 a share. You sell and now you have $4.50 in gains. But you're still before the 2 year period so your cost basis is $12 and the split is $3.50 in ordinary income and $1 in LTCG. Now say you waited 2 years. This is where the tax advantage happens. Your cost basis is adjusted to the min($10,$12) value. Even if the price is still at $13 when you sell your tax split is $1.50 ordinary income and $3 LTCG, because your new cost basis is $10. Keep in mind when the stock declines over the purchase period this advantage completely evaporates. Another thing to note on the timing. The clock starts ticking on LTCG when the stock is purchased into your account. But for the tax benefit is it from the start of the plan, when they start taking money out of your paycheck. Where I work the plan is annual, with purchases every 6 months. So on the first purchase of the period 6 months have already elapsed and I need to wait 18 months to get the tax benefit. On the second purchase 12 months have passed so I only need to wait 12 more months, which aligns with the LTCG period.