Ask HN: What do you do with vested RSUs?

https://news.ycombinator.com/item?id=34088231

by aoldoni • 4 years ago

32 24 4 years ago

news.ycombinator.com

What do you do with your vested RSUs? I heard of a very strong school of thought here to sell straight away as to diversify. Is this what most of HN generally does? Or do you have other strategies? Thanks!

pkd• 4 years ago

Personally I have not sold all of it, but that is not the financial advice I will give. It served me well till the stocks crashed.

A way to think about it is if you had the equivalent in cash, would you spend that money to purchase that stock? If yes, then keep the RSU otherwise sell enough for your risk tolerance.

brewdad• 4 years ago

Personally, we have decided to not let our RSUs exceed 10% of our total investment portfolio. That may be too risky for some and too conservative for others.

romanhn• 4 years ago

When I was getting RSU's, yes, I sold them off immediately under Rule 10b5-1 (allows selling of stock on a predetermined schedule so as to avoid no-trade windows and insider trading issues). My rationale was that I'm exposed to stock performance already through staggered vest periods (as long as I have employment anyways), and it would be best to diversify the liquid cash, same as I do with salary.

refurb• 4 years ago

Pretty much this. If you're getting regular equity grants, it doesn't take long to have a lot of risk associated with one company - your job, your bonus, your equity holdings.

Generally I sell as soon as they vest and invest the proceeds into a diversified portfolio.

leet_thow• 4 years ago

Sell with limit or market-on-close order ASAP and allocate to a diversified portfolio.

takinola• 4 years ago

Think of it as cash. If you received $1K of vested RSUs, you have the exact same scenario of getting $1K cash. Would you buy the company stock? If so, keep the RSUs. Would you buy some other company stock, a new phone, whatever? If so, sell the RSUs and put the money to other use. The only other consideration is that if you choose to keep the RSUs, the additional wrinkle is that the stock is typically not fully liquid because you can typically sell only during certain windows during the year.

rachitranjan• 4 years ago

Also the value will fluctuate based on market conditions

jejeyyy77• 4 years ago

Fair, but this doesn’t take into consideration the biggest financial impact for these income levels - taxes.

kasey_junk• 4 years ago

What tax implications would impact here? RSUs get taxed as income when they vest.

pesfandiar• 4 years ago

It depends on your risk tolerance and financial goals. Do you buy individual stocks? Would you buy stocks in your employer if you had the equivalent in cash? Even if you can't sell them some times during the year and there's some correlation between your employment income and its price (considering slowdown and layoffs)?

roland35• 4 years ago

Sell immediately when they vest! I have plenty of unvested shares.

ernestipark• 4 years ago

Generally the advice is to sell immediately and diversify.

I've also had ESPP shares that appreciated significantly and therefore held onto them to get long term capital gains, then sold them into a donor advised fund (DAF) to give to charities in a doubly tax advantaged way.

throwawayacc32• 4 years ago

Hodl til the end of time and diversify elsewhere. It's a gamble, but if you sold TSLA or FB stocks right after they vested, you'd be kicking yourself now.

fragmede• 4 years ago

When is this hypothetical vest? If you got them at the end of 2021 or Q1 this year you'd be up compared to today.

throwawayacc32• 4 years ago

2021 or Q1 this year isn't "hodling til the end of time" in my mind. Think on the order of decades. If you sold right after vest in 2012, you'd be in pain.

lanbanger• 4 years ago

I already have a diversified stock portfolio, so I'm happy keeping my RSUs as a leveraged bet on my employer. I got one piece of advice recently, which was to sell enough of the vest to cover the tax that it will incur - since RSU tax is incurred at the point of vest in my tax jurisdiction. YMMV on that depending on where in the world you are.

alexanderscott• 4 years ago

Agree with other comments to sell immediately upon vesting. Learned this the hard way a while back when I held onto my vested RSUs for 1y to reduce the tax burden. Per-share value dropped below the tax % difference, and I was not diversified enough for risk.

As I also recall, holding them complicated my taxes that year and put me into AMT threshold. This may have been from option exercise though, I can’t remember.

deanmoriarty3• 4 years ago

to reduce the tax burden

If you were allowed to sell on the vesting day (open trading window etc) there is generally no way to reduce any tax burden, you are taxed as regular income on the vesting day based on the vesting price, no amount of waiting will reduce your tax liability.

TedDoesntTalk2• 4 years ago

That’s not true if you’re getting the RSU at a discounted stare price. Waiting changes it from income tax to capital gains tax.

Ask HN: What do you do with vested RSUs?

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