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Financial Freedom => Financial Advice From The Community / Reader Profiles => Topic started by: pat on December 01, 2018, 11:31:58 AM

Title: What is the best strategy to invest Restricted Stock Units (RSUs) income?
Post by: pat on December 01, 2018, 11:31:58 AM
Generally Restricted Stock Units (RSUs) keep on vesting every quarter, ideally what should person do with that income? Sell immediately and diversify?
Title: Re: What is the best strategy to invest Restricted Stock Units (RSUs) income?
Post by: Fat Tony on December 29, 2018, 06:03:43 PM
Sell ASAP and diversify. If you're getting RSUs from your employer, they're taxed at regular income rates without any tax benefit that might occur to other types of stock-based compensation like ISOs. Thus, you earn nothing from holding. Think of it this way, if you were getting that $X annually from your employer in cash rather than their stock, would you go back to your brokerage account and buy your employer stock?

Tying your regular income (salary - not being laid off if the company goes south), your future compensation (future RSUs are generally fixed at the price when you start - thus 2018 stock movements will impact 2019 income), health insurance, and current investments (vested but not sold RSUs) all together is generally not a good idea.

The situation is  a little different different for ESPPs, where you may be able to purchase your employer stock at a significant discount e.g. 10%. However, the recommendation is nearly always the same: Diversify quickly.