Should I sell vested RSU immediately?

Apple winepix
Sep 15 47 Comments

Joined Apple this year and my first batch of RSU vested worth about 15k. After short term capital gains tax, I will roughly get 10k. I am new to the trading game so I wanted your inputs on whether I should sell immediately or wait to avail of long term capital gains tax (which is lower than short term tax) and long term stock growth (hopefully apple stock keeps growing). The wisdom on Blind seems to be to sell immediately and not to time the market but I don’t have a good sense of how risky or not it is to hold long term. I would really appreciate it if someone can explain their strategy.

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TOP 47 Comments
  • Facebook wxPg83
    Your tax rate isn’t lowered by holding. The stock is taxed as income on the stocks’ value on the vesting date. Cap gains only apply to the growth/loss that happens after the vesting date.
    Sep 15 14
    • Apple s432
      If you are looking to invest short term then sell, but Apple is a good long term hold. As pollett mentioned, great dividends
      Sep 15
    • Apple pollett
      Rsus appear on w2, only espp don’t if u didn’t sell
      Edited
      Sep 15
    • Facebook xnx
      If you had a windfall of 15k, would you buy Apple stock? If yes, hold, otherwise, sell and make an alternative investment consistent with your overall plan.
      Sep 15
    • VMware ateve
      ^This. RSU is essentially cash comp, but instead of giving you cash the company buys stock with it and gives that to you.
      Sep 15
    • Spotify StxGSd 🐶
      The primary reason people tell you to sell is because of concentration risk. You're employed at Apple and you're compensated by Apple. Selling is a way to diversify that income stream, typically through other holdings. Apple is a great company with great potential of future stock appreciation, but even with that, I'd sell and put my money in VOO or VTI.
      Sep 16
  • Amazon yacht 🛥
    It seems that if you joined Apple, you believe in the company future growth, which would mean you should not sell stock. If it’s just temporary gig and you don’t really see Apple succeeding in the future, then sell for sure and invest elsewhere
    Sep 15 4
    • Facebook wxPg83
      But keep in mind how much potential AAPL you still have coming to you in your diversification strategy.
      Sep 15
    • LinkedIn Zeiwkf5
      Sorry. Disagree with comment. If AAPL does well, you will be rewarded in all sorts of ways: Bonus, stock appreciation, not getting laid off... if AAPL does poorly, your investments will be tied to employment. As a matter of diversification, you should sell. Also, if you think you can gauge better than the market how any company will do just because you work there, you are probably kidding yourself. You have no market moving knowledge. If you do, you wouldn’t be allowed to trade on it. Employees tend to overestimate how well their own company is doing.
      Sep 15
    • Apple winepix
      OP
      @Linkedin: you are saying I am less likely to get laid off I hold RSU? Never heard of that.
      Sep 15
    • Amazon TRuc81
      Are you illiterate? He’s saying you’re putting all of your eggs in one basket
      Sep 15
  • Juniper democracy
    The best way to understand this is to imagine that 100% of your vested RSU is completely sold on vesting date. You have no choice on this. The cash is deposited into your account. Taxes are withheld for the IRS. Now, that cash is yours to whatever you want. You have an infinite number of options on how you want to spend, invest, or just enjoy that cash. Why the fuck would you take all that cash and reinvest it back into your employer ? Do you take the saving from your paycheck and spend it all to buy your employers stock ? If you don’t sell your RSU it’s equivalent to taking all the cash and putting it back into your employers stock. From a tax perspective you have already sold everything.

    Back in the day we were alll given stock options not RSU. Tax impact was different and there may be an advantage to not selling. With RSU you should always sell and diversify.
    Sep 15 0
  • Microsoft oh snap!
    That’s, as the tech lead would say, “beer money” so it doesn’t really matter.
    Sep 15 2
    • Microsoft boogr
      You work for MS, so you are correct as about all you can buy with the measley stock from MS typical stock awards is a few beers.
      Sep 15
    • Facebook wxPg83
      But if you’re relaxing at the country club, a cold beer is all you really need. 🍻
      Sep 15
  • eBay buyit
    Don’t hold a large amount of your assets in your employer. You already have enough risk on them as choosing them as a place to work. You also will be biased about the stock since you work there. At a minimum sell half
    Sep 15 1
    • LinkedIn Zeiwkf5
      Selling half seems arbitrary. I’d say don’t hold more in AAPL than you would be comfortable buying another companies stock. If you routinely buy 10k in other companies - more power to you.
      Sep 15
  • Microsoft Raiders!
    Hodl- my msft shares tripled since I joined. I also max out my ESPP. I aint sell shit yet.
    Sep 15 1
    • LinkedIn Zeiwkf5
      Jesus Christ don’t listen to this guy. The plural of anecdote is not data. Do not expect the same kind of return. Yes, MsFT and AAPL are pretty stable companies, but it is crazy to hold a lot of money in any single stock - double bad if it’s your own company.
      Sep 15
  • Microsoft / Eng HINs46
    What is the long term capital gain BS? RSU is taxed on vest as income tax, there you establish the cost basis. If you sell immediately, no capital gain, no tax. If you keep it, it is effectively same as if you got that much cash and buy those shares. Long term capital gain tax? Yes, but only on the gain AFTER vest.
    Sep 20 0
  • Juniper Pliny Jr
    My tax professional keeps INSISTING that the tax law advantage of selling before year 1 are minimal.

    Sell ASAP and diversify those gains into less risky ETFs.
    Sep 15 0
  • Apple Hansel2
    Sell RSUs immediately, keep ESPP for 1.5yrs
    Sep 15 7
    • Symantec / Eng eYcG72
      I think because you get long term capital gains tax rate which is lower.
      Sep 16
    • Twitter YxeA72
      But long term happens after 1 year, and espp have 0.5 year when you got them, no?
      Sep 16
    • Symantec / Eng eYcG72
      If you sell too close to the time you buy new shares and your trying to harvest losses it will get deferred until you sell the stock you just bought.
      Sep 16
    • Apple Hansel2
      I believe in AAPL enough to let my ESPP grow, but am sane enough to cash out RSUs immediately
      Sep 16
    • Apple Hansel2
      Also, FFS, read the tax implications on hrbenefits - it’s 2 paragraphs with examples! You’ll see why 1.5 yrs in 5 minutes (my ESPP are making almost 50% ROI under this strategy over 2 years)
      Sep 16
  • Symantec / Eng eYcG72
    Usually part of your vested shares are sold to pay the income taxes. The rest is your to keep if you sell right away. Also have to factor in risk of keeping lots of money locked up in single company's stock.
    Sep 15 3
    • Apple winepix
      OP
      Thanks. If I don’t sell the rest immediately and Apple stock value goes down by half when I decide to sell, I end up getting only half? Is my understanding correct?
      Sep 15
    • Symantec / Eng eYcG72
      Yes. If you harvest your losses you can use that to help lower tax libility. In short if you sell for a profit you only pay tax on the gains, if you lose money you can use that to offset gains in other stock you sold or just lower your taxable income for that year.
      Sep 15
    • Verizon Media / Eng IVFR58
      Yes, but you still pay income taxes on the value the stocks have when they vest, not when you sell them.
      Personally, I would at least sell part of them and diversify your portfolio.
      Sep 15
  • Amazon fVAT38
    There are many schools of thought, here's mine.

    Only sell immediately if you're going to invest it in another asset. Either put it into a diversified index, like the Vanguard 500 index. Or buy real-estate that you intend on renting out.

    If you're okay with risk, an easy method is just to forget about it until you need to buy a house.
    Sep 16 0
  • Intuitive Surgical HfMg53
    Not selling RSU could be viable strategy. Just 100% risk.

    Lets say you have good savings in funds/cash. Then vested RSU is 50% of your total savings. If you don’t need full savings amount within next 2-3 years and you’re young, don’t have kids college to pay for, ride them out for 10-15 years, it can get lucky, also can get ugly. Personally I wish I bought my company stocks with cash 5 years ago, you never know, holding RSU is purest form of gambling.
    Sep 16 0
  • PayPal wknu08
    One other way to look at this is that you are completely investing urself already in ur company.
    Hence if the company does well you would anyway have a job, salary hike, great bonus etc.
    But you will be stuck if company doesn't do good.
    So taking out RSU and diversifying is the best option, unless you think the only best investment option is ur company itself.
    Sep 15 0
  • Facebook come to me
    https://blog.wealthfront.com/manage-vested-rsus/ - of course I’m still holding about half my equity in fb stock so I’m not being entirely rational
    Sep 15 0
  • Workday / Eng SpagtiCode
    Honestly, it's not binary. I'd hold on to some and sell some. That way, you don't feel bad if the stock does down or up.
    Sep 15 0