For the past 4-5 years, I have been selling all my vested RSUs and investing them consistently in fidelity index funds. I firmly believe that buying and holding index funds for 20-30 year old period is a good strategy and I want to achieve financial independence as soon as possible. I just wonder if i’m missing the boat by not holding on to my vested RSUs (considering the growth of FAANG stocks over the past couple of years). The problem is I know that if I was given an equivalent amount of cash, I wouldn’t buy my company stock since that’s too much risk with holding so much money in just 1 company (for me personally) What do you guys tell yourself so that you consistently invest in index funds? Do you guys hold some percentage of portfolio in your vested RSU stock and the remaining in index funds? If yes, how do you rebalance your portfolio? TC $300k (don’t work at amazon any more) #investing #indexfunds #rsus #tech
Yes you are on the right track. Treat the decision as if you had that money in cash how you would invest it. Even if you wanted FAANG rather than an index fund, you could diversify across the FANGMULAs. The only downside of this is if your company does much better having to live with seeing your rich coworkers while you are on the slow but steady schedule.
Diversifying across FANGMULAs sounds like a good idea. Yeah part of the problem is I want to achieve FI asap and the other issue, as you mention is, it really sucks to see that you could have gotten rich and achieved FI earlier if you had held on to your vested RSUs.
I lost a bunch of money keeping stock in INTC when I could have put it in an index fund. Luckily I switched years ago and got the last 12 years of market gains.
There’s also the question of which index you invest in. The qqq, for example, would make you feel much less bad.
I typically just buy FXAIX
If you believe in your company then you definitely want to hold some vested RSU.
Yeah I believe in my company - the only thing is I don’t know when I should sell/rebalance my company stock. I guess I could do it 2-3 times a year. With index funds, i’m just on a buy and hold strategy. Definitely going to look into holding some of my vested RSUs for some period of time.
I'll just hold that portion indefinitely like an index till I feel the company is no longer doing well or if you're trying to allocate a certain percent. 2-3x a year is a lot. Just once a year
I was thinking this way about Google. In one year, the stock doubled. I don't mind keeping my shares vested in Google.
It’s much easier to look good about these decisions when you pick the good years
Answers to this question will be very different if tech valuations drop to more 'normal' multiples in other industries. Risk tolerance should be the basis for decisions: if you're OK with possible 20-40% drop to capture the upside, then hold. If not, sell. No one can guarantee what future returns will look like but the party has been awesome so far and no one is complaining right now.
OP, reach the intelligent investor by Brahmin graham - if you get the time . Typically , you don’t want to have more than 40% of your pay check going to speculative investments. Speculative investments are generally defined as ANY investment you are doing based in faith versus fundamental research. I typically use my 401k and about 60 % of my post tax , post mortgage income in index funds and spread the balance over stocks I think will do well solely based in hoping some other sucker buys it higher. In my late thirties I’ll probably reduce the speculative number to 20% or carve out time to do fundamental research
>For the past 4-5 years, I have been selling all my vested RSUs and investing them consistently in fidelity index funds Good strategy.
It's the right strategy to reduce single company risk, but you lose the upside. AT&T stock has been... Lackluster so index fund wins. Different experience if you sold your FAANG RSUs and bought VTI last few years.
I think about it this way: if they gave me money equivalent to the present value of my vested RSUs, would I buy company stock? Hell no. I would buy index funds. I'm not going to bet my entire financial future on one company when the market as a whole good long terms returns. So I immediately sell my RSUs and reinvest in my normal portfolio. Easy decision. The ONLY case that would be different is if I had insider information suggesting the stock would go up. But alas, I do not. I also don't buy the line of thinking that keeping some stock is "betting on yourself" or "betting on your org". Maybe at a small company. But at a massive multinational? No way. I'm not moving the needle.
You know you can leave some % in RSUs if you want the upside exposure. Assuming you would buy your companies stock if you didn't already have it. You seem to imply that this is an all or nothing choice.
Good point. I’m definitely open to holding some % of my portfolio in vested RSUs since i’m anyway exposed to them via index funds. How much % of your portfolio do you keep in vested RSUs?
I have a high risk appetite so 50% with rolling window 2 month out otm puts on indices.