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.
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
But keep in mind how much potential AAPL you still have coming to you in your diversification strategy.
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.
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.
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?
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.
That’s, as the tech lead would say, “beer money” so it doesn’t really matter.
Hodl- my msft shares tripled since I joined. I also max out my ESPP. I aint sell shit yet.
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.
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.
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.
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
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.
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.
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
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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.
So the cap gains is applied to any growth that happens on top of the 15k and not the entire amount?
Yep