Investing in index funds vs keep your vested RSUs

Amazon
BqQS04

Go to company page Amazon

BqQS04
Apr 7, 2021 21 Comments

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

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TOP 21 Comments
  • Amazon
    sassursaas

    Go to company page Amazon

    sassursaas
    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.
    Apr 7, 2021 2
  • Google / Eng
    cme -> ee

    Go to company page Google Eng

    cme -> ee
    I was thinking this way about Google. In one year, the stock doubled. I don't mind keeping my shares vested in Google.
    Apr 7, 2021 1
  • If you believe in your company then you definitely want to hold some vested RSU.
    Apr 7, 2021 2
    • Amazon
      BqQS04

      Go to company page Amazon

      BqQS04
      OP
      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.
      Apr 7, 2021
    • 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
      Apr 7, 2021
  • McKinsey
    Parmanu123

    Go to company page McKinsey

    Parmanu123
    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
    Apr 7, 2021 0
  • 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.
    Apr 7, 2021 0