I am recent grad and new to RSU and taxes. I came across some ppl discussing that they sell RSU immediately on vest. Could not get much details om benefits. anyone has idea what is benefit of selling RSU right after vesting ?
Capital gains
It's just a question of diversification. So much of your future earnings are tied up in your company's performance. No reason to leave any vested shares there.
A good way to think of it is, if you had it as cash instead, would you use it all to buy your company stocks?
Depends on the person. If I had cash, I'd splurge it on random shit, so getting stocks and keeping them is a good way of investing for me and likely many others.
Diversification. You already get a bonus that is partially based on company performance. And you are forced to hold RSUs until vest in company stock. Once the stocks vest you can invest in other high growth stocks (e.g. Amazon/Apple/Tesla/etc) or index funds so youâre better covered if FB stock were to suddenly drop.
Some people need the cash right then and there at vest (pay off debts, etc), so they sell immediately.
Your salary is from FB, your bonus is tied to FB, your unvested RSUs are FB. Letâs say FB pulls an Enron, if you held all your vested stuff in FB still you have no money. If you sold and diversified your savings, bought a house whateverâŚ. You have something still.
Lots of people say diversification and then spend it or put it in a savings account. Donât be one of those. Either donât sell or have a plan - pay off debt (might be a bad idea depending on the interest), buy a house (might be a good or bad idea), actually diversify in other assets etc.
thanks everyone !
Probably to not over expose yourself to your companyâs stocks.