Selling RSU

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ridebikeseveryday
Posts: 68
Joined: Sun Nov 03, 2013 6:28 am

Re: Selling RSU

Post by ridebikeseveryday »

Jack FFR1846 wrote: Tue May 11, 2021 9:45 am If the stock goes into the toilet, I suppose you can take a smaller gain, which means less taxes, right?
No. You're income taxed at vest time, and then cap gains taxed on any delta after that. So if the stock goes to the toilet you paid a bunch of taxes on money you don't have any more.
diy60
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Re: Selling RSU

Post by diy60 »

ridebikeseveryday wrote: Tue May 11, 2021 5:59 pm
Jack FFR1846 wrote: Tue May 11, 2021 9:45 am If the stock goes into the toilet, I suppose you can take a smaller gain, which means less taxes, right?
No. You're income taxed at vest time, and then cap gains taxed on any delta after that. So if the stock goes to the toilet you paid a bunch of taxes on money you don't have any more.
Correct. This is exactly what happened to me early in my career.
softmax
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Re: Selling RSU

Post by softmax »

ridebikeseveryday wrote: Tue May 11, 2021 5:59 pm
Jack FFR1846 wrote: Tue May 11, 2021 9:45 am If the stock goes into the toilet, I suppose you can take a smaller gain, which means less taxes, right?
No. You're income taxed at vest time, and then cap gains taxed on any delta after that. So if the stock goes to the toilet you paid a bunch of taxes on money you don't have any more.
This is only true if you paid tax in cash at vest time and kept the RSUs. My company sells a portion of the RSUs at vest time to pay for the tax.
softmax
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Re: Selling RSU

Post by softmax »

To overcome the psychological challenge to sell "underperforming company stocks", I always sell half immediately at vest time.
Escapevelocity
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Re: Selling RSU

Post by Escapevelocity »

Marseille07 wrote: Tue May 11, 2021 4:22 pm
sureshoe wrote: Tue May 11, 2021 4:15 pm All over this thread, you are making claims (whether you realize it or not) that you are capable of making market calls that many people on these forums don't think are possible.
I just pitched a different idea than sell immediately and index.

People like you kept arguing back on the idea. Please don't turn around and tell me I've been making lots of claims; there was only one.
Do you hold onto that ugly sweater or tie you receive at Christmas instead of returning it to Macys because you feel guilty that you didn’t appreciate it sufficiently?
Marseille07
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Re: Selling RSU

Post by Marseille07 »

Escapevelocity wrote: Tue May 11, 2021 7:07 pm
Marseille07 wrote: Tue May 11, 2021 4:22 pm
sureshoe wrote: Tue May 11, 2021 4:15 pm All over this thread, you are making claims (whether you realize it or not) that you are capable of making market calls that many people on these forums don't think are possible.
I just pitched a different idea than sell immediately and index.

People like you kept arguing back on the idea. Please don't turn around and tell me I've been making lots of claims; there was only one.
Do you hold onto that ugly sweater or tie you receive at Christmas instead of returning it to Macys because you feel guilty that you didn’t appreciate it sufficiently?
This is a good one. It's kind of like this, indeed.
HawkeyePierce
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Re: Selling RSU

Post by HawkeyePierce »

My advice going forward is to see if your employer lets you make a sell-all election for your RSUs. Mine does, so I don't even get shares anymore. Just cash.

I suppose I technically own the shares for a moment, but they're automatically liquidated the day of vest. My employer only allows us four trading windows a year and typically shares vest just before earnings when the window is still closed. A sell-all election saves some grief watching things play out during those periods.
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mrspock
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Location: Vulcan

Re: Selling RSU

Post by mrspock »

t24b350 wrote: Tue May 11, 2021 9:37 am I used to sell RSU once vested and bought into balanced funds.
However, I stopped this practice for more a year due to under performance of the company stock.
Now it comes back again so I plan to resume my previous approach but capital gain kicks in badly.
My question is that should I convert RSU into balance funds even if it under perform the market?
Would less tax justify the immediate conversion?
Congrats you’ve discovered how doing this really sets you up for big behavioral mistakes. Sell and get back to your plan.
dcabler
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Re: Selling RSU

Post by dcabler »

Jack FFR1846 wrote: Tue May 11, 2021 9:45 am Stop speculating just to try to reduce taxes. I have RSUs coming up next week. HUGE gains as I work for one of the semiconductor companies who is being begged by every company out there for product, pushing profits and margins and the stock price way up. The shares become available Monday. Guess when I'm selling. If you said Monday, you'd be right. I'll pay ordinary income tax. So what? I take no risk. I make money and pay my share of taxes. The end. If you want to speculate in order to reduce tax on potential stock upturn, that's your right. If the stock goes into the toilet, I suppose you can take a smaller gain, which means less taxes, right?
+1 Also a semiconductor industry employee & same thing with my company. This has been my policy forever for both RSU's and ESPP and stock options back when they were the thing before RSU's replaced them. Free money is free money and as a BH'er I don't own individual stocks anyway. If I weren't working for this company, would I own their stock? Nope.
angelescrest
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Re: Selling RSU

Post by angelescrest »

fortunefavored wrote: Tue May 11, 2021 1:37 pm If you have no special insight, you should treat it like any other individual stock that is a black box. Most people think they know something about the company they work for, but outside the executive halls.. you have no idea what bad decisions or risks they are taking on (I'd love to give specific examples but I'd also like to not be sued.. so.. :)
I’d love to hear examples, too, but not interested in seeing you get sued either. I like your perspective, as it boils down to managing risk. I made an investment in one of the most successful stocks in the past decade, back when nobody knew about them, but sensed how close they were to failing and sold before another run missing out on another 10x returns. But it was the right call, the risk of having so much money in a single stock made no sense. I would have never gone out and purchased that amount at that valuation, so why keep it? Having a diversified portfolio leads to great sleep. My economic mission in life isn’t to be the richest person in the room; it’s to sleep well and live peacefully.
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TomatoTomahto
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Re: Selling RSU

Post by TomatoTomahto »

fortunefavored wrote: Tue May 11, 2021 1:37 pm If you have no special insight, you should treat it like any other individual stock that is a black box. Most people think they know something about the company they work for, but outside the executive halls.. you have no idea what bad decisions or risks they are taking on (I'd love to give specific examples but I'd also like to not be sued.. so.. :)
And sometimes even in the executive halls. . .

Decades ago, I worked for a CIO who had been the CIO at a previous company that went belly up. He was set for life but got greedy, and held all of his stock. Until it was worth $0. You can argue that a CIO might not know as much about a company as a CEO, CFO, or COO, but they’re still among the inner circle. Anyway, rather than spending his time on his sailboat, he was still grinding away, and then got made redundant and was scrambling for employment. Nice guy, too; I felt bad for him, but greed stinks.

ETA: we would have scored large once, done okay a few times (ie, matching S&P), and been killed once had we retained company shares. We always sell on vest.
I get the FI part but not the RE part of FIRE.
fortunefavored
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Re: Selling RSU

Post by fortunefavored »

TomatoTomahto wrote: Wed May 12, 2021 6:48 am
fortunefavored wrote: Tue May 11, 2021 1:37 pm If you have no special insight, you should treat it like any other individual stock that is a black box. Most people think they know something about the company they work for, but outside the executive halls.. you have no idea what bad decisions or risks they are taking on (I'd love to give specific examples but I'd also like to not be sued.. so.. :)
And sometimes even in the executive halls. . .

Decades ago, I worked for a CIO who had been the CIO at a previous company that went belly up. He was set for life but got greedy, and held all of his stock. Until it was worth $0. You can argue that a CIO might not know as much about a company as a CEO, CFO, or COO, but they’re still among the inner circle. Anyway, rather than spending his time on his sailboat, he was still grinding away, and then got made redundant and was scrambling for employment. Nice guy, too; I felt bad for him, but greed stinks.

ETA: we would have scored large once, done okay a few times (ie, matching S&P), and been killed once had we retained company shares. We always sell on vest.
Great story and apt. Personally I have worked for 5 public companies. 3 went to $0, despite at the time being dominant top 1 or 2 in their segment/industries. One of the other 2 continues to bumble along in the Fortune 500 due to inertia despite massive incompetence, the final one turned into a megacap and did great.

Personally I think "luck" had more to do with all 5 than anything else. My experience is executives are just random people who fell into the right time/right place. The idea of the "genius" executive is as mythic as the "genius" active fund manager!
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TomatoTomahto
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Re: Selling RSU

Post by TomatoTomahto »

fortunefavored wrote: Wed May 12, 2021 8:15 am My experience is executives are just random people who fell into the right time/right place. The idea of the "genius" executive is as mythic as the "genius" active fund manager!
Ain’t that the truth!!!! The more I’ve seen, the less impressed I am.
I get the FI part but not the RE part of FIRE.
ryman554
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Re: Selling RSU

Post by ryman554 »

Marseille07 wrote: Tue May 11, 2021 7:13 pm
Escapevelocity wrote: Tue May 11, 2021 7:07 pm
Do you hold onto that ugly sweater or tie you receive at Christmas instead of returning it to Macys because you feel guilty that you didn’t appreciate it sufficiently?
This is a good one. It's kind of like this, indeed.
I have to tip my hat to you that you are keeping a *very* good tone throughout this conversation as you are being broadsided left and right. This is a good example of disagreement without it getting too heated.

I understand where you are coming from now. I happen to think it's behaviorally incorrect, but hey, you're an adult and you know full well what you are doing. Wish you the best.
AnEngineer
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Re: Selling RSU

Post by AnEngineer »

ryman554 wrote: Wed May 12, 2021 10:58 am
Marseille07 wrote: Tue May 11, 2021 7:13 pm
Escapevelocity wrote: Tue May 11, 2021 7:07 pm
Do you hold onto that ugly sweater or tie you receive at Christmas instead of returning it to Macys because you feel guilty that you didn’t appreciate it sufficiently?
This is a good one. It's kind of like this, indeed.
I have to tip my hat to you that you are keeping a *very* good tone throughout this conversation as you are being broadsided left and right. This is a good example of disagreement without it getting too heated.

I understand where you are coming from now. I happen to think it's behaviorally incorrect, but hey, you're an adult and you know full well what you are doing. Wish you the best.
It's a good example of being civil, but not of disagreement; he's ignoring the substance of the disagreement. I doubt that he knows what he's doing because he hasn't explained why, but I obviously wish him well as well.
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