[WINii] RSUs - Do You Sell or Hold?

Hi WINers!

Does your company offer equity compensation? If your company offers RSUs, ESOPs, or ESPPs, you should consider how to incorporate them as part of your portfolio as well as plan for incurred taxes in advance. 

But first, let's get inspired by Erin and her unconventional journey to Google. 

Here we go! ⏬

🐝 MoneyBites (Women in Tech): Why storytelling is important for UX design w/ Erin Essex

Erin Essex has had an interesting career as a UX designer. She held positions at a call center, with notable startups, and worked on major projects for the MLB.

However, she gave up a director role to get back to a senior IC when Google came calling - it was her dream company. Erin wanted to work on a product her “mother understood.” 

All the while, she kept busy as a beekeeper, evangelizing the impact of Moth style storytelling in leadership reviews. 

Have you been dreaming of bucking the traditional career trajectory? Erin chose her own path by following her own career satisfaction criteria. 

Check out her inspiring story! 👇

🎧 Listen on Spotify

📈 What To Do with RSUs

You may have heard of folks getting taxed in the five digits due to vesting Restricted Stock Units (RSUs). 

Many employers in big tech offer RSUs as part of the total compensation package. Yet, it's not uncommon to experience sticker shock come tax season. Why?

Vested RSUs (when an employee receives shares) are considered income, so they are taxed at an ordinary income rate. However, employers may only withhold the default tax rate of 22%. Depending on your income, your tax rate may be higher and you may end up owing money to Uncle Sam.

If your company allows, increase your tax withholding amount manually through payroll deductions to avoid a surprise come tax time. For more in-depth tips, check out this Substack article from Andre Nader. 💡

Remember, if you sell your RSUs at the vesting date, you pay no capital gains tax. If you sell within a year, the tax rate jumps to short term capital gains tax rate. On the flip side, if you hold onto your shares for more than a year, you'll be subject to the long term capital gains tax rate. Long term capital gains tax rate is lower than short term.

Should you hold or sell your RSUs? Here are some food for thought.

✅ One - Be mindful of single stock concentration. Review your whole portfolio and assess the percentage of company stock you're holding. A good rule of thumb is to not hold more than 10-15% of your assets in any single stock. If your equity compensation has your portfolio highly concentrated in your company’s stock, you may want to rebalance. 

✅ Two - Adjust your risk. You're earning a salary from your company, so holding a high concentration in their stock is a double exposure to the company's performance. If your company’s performance falters, both your job and your portfolio may get hit. 

✅ Three - Diversify. Consider if you were to receive a cash bonus. Would you buy your company stocks with that money, or invest into a broad market index fund?

📢 PS - Refer a Friend!

Are there others female friends/colleagues in your social circle you’d like to include in our money chat? Consider sharing this newsletter!

The more friends you refer, the more bonuses you’ll earn:

• 5 referrals - Private group Q&A session on student loans 

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• 15 referrals - 1:1 budget review session with founder

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