Top Reasons To Sell Restricted Stock Units On The Vesting Date

Jonathan Satovsky
CFP®, ChFC®, CIMA®, CPWA®

Good afternoon, this is Jonathan Satovsky of Satovsky Asset Management.

On today’s episode of wisdom, wealth and wellness, I want to talk about restricted stock units.

Many corporations give restricted stock awards or units to employees as an incentive for long-term ownership stake in the success of the business.

And these normally vest over three years; a third, a third, a third.

And on the vesting date, which often happens in February or March or August, whatever date they’re granted, it is our typical suggestion that employees take the action to sell those shares on the vesting date.

And the reason why includes several factors:

Number one, the employer generally reloads or gives additional grants each year so you already have a stake in the business that’s growing.

Number two, it’s taxed as if it you got a bonus.

And to highlight [an example], if someone got a bonus of $100,000 and $40,000 came out on taxes, would you take the $60,000 cash and go out and buy that stock on that particular day?

The vesting is in effect that action, so your cost basis becomes the date of vesting. Not the date the grant was made but the date of vesting.

Very important consideration.

So remember, you concentrate to get rich and diversify to stay rich. It is prudent financial planning policy to take some chips off the table; and on the vesting date.

Remember, trim back your issues; you’ll get reloaded. You can reinvest and look forward to continue to build your wealth for many generations to come.

On that, have a happy healthy day and good luck on your own journey for wisdom, wealth and wellness.

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Video Recorded February 23rd, 2021
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Disclosures

This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market indata. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.

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