[02/15 Meta Vest] Are you selling your RSUs on vesting day?
One of the most common questions I get
Prerequisites
101 Level
[Meta employees only] Company 401k Investment Options Walk-Thru
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Hi all - I've been getting a lot of pings on this topic. I never got this question when META (formerly FB) shares more than doubled from $180 at the time of my hire (May-2019) to $380 in September 2021.
As I've stated many times before, I think these sorts of questions/discussions are better had in Investing @. This group serves as more of a lightweight bulletin board for people to start exploring personal finance and set up some foundational things. That said let me share a few thoughts.... I will not make a formal recommendation. But I’m happy to provide an education on how to start thinking about this for yourself.
A question one should ask oneself
Would I buy Meta stock in my personal brokerage at the current price? If the answer is YES, then sure hold onto your RSUs post-vest. If the answer is NO, then holding onto the RSUs is sort of self-contradictory, no?
Amount of stake in Meta
An employee here is already quite tied to Meta via their base salary, cash bonuses, and unvested equity (i.e. that amount to vest over the next rolling 4 years). Does it make sense to add to that stake by holding onto vested RSUs?
Tax impact
At the moment of a vesting date, ‘all the shares that vest’ X ‘the recent Meta share price’ turn into taxable income. There is no avoiding this. IF I sell immediately around vest date, there is no further tax impact. There is only further future tax impact if one holds onto the RSUs post vest and Meta stock appreciates. Therefore a decision to sell/hold RSUs at time of vest is not impacted by tax considerations.
Additional Resource: Andre Nader's very insightful post on LinkedIn.
Before diving into the topics, there are several prerequisite priorities:
6-month rainy day fund
Higher-interest debt pay-down (i.e. all non-home debt, so mainly car, student and credit)
Any money tied in the near term to a home down payment, children's education and family health SHOULD NOT (in my humble opinion) be invested into a retirement account (401(k) or IRA, due to $$, for the most part, being locked up till retirement) or, more generally, into the stock market. This money is best suited to be parked in a high-yield savings account or CD. The stock market, historically, only provides stable return over medium terms and beyond. Any money invested in the stock market, you should plan to keep invested for at least 5 years (and, ideally, 10 years). During the 2008-09 crisis, the market required ~6 years to fully recover. See attached graphic!
