When to Cash Out on RSUs

how's it goin everybody this is beauty

push today I'm going to talk about when

you should cash in on stock options or

RS use stock options and RS user is

something that you get as part of your

compensation plan usually if you work

for a start-up you would get some stock

options as an incentive to work harder

to try to bring the company public to

make the stock price worth something

alternatively unicorn companies such as

Facebook snapchat or uber might give

something in the form of RS use which is

basically shares of stock that you get

outright for free you do not have to pay

for it you do not have to exercise at a

certain price you just get the stock

itself and it's yours to keep or you can

sell it at the full value now I'm not

going to talk too deeply about the tax

implications of short term versus long

term sales I'm going to talk more about

how you should take it in terms of an

investor as an investor you have to ask

yourself if you do not work for that

particular company would you go on the

open market and actually buy those

shares yourself and keep it in your

portfolio oftentimes when you work for a

company you might have an emotional

attachment and this might bias your view

on how much the stock is worth it is

true that some people might do very well

because they just take all the stock

options or the rsu's and they just never

sell for many many years and at the end

they sell it all and they make millions

or something this is essentially the

same thing as you taking your cash and

buying stock in that company over the

many years and then letting it grow it

just so happens that the company that

you work for had the stock price

increase and therefore you had a large

increase in whatever you put in when

your stock option vests or the RS you

vests is as if you took your own cash

and bought more and more shares of it so

you really need to look at how much that

you're holding in the company is that

fits well with what you want in your

portfolio as I said in previous videos

whenever you invest in a particular

single company is actually a very risky

thing to do normally for me to invest in

a particular company I would look at a

really large number of companies

actually and I would follow the stock

information on its news read all the

information I can try to value the

company itself and when you're actually

part of the company and you know you

know projects that you're working on you

are inherently going to be biased and

how whatever you know since you're

living in it from day to day it's going

to bias you maybe something wrong is

happening in your team or something then

you go oh yeah you know the whole

company is doing that but little do you

know it's just that particular team is

doing that and therefore it will cause

you to sell so when you hold stock in

the whole company you really need to

evaluate the company as a whole and this

is very very hard to do if you have

stock options or RS use in the company

that you're working at now generally

what I would do is sell the stock as

they vest this is nothing personal with

the company at all it is more for

diversification and if you look at CEO

pay they often get a lot of stock

options or Research's stock options

vested and what they do is they sell

this immediately and they take the cash

and run with it so it's more of a

diversification type because it's a very

very rare instance for me to go and buy

thousands of dollars of a single company

as I said even if you're going to invest

in a single particular company you

really should restrict the amount that

you invest to less than ten percent per

company this is just a diversification

thing because you don't want all your

eggs in one basket for most people and

myself included I do not think I'm a

very very good stock picker although

I've had previous investment videos

where I've selected one particular stock

that I was very very sure of out of a

lot of research and I recommended it

such as the i-x e oil index fund that

happened to do well but if I repeated a

couple of times more I might not be able

to find stock just as good so my final

recommendations for stock options are RS

use is generally to sell them as they

come in in order to reduce your exposure

for one single company now some people

it's going to go in the comments and say

also one so they did they held

everything and then they end up ended up

making millions yes that is true the

idea here is when you hold a single

company or a few companies the

volatility is going to be really great

yes there will be a lot of gains

possible then but there's also a lot of

losses that's also possible the way I'm

describing things is really just as a

prudent way yes you're not going to get

as much gain however you're also not

going to get as much losses it's just

the way I would normally invest

so give that a thought when you're

holding stock options or or s use you're

holding cash value here there's a value

inherent to it and this is actually

bought by your own cash don't think of

it as shares is floating around because

you can sell it immediately and get a

bundle of cash for it so this is the

same thing as you taking that

buttonholed cash and going out there and

just buying some company in this case is

the company that you work at don't

forget to give me a like on this video

comment down below let me know if you're

the type that sells your stock options

or rsu's immediately in order to reduce

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thanks for watching