Vested shares usually takes 24 - 48 hours to show up in your account. Is that the case with yours too, Andre? I heard if you sell on the same day, you can avoid being taxed at the short-term rate, but given vested shares don't show up immediately in the account, I wonder what your tax strategy is. I'm also interested in the ESPP vs. vested RSU diversification approach.
Having worked at Uber, I can resonate with the second half of your article. It's going to be a while before the share price is back at the initial $40
Yeah the same here. There is the vest day, then Vest day +1 when you can actually have access to sell. The tax would only apply to the additional gain over that time (if there even is a gain). The movement over a handful of days is normally not that significant to really over think the tax piece.
Love ESPP options, I wish Meta offered it. At minimum a 15% discount and often times more depending on the look back windows. The prudent thing would also be to approach this the same way, with the added benefit of it being guaranteed gains.
Hoping to see >$40 Uber again soon! I have not been following my own advice as prudently with the Uber shares.
Quick note: I joined Facebook in 2017, and I still had a one year cliff. It was updated during 2018 for employees joining after Jan 1, 2018 (I clearly remember how annoyed my teammate that joined in December 2017 was about this).
Separately, I really wish there were low cost ways to reverse custom index (basically buy VTI minus $FB), since it would theoretically let people salve their FOMO without losing as much diversification. Tools definitely exist for custom indexing, but AFAIK they haven’t made their way down to the low fee world yet.
The custom indexing is interesting. Particularly since tech is >25% of VTI, so you are diversifying away from just FB but still heavily weighted in tech. Didn't think about removing FB and then holding it separately for FOMO reduction. Direct indexing could make that interesting too where you have more visibility into exactly how many FB shares you hold while diversifying (although that would get complicated with trading window restrictions).
Yea, the primary reason would be to just negate the choice of hold vs. sell, but it would also allow people to do more easily do things like "I'd like to be 2% overweight $FB".
One issue: This would be tough for people early in their careers, since it would take a few years to get to the point where you wouldn't be very overweight $FB. That said, using my own career as a guide, it took a few years before it made sense for me to put money towards anything but retirement, student loans, and emergency fund, so maybe this would usually resolve itself.
Wow, loved this analysis and thanks for sharing your template so I could compare my own vests at TENB. I guess it is one of the few/handful companies that still beats VTI & VTSAX, but not by much (+6.7% only) and with the way things are going with tech right now this may not hold true in the future. I also love your "If-it-were-cash-would-you-buy-the-stock?" test. But just for my FOMO reduction, what I've started doing since a few months ago is selling shares worth the original grant value and riding the remaining "free" shares – for a very long term (perhaps forever). Additionally I try to optimize the tax lots to have least tax impact and also I don't sell ESPP stocks until they're eligible for Qualified Disposition. Nonetheless, your analysis still shows how simple yet powerful diversifying is. While my 401K is in diversified index funds, my personal investments are mainly in tech stocks (due to cognitive biases at play, from living in the Bay Area) and as a result I'm still in deep-red with some stocks losing 67% of their value! So much for all the time spent in analyzing and picking companies to invest in while you opted for a simpler, less-riskier, and as you & Warren Buffet proved it, a more profitable way to invest. https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp
Still selling! If the stock recovers then my unvested shares will benefit. It is actually the same price as last vest, no reason for me to do anything differently.
Remember, the question you always need to ask is "If Meta gave me this amount in straight cash, would I use that cash to buy FB shares?" If the answer is yes, then go ahead and hold. If that is true though I would assume you are also buying more using extra savings from your paycheck?
That's a very good way of casting the decision: thinking of it as cash (which it pretty much is). It does seem like a "Buy" now, but since I never buy individual stocks, perhaps I shouldn't be buying this one now either, especially since I am already committed to it in so many ways. And yet I resist the idea at some level, perhaps because "selling when it's low" sounds like a bad idea. Interesting, I need to process this more, thank you for the insight!
Vested shares usually takes 24 - 48 hours to show up in your account. Is that the case with yours too, Andre? I heard if you sell on the same day, you can avoid being taxed at the short-term rate, but given vested shares don't show up immediately in the account, I wonder what your tax strategy is. I'm also interested in the ESPP vs. vested RSU diversification approach.
Having worked at Uber, I can resonate with the second half of your article. It's going to be a while before the share price is back at the initial $40
Yeah the same here. There is the vest day, then Vest day +1 when you can actually have access to sell. The tax would only apply to the additional gain over that time (if there even is a gain). The movement over a handful of days is normally not that significant to really over think the tax piece.
Love ESPP options, I wish Meta offered it. At minimum a 15% discount and often times more depending on the look back windows. The prudent thing would also be to approach this the same way, with the added benefit of it being guaranteed gains.
Hoping to see >$40 Uber again soon! I have not been following my own advice as prudently with the Uber shares.
Quick note: I joined Facebook in 2017, and I still had a one year cliff. It was updated during 2018 for employees joining after Jan 1, 2018 (I clearly remember how annoyed my teammate that joined in December 2017 was about this).
Separately, I really wish there were low cost ways to reverse custom index (basically buy VTI minus $FB), since it would theoretically let people salve their FOMO without losing as much diversification. Tools definitely exist for custom indexing, but AFAIK they haven’t made their way down to the low fee world yet.
Ahh good catch on the change to vest dates!
The custom indexing is interesting. Particularly since tech is >25% of VTI, so you are diversifying away from just FB but still heavily weighted in tech. Didn't think about removing FB and then holding it separately for FOMO reduction. Direct indexing could make that interesting too where you have more visibility into exactly how many FB shares you hold while diversifying (although that would get complicated with trading window restrictions).
Yea, the primary reason would be to just negate the choice of hold vs. sell, but it would also allow people to do more easily do things like "I'd like to be 2% overweight $FB".
One issue: This would be tough for people early in their careers, since it would take a few years to get to the point where you wouldn't be very overweight $FB. That said, using my own career as a guide, it took a few years before it made sense for me to put money towards anything but retirement, student loans, and emergency fund, so maybe this would usually resolve itself.
Wow, loved this analysis and thanks for sharing your template so I could compare my own vests at TENB. I guess it is one of the few/handful companies that still beats VTI & VTSAX, but not by much (+6.7% only) and with the way things are going with tech right now this may not hold true in the future. I also love your "If-it-were-cash-would-you-buy-the-stock?" test. But just for my FOMO reduction, what I've started doing since a few months ago is selling shares worth the original grant value and riding the remaining "free" shares – for a very long term (perhaps forever). Additionally I try to optimize the tax lots to have least tax impact and also I don't sell ESPP stocks until they're eligible for Qualified Disposition. Nonetheless, your analysis still shows how simple yet powerful diversifying is. While my 401K is in diversified index funds, my personal investments are mainly in tech stocks (due to cognitive biases at play, from living in the Bay Area) and as a result I'm still in deep-red with some stocks losing 67% of their value! So much for all the time spent in analyzing and picking companies to invest in while you opted for a simpler, less-riskier, and as you & Warren Buffet proved it, a more profitable way to invest. https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp
Great analysis, thank you! I assume you ARE holding your FB stock now? Or should we diversify even in times like these?
Still selling! If the stock recovers then my unvested shares will benefit. It is actually the same price as last vest, no reason for me to do anything differently.
Remember, the question you always need to ask is "If Meta gave me this amount in straight cash, would I use that cash to buy FB shares?" If the answer is yes, then go ahead and hold. If that is true though I would assume you are also buying more using extra savings from your paycheck?
That's a very good way of casting the decision: thinking of it as cash (which it pretty much is). It does seem like a "Buy" now, but since I never buy individual stocks, perhaps I shouldn't be buying this one now either, especially since I am already committed to it in so many ways. And yet I resist the idea at some level, perhaps because "selling when it's low" sounds like a bad idea. Interesting, I need to process this more, thank you for the insight!