Author Topic: Company stock - what to do with it  (Read 606 times)

nyekolas

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Company stock - what to do with it
« on: February 17, 2018, 09:56:40 AM »
First time posting here :)

I work for a large silicon valley company you've all probably heard of. A significant part of my compensation is issued in a type of company stock (not sure what the technical/correct term for it is). I've had it explained to me as essentially it's as if my employer hands me a bunch of money and then looks over my shoulder as I buy their stock with it. So taxes are withheld from this transaction upon my receiving them. There is a vesting schedule, etc.

At this point I have a few options:
(1) sell immediately for cash with taxes already withheld (there are no capital gains then).
(2) hold onto them for a least a year before selling to avoid short term gains.

I have a lot of confidence in the value of this particular company (everyone in the world uses it) but at the same time it does seem like its decreasing the diversity of my portfolio to have a relatively large chunk of money invested in a single company. My inclination is to convert it to cash upon receiving and re-invest that money in a more diversified way like in an index fund.

What does the community think my best play is here?

Catbert

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Re: Company stock - what to do with it
« Reply #1 on: February 17, 2018, 11:15:55 AM »
I'm assuming that getting the stock will be an ongoing process year after year.  If so, I'd likely hold the stock for long enough that I could pay long-term rather than short-term gains.  This assumes, of course, that you think it is a company with the long-term future. 

If it was a one-shot offer, I'd likely hedge my bets and sell some ASAP and some over time.

Over the long run I'd aim to have no more than 10% of my portfolio in one stock.  If you're starting out and your biggest investment is this stock option obviously it would take a while to get to 10%.