Author Topic: Assets tied to my workplace  (Read 1405 times)

verily

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Assets tied to my workplace
« on: December 08, 2015, 01:03:08 PM »
I could use some advice. I've started taking an active interest in investing and early retirement and have come to the realization that I'm sitting on a powder keg. I work for a major tech company and have picked up a large number of ESPP shares and RSUs over the past 8 or so years. Without directly looking into it, I'd wager that my company's stock also makes up a portion of my target fund 401k and mutual funds too, so most of my assets sit with my company.

My assets look like this:
401k: 97k (maxing contributions)
Mutual Fund: 3k (Vanguard mod growth fund)
RSUS: 70k out of 220k vested (4 year vesting cycle)
ESPP: 46k (contribute 3% of salary yearly)

Debt:
Mortgage: 130k
Car: 3k (interest on loan is negligible though)

The RSUs were issued during periods of slower growth over the past 4 years. The ESPPs go back farther during periods of high growth and have made a lot per share, so the tax on capital gains will be much, much higher.

I want to offload at least the RSUs and put them to good use. I'm thinking about putting the money towards my mortgage, either all of it or use part of it to refinance for a smaller loan at a better rate. I like the idea of reducing debt after I've already taken the tax hit, and I'm only 6 years into a 30 year 4.825% mortgage. Good idea or awful idea? The alternative would be to put the money towards diversified stocks and bonds.

I plan to also talk to a financial adviser, but I wanted to get your advice and a good understanding of my potential options before I do.

JinBoston

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Re: Assets tied to my workplace
« Reply #1 on: December 09, 2015, 07:56:00 PM »

I don't know details about tax issues with RSUS and ESPP, but it sounds like you will be paying long term capital gains on both, and possibly  income tax on the former?

I agree you have too much correlated risk.   I think reducing your concentrated risk is job #1.   Maybe put some of that money into a Roth?

After that, I think you have the usual question of "Do I invest, or do I pay down mortgage?"   There are plenty of well educated and well reasoned opinions out there, and I don't think it is a huge deal whichever you do, as long as you always max out that 401K and Roth every year.

verily

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Re: Assets tied to my workplace
« Reply #2 on: December 10, 2015, 09:32:04 AM »
They've been taking a chunk of shares to cover taxes at least. I started playing with calculators and the hit for selling RSUs is about 2k. ESPPs hurt more, but they had big gains, so I'll let them continue to play out.

My husband and I make too much to get a Roth directly, but I've looked at the backdoor option. I do think it's a good idea. We're starting to lean towards refinancing with some, but not all, of the money to reduce the payment and overall interest on the mortgage.

Goldielocks

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Re: Assets tied to my workplace
« Reply #3 on: December 10, 2015, 09:45:25 AM »
You are on the wrong track to think of stock options (that is what RSUS sort of are, right?) are investments. Once you realize the money then nclude, until then think of them as a potential bonus only.

I agree, you should pull everything vested out, in a tax optimized way, and diversify.